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Should You Avoid Kinross Gold Corporation (KGC)?

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by 4 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Kinross Gold Corporation (NYSE:KGC).

Kinross Gold Corporation (NYSE:KGC) has seen a decrease in support from the world’s most elite money managers recently. KGC was in 18 hedge funds’ portfolios at the end of June. There were 19 hedge funds in our database with KGC holdings at the end of the previous quarter. Our calculations also showed that KGC isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Crispin Odey

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the recent hedge fund action surrounding Kinross Gold Corporation (NYSE:KGC).

What have hedge funds been doing with Kinross Gold Corporation (NYSE:KGC)?

Heading into the third quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in KGC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

KGC_oct2019

Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Kinross Gold Corporation (NYSE:KGC), worth close to $220 million, amounting to 0.2% of its total 13F portfolio. On Renaissance Technologies’s heels is Crispin Odey of Odey Asset Management Group, with a $28.1 million position; 2.4% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group.

Because Kinross Gold Corporation (NYSE:KGC) has experienced a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of money managers who sold off their full holdings heading into Q3. Interestingly, Kenneth Tropin’s Graham Capital Management said goodbye to the biggest position of the 750 funds watched by Insider Monkey, comprising about $0.5 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to Kinross Gold Corporation (NYSE:KGC). These stocks are Huntsman Corporation (NYSE:HUN), Blueprint Medicines Corporation (NASDAQ:BPMC), 51job, Inc. (NASDAQ:JOBS), and Chegg Inc (NYSE:CHGG). This group of stocks’ market valuations are closest to KGC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HUN 30 413733 -5
BPMC 27 663156 -5
JOBS 9 22105 -3
CHGG 26 431870 -10
Average 23 382716 -5.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $312 million in KGC’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand 51job, Inc. (NASDAQ:JOBS) is the least popular one with only 9 bullish hedge fund positions. Kinross Gold Corporation (NYSE:KGC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on KGC as the stock returned 18.6% during the same time frame and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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