It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Pretium Resources Inc (NYSE:PVG) .
Pretium Resources Inc (NYSE:PVG) has seen an increase in enthusiasm from smart money of late. There were 12 hedge funds in our database with PVG holdings at the end of the third quarter. At the end of this article we will also compare PVG to other stocks including DiamondRock Hospitality Company (NYSE:DRH), KapStone Paper and Packaging Corp. (NYSE:KS), and Applied Industrial Technologies (NYSE:AIT) to get a better sense of its popularity.
Follow Penn Virginia Gp Holdings L.p. (NYSE:PVG)
Follow Penn Virginia Gp Holdings L.p. (NYSE:PVG)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, mor
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With all of this in mind, let’s analyze the latest action regarding Pretium Resources Inc (NYSE:PVG).
How are hedge funds trading Pretium Resources Inc (NYSE:PVG)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, compared to 10 funds at the end of June. On the other hand, there were a total of 6 hedge funds with a bullish position in PVG at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Anchor Bolt Capital, led by Robert Polak, holds the largest position in Pretium Resources Inc (NYSE:PVG). Anchor Bolt Capital has a $40.1 million position in the stock, comprising 1.2% of its 13F portfolio. On Anchor Bolt Capital’s heels is Sun Valley Gold, led by Peter Franklin Palmedo, which holds a $37.9 million position; 1.2% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions encompass Eric Sprott’s Sprott Asset Management, Roberto Mignone’s Bridger Management and Michael Kaufman’s MAK Capital One. We should note that two of these hedge funds (Sun Valley Gold and Sprott Asset Management) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key money managers have been driving this bullishness. Citadel Investment Group, led by Ken Griffin, created the largest call position in Pretium Resources Inc (NYSE:PVG). Citadel Investment Group had $1.3 million invested in the company at the end of the quarter. Philippe Jabre’s Jabre Capital Partners also initiated a $0.9 million position during the quarter. The following funds were also among the new PVG investors: David Costen Haley’s HBK Investments and Robert B. Gillam’s McKinley Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pretium Resources Inc (NYSE:PVG) but similarly valued. These stocks are DiamondRock Hospitality Company (NYSE:DRH), KapStone Paper and Packaging Corp. (NYSE:KS), Applied Industrial Technologies (NYSE:AIT), and IAMGOLD Corporation (USA) (NYSE:IAG). All of these stocks’ market caps are closest to PVG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRH | 12 | 49550 | -2 |
| KS | 18 | 164051 | -3 |
| AIT | 15 | 70956 | -3 |
| IAG | 17 | 154807 | 7 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $141 million in PVG’s case. KapStone Paper and Packaging Corp. (NYSE:KS) is the most popular stock in this table. On the other hand DiamondRock Hospitality Company (NYSE:DRH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Pretium Resources Inc (NYSE:PVG) registered the same number of bullish investors as DRH. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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