At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Endeavour Silver Corp. (NYSE:EXK).
Hedge fund interest in Endeavour Silver Corp. (NYSE:EXK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EXK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare EXK to other stocks including Harmonic Inc (NASDAQ:HLIT), Oyster Point Pharma, Inc. (NASDAQ:OYST), and Forte Biosciences, Inc. (NASDAQ:FBRX) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are dozens of indicators investors use to size up stocks. A pair of the less known indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite money managers can trounce their index-focused peers by a superb amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Endeavour Silver Corp. (NYSE:EXK).
How have hedgies been trading Endeavour Silver Corp. (NYSE:EXK)?
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in EXK 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.
Among these funds, Renaissance Technologies held the most valuable stake in Endeavour Silver Corp. (NYSE:EXK), which was worth $4.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $4.2 million worth of shares. Citadel Investment Group, Manatuck Hill Partners, and Tudor Investment Corp were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Endeavour Silver Corp. (NYSE:EXK), around 0.3% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to EXK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Paloma Partners. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Manatuck Hill Partners).
Let’s now take a look at hedge fund activity in other stocks similar to Endeavour Silver Corp. (NYSE:EXK). These stocks are Harmonic Inc (NASDAQ:HLIT), Oyster Point Pharma, Inc. (NASDAQ:OYST), Forte Biosciences, Inc. (NASDAQ:FBRX), Cars.com Inc. (NYSE:CARS), MSG Networks Inc (NYSE:MSGN), Meridian Bancorp, Inc. (NASDAQ:EBSB), and Freeline Therapeutics Holdings plc (NASDAQ:FRLN). This group of stocks’ market values are closest to EXK’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $12 million in EXK’s case. MSG Networks Inc (NYSE:MSGN) is the most popular stock in this table. On the other hand Forte Biosciences, Inc. (NASDAQ:FBRX) is the least popular one with only 6 bullish hedge fund positions. Endeavour Silver Corp. (NYSE:EXK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EXK is 33.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately EXK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EXK investors were disappointed as the stock returned 5.7% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.