Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in IAMGOLD Corporation (NYSE:IAG)? The smart money sentiment can provide an answer to this question.
IAMGOLD Corporation (NYSE:IAG) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 22. IAG investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 22 hedge funds in our database with IAG positions at the end of the first quarter. Our calculations also showed that IAG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
With all of this in mind let’s go over the latest hedge fund action regarding IAMGOLD Corporation (NYSE:IAG).
Do Hedge Funds Think IAG Is A Good Stock To Buy Now?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in IAG a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in IAMGOLD Corporation (NYSE:IAG), which was worth $59.6 million at the end of the second quarter. On the second spot was Polunin Capital which amassed $30 million worth of shares. Kopernik Global Investors, Paulson & Co, and Royce & Associates 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 Polunin Capital allocated the biggest weight to IAMGOLD Corporation (NYSE:IAG), around 9.27% of its 13F portfolio. Kopernik Global Investors is also relatively very bullish on the stock, setting aside 1.09 percent of its 13F equity portfolio to IAG.
Since IAMGOLD Corporation (NYSE:IAG) has faced falling interest from the aggregate hedge fund industry, we can see that there were a few money managers that decided to sell off their positions entirely by the end of the second quarter. It’s worth mentioning that Stephen Mildenhall’s Contrarius Investment Management dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $1.2 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dropped about $0 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds by the end of the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as IAMGOLD Corporation (NYSE:IAG) but similarly valued. These stocks are Broadmark Realty Capital Inc. (NYSE:BRMK), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), e.l.f. Beauty, Inc. (NYSE:ELF), Radware Ltd. (NASDAQ:RDWR), Kaman Corporation (NYSE:KAMN), Materialise NV (NASDAQ:MTLS), and Canaan Inc. (NASDAQ:CAN). All of these stocks’ market caps resemble IAG’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRMK,12,91152,0 BHLB,11,43655,0 ELF,30,150083,9 RDWR,19,260927,2 KAMN,12,177937,-2 MTLS,14,201133,6 CAN,11,48522,2 Average,15.6,139058,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $124 million in IAG’s case. e.l.f. Beauty, Inc. (NYSE:ELF) is the most popular stock in this table. On the other hand Berkshire Hills Bancorp, Inc. (NYSE:BHLB) is the least popular one with only 11 bullish hedge fund positions. IAMGOLD Corporation (NYSE:IAG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IAG is 49. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately IAG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IAG were disappointed as the stock returned -3.1% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
Read More: Here is What Hedge Funds Think About IAMGOLD Corporation (IAG)