The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Americas Gold and Silver Corporation (NYSE:USAS) based on those filings.
Is Americas Gold and Silver Corporation (NYSE:USAS) undervalued? The best stock pickers were selling. The number of bullish hedge fund positions shrunk by 2 in recent months. Americas Gold and Silver Corporation (NYSE:USAS) was in 4 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that USAS 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Eric Sprott of Sprott Asset Management
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 10 most profitable companies in the world 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. Now let's check out the recent hedge fund action regarding Americas Gold and Silver Corporation (NYSE:USAS).
Hedge fund activity in Americas Gold and Silver Corporation (NYSE:USAS)
At Q3's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards USAS over the last 21 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Eric Sprott's Sprott Asset Management has the biggest position in Americas Gold and Silver Corporation (NYSE:USAS), worth close to $4.7 million, amounting to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is CQS Cayman LP, managed by Michael Hintze, which holds a $1.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Donald Sussman's Paloma Partners, Noam Gottesman's GLG Partners and . In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Americas Gold and Silver Corporation (NYSE:USAS), around 0.19% of its 13F portfolio. CQS Cayman LP is also relatively very bullish on the stock, dishing out 0.17 percent of its 13F equity portfolio to USAS.
Judging by the fact that Americas Gold and Silver Corporation (NYSE:USAS) has experienced bearish sentiment from the smart money, we can see that there lies a certain "tier" of fund managers that elected to cut their entire stakes last quarter. It's worth mentioning that John Overdeck and David Siegel's Two Sigma Advisors dumped the largest position of the 750 funds monitored by Insider Monkey, totaling about $1 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dropped about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Americas Gold and Silver Corporation (NYSE:USAS) but similarly valued. These stocks are OneWater Marine Inc. (NASDAQ:ONEW), Del Taco Restaurants Inc (NASDAQ:TACO), Ares Commercial Real Estate Corp (NYSE:ACRE), Noodles & Co (NASDAQ:NDLS), Oxford Immunotec Global PLC (NASDAQ:OXFD), GTT Communications Inc (NYSE:GTT), and Innate Pharma S.A. (NASDAQ:IPHA). This group of stocks' market valuations are closest to USAS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ONEW,11,38634,6 TACO,15,21195,3 ACRE,9,24591,-1 NDLS,19,67028,1 OXFD,20,136176,2 GTT,9,87069,0 IPHA,2,1248,-1 Average,12.1,53706,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $6 million in USAS's case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand Innate Pharma S.A. (NASDAQ:IPHA) is the least popular one with only 2 bullish hedge fund positions. Americas Gold and Silver Corporation (NYSE:USAS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for USAS is 23.6. 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately USAS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); USAS investors were disappointed as the stock returned 2.3% since the end of September (through 11/27) 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.
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Disclosure: None. This article was originally published at Insider Monkey.