Is Solitario Zinc Corp. (NYSE:XPL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is XPL a good stock to buy now? Prominent investors were taking an optimistic view. The number of long hedge fund bets moved up by 1 recently. Solitario Zinc Corp. (NYSE:XPL) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that XPL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 2 hedge funds in our database with XPL positions at the end of the fourth quarter.
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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to review the new hedge fund action surrounding Solitario Zinc Corp. (NYSE:XPL).
Do Hedge Funds Think XPL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in XPL over the last 23 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Solitario Zinc Corp. (NYSE:XPL), with a stake worth $1 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $0.2 million. Millennium Management was 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 0 allocated the biggest weight to Solitario Zinc Corp. (NYSE:XPL), around 0.0012% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 0 percent of its 13F equity portfolio to XPL.
As aggregate interest increased, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Solitario Zinc Corp. (NYSE:XPL). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0 million position during the quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Solitario Zinc Corp. (NYSE:XPL) but similarly valued. We will take a look at Zhongchao Inc. (NASDAQ:ZCMD), Virco Mfg. Corporation (NASDAQ:VIRC), ICC Holdings, Inc. (NASDAQ:ICCH), CBM Bancorp, Inc. (NASDAQ:CBMB), Bellerophon Therapeutics, Inc. (NASDAQ:BLPH), Vinco Ventures, Inc. (NASDAQ:BBIG), and Alterity Therapeutics Limited (NASDAQ:ATHE). All of these stocks' market caps resemble XPL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZCMD,2,311,1 VIRC,4,4114,1 ICCH,3,1476,0 CBMB,2,896,-1 BLPH,6,2093,5 BBIG,1,59,1 ATHE,2,418,0 Average,2.9,1338,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.9 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in XPL's case. Bellerophon Therapeutics, Inc. (NASDAQ:BLPH) is the most popular stock in this table. On the other hand Vinco Ventures, Inc. (NASDAQ:BBIG) is the least popular one with only 1 bullish hedge fund positions. Solitario Zinc Corp. (NYSE:XPL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XPL is 56. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately XPL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on XPL were disappointed as the stock returned -15.7% since the end of March (through 6/11) 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.