The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about HudBay Minerals Inc Ord Shs (NYSE:HBM)?
HudBay Minerals Inc Ord Shs (NYSE:HBM) shareholders have witnessed a decrease in hedge fund sentiment recently. HBM was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 11 hedge funds in our database with HBM positions at the end of the previous quarter. Our calculations also showed that HBM isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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.
[caption id="attachment_27480" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the new hedge fund action regarding HudBay Minerals Inc Ord Shs (NYSE:HBM).
What does smart money think about HudBay Minerals Inc Ord Shs (NYSE:HBM)?
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HBM over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in HudBay Minerals Inc Ord Shs (NYSE:HBM) was held by GMT Capital, which reported holding $70.5 million worth of stock at the end of September. It was followed by Heathbridge Capital Management with a $15.5 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Heathbridge Capital Management allocated the biggest weight to HudBay Minerals Inc Ord Shs (NYSE:HBM), around 4.14% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, setting aside 3.95 percent of its 13F equity portfolio to HBM.
Since HudBay Minerals Inc Ord Shs (NYSE:HBM) has faced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there exists a select few hedge funds who sold off their full holdings by the end of the first quarter. Intriguingly, Todd J. Kantor's Encompass Capital Advisors said goodbye to the largest stake of all the hedgies watched by Insider Monkey, valued at close to $8.9 million in stock, and Peter Muller's PDT Partners was right behind this move, as the fund dumped about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as HudBay Minerals Inc Ord Shs (NYSE:HBM) but similarly valued. We will take a look at National Presto Industries Inc. (NYSE:NPK), Kelly Services, Inc. (NASDAQ:KELYA), Thermon Group Holdings, Inc. (NYSE:THR), and Atara Biotherapeutics Inc (NASDAQ:ATRA). This group of stocks' market valuations are similar to HBM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NPK,6,52289,-5 KELYA,13,13558,1 THR,11,24611,-3 ATRA,17,220066,1 Average,11.75,77631,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $102 million in HBM's case. Atara Biotherapeutics Inc (NASDAQ:ATRA) is the most popular stock in this table. On the other hand National Presto Industries Inc. (NYSE:NPK) is the least popular one with only 6 bullish hedge fund positions. HudBay Minerals Inc Ord Shs (NYSE:HBM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on HBM as the stock returned 48.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.