The markets have been juggling a lot of developments in the past few weeks. The 40-year high inflation, approaching stagflation, and the threat of a further slip into a recession are keeping investors at the edge of the stock market cliff, ready to retreat or take the plunge at the slightest headwind.
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Take, for instance, the stock market movements over the past couple of weeks. Investors were initially positive, though cautious, of the possible cooling of inflation in May on a month-over-month basis.
However, as the week rolled on, fears got the best of them (of course, further catalyzed by weak outlooks provided by a few companies), and the major stock market indexes are on track to clock in another week of losses.
Actually, these movements are being stoked by a lack of confidence —in the economy, the interest rate situation, and in the geopolitical situation. This lack of confidence can be attributed to the fact that it is very difficult to choose the right stocks to invest in during tumultuous times like these.
In this regard, it may be wise to follow what market experts are saying or doing when it comes to investments. One group of experts whose transactions are closely watched and factored into market movements are corporate insiders.
Insiders are privy to company information that general investors do not have access to. Insiders may sell their positions for multiple reasons, but when they buy shares, it is only when they have enough confidence in the stock.
In today’s Expert Spotlight article, we will talk about investment management group Sun Valley Gold Llc, and the only stock that the group has invested in recently, in about 2.5 years.
Our Expert: Sun Valley Gold
Sun Valley owns stock in several companies that represent more than 10% of the voting power of all classes of stock.
The TipRanks Star Ranking system puts Sun Valley in the 2nd position among 89,348 corporate insiders tracked on TipRanks, making the group one of the most influential insiders.
The TipRanks Star Ranking takes into account an expert’s success rate on transactions, the average return generated within a specific period, and statistical significance that pushes the rating of an expert up with a higher number of transactions or recommendations.
About 60% of Sun Valley’s transactions have been fruitful. Moreover, the group has generated an average return of 75.5% per transaction over the past year.
Moreover, during the same period, Sun Valley’s transactions have generated an alpha of a whopping 89.1% over the S&P 500 (SPX) and 86.8% over the metals & mining sector.
Importantly, Bear Creek Mining (BCEKF) was Sun Valley’s most profitable Buy transaction, having generated a staggering 554.3% over the period of January 26, 2016, to January 26, 2017.
However, the group’s 2nd-most-recent Buy transaction was made in December 2019. Throughout 2020 and 2021, Sun Valley sold positions in several holdings. It broke the chain on June 2, 2022, by buying $95,801.75 worth of Gold Standard Ventures (GSV).
The Favorite Stock
Mineral exploration company Gold Standard Ventures focuses on gold assets. The Railroad-Pinion project is its flagship property, covering about 21,679 hectares in Elko County, NV.
Notably, the demand for gold is likely to remain strong as investors lean on precious metals to hedge against market disruptions.
Moreover, not only did our expert Sun Valley Buy many shares of GSV stock, but in the second quarter of 2022, thus far, there have been 14 Buy transactions of the stock and no Sells.
Recently, Canaccord Genuity (CCORF) analyst Michael Fairbairn reiterated a Buy rating on the stock with a price target of C$1.00, which is around $0.79 in USD.
GSV is a Strong Buy on Wall Street, with three unanimous Buys. The average GSV price target is $0.87, implying 128% upside potential.
This stock has been beaten down by forces beyond the control of the company, and that possibly makes it attractive to experts.
Bottom Line
Insider activities do not always ensure positive returns. However, they can be a good way to find a direction while researching investments in precarious times like these.
