Jeffrey Vinik first became famous for his success at Fidelity Investments as the head of the Magellan Fund. After leaving Fidelity, he started a hedge fund- but within five years the fund had been so successful that Vinik returned money to outside investors. When we went through his 13F filing for the third quarter of the year, we noticed a number of mining stocks among his top holdings. Read on for our quick take on the five largest mining positions in his portfolio or see the rest of his stock picks.
The largest single stock holding in Vinik’s portfolio was his 2.3 million shares of Barrick Gold Corporation (NYSE:ABX), a global miner of gold as well as copper. As will be the case with any mining stock, Barrick is dependent on commodity prices and the business hasn’t been doing well recently: revenue was down 14% last quarter versus a year earlier, which cut net income about in half. However, the stock trades at 10 times trailing earnings and so is arguably a candidate for value status. Platinum Asset Management, managed by billionaire Kerr Neilson, owned 2.6 million shares of Barrick at the end of September (check out Platinum’s favorite stocks).
Vinik initiated a position in another gold miner, NovaGold Resources Inc. (NYSE:NG) during the third quarter, making for two gold miners out of his five favorite companies. Novagold, which is one of the ways that billionaire John Paulson is investing in gold (read about why Paulson likes gold investments), has seen its stock price fall 49% in the last year and the most recent data shows considerable short interest even now. It’s a much smaller company than Barrick, at a market cap of $1.3 billion, and with its financials looking less solid we think that we’d avoid it.