5 Best Gold Stocks To Buy Now

2. Barrick Gold Corporation (NYSE: GOLD)

The world’s second-largest gold mining company Barrick Gold Corporation (NYSE: GOLD) is a member of Jim Simons stock portfolio over the last six years. It is also the second-largest gold-stock investment of a billionaire hedge fund valued at $603 million, accounting for 0.60% of the overall portfolio.

The shares of a Canada-based gold mining company jumped 30% this year. The hedge fund has sold 19% of Barrick Gold’s stake in the latest quarter to capitalize on share price gains. The company has recently raised the quarterly dividend by 12%, thanks to a strong gold price. Its dividends are safe as its third-quarter free cash flow hit a record level of $1.3 billion.

We shared Massif Capital’s detailed GOLD thesis in this article. Here is an excerpt:

“We entered Barrick Gold at an average price of roughly $10 a share in late 2018, and on the Friday before the firm announced its transformational merger with Randgold. Over the approximately two years that we held the position, not only did the price of gold rally dramatically, but the business itself produced excellent returns under a superior (dare we say the best?) management team in the gold industry. The position returned roughly 125% or 6.6% to the portfolio. Although this is a good return, the position was not without its challenges. The first challenge was sizing. We started the position small, with a roughly 3% portfolio weighting. We intended to add to the position, but we proved behaviorally incapable of adding to a position that had appreciated significantly.

This is a behavioral shortcoming that should not be dismissed simply because we made money and is without question a mark against us as investors. We are aware of it, though, and awareness will hopefully help us avoid making similar mistakes in the future.

The second challenge came at the time of closing out the position. Although we remain highly constructive on gold in general, we believed we needed to exit the position as our valuation for the company was between $20 and $25 per share at gold prices of around $1,500 to $1,600 an ounce. At our exit, the company was trading between 125% and 150% of the low end of our intrinsic value estimate. So although constructive on gold, and thus open to the possibility that a continued run in gold might take the stock higher on sentiment and momentum, we were concerned that the additional price appreciation was exposing us to the risk of needing to find a greater fool to sell the position to, if and when we wanted to exit.”