Gold has enjoyed a strong and sharp rally since the beginning of 2016, primarily owing to worries and concerns over the state of the global economy and the strong depreciation of some countries’ currencies. The recent volatility and uncertainty across the globe somewhat re-established gold’s status as a safe haven in tumultuous times. The demand for physical gold has been quite high in emerging markets, as numerous currencies such as the Indonesian rupiah and the Malaysian ringgit have depreciated notably against the green buck. What’s more, some analysts believe that the yellow metal is not far removed from a bottoming-out phase, which implies that the odds of seeing significantly lower gold prices is quite limited. Therefore, investors should consider seeking out undervalued and high-potential gold mining stocks. Although the recent rally may turn out to be short-lived, individual investors can hold onto their gold-related holdings for the long-term, with gold prices expected to increase in the coming years due to expected supply/demand factors. Even though the Federal Reserve may raise interest rates by the end of 2016 or early in 2017 (a move that generally puts downward pressure on gold prices given that the yellow metal represents a non interest-yielding asset), gold miners are nonetheless worth examining at this point in time. For that reason, this article discusses the five most-favored gold mining stocks among the pool of hedge funds tracked by Insider Monkey.
At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 Turquoise Hill Resources Ltd (NYSE:TRQ)
– Hedge Funds with Long Positions (as of December 31): 21
– Value of Hedge Funds’ Holdings (as of December 31): $425.21 Million
The hedge fund sentiment towards Turquoise Hill Resources Ltd (NYSE:TRQ) remained unchanged in the fourth quarter of 2015, while the value of hedge funds’ stakes in the company increased ever so slightly quarter-over-quarter. Turquoise Hill Resources is a mining company that relies entirely on its 66% interest in the Oyu Tolgoi copper/gold/silver mine in Mongolia. In December 2015, the company released its 2016 production guidance, which stipulates production of copper in the range of 175,000 to 195,000 tonnes, along with 210,000-to-260,000 ounces of gold in concentrates. Fresh estimates of 2015 production reported that 175,000-to-195,000 tonnes of copper were mined, while 600,000-to-700,000 ounces of gold in concentrates were excavated from the site. The substantial decrease in gold is mainly attributable to mining in lower-grade gold areas and processing lower-grade stockpiled ore. The shares of the mining company are down by 7% over the past 12 months, after having advanced by nearly 10% since the beginning of 2016. Turquoise is set to reveal its fourth quarter and full year 2015 financial results on March 17, which will allow investors to get a better picture of the company’s recent performance. Matthew Halbower’s Pentwater Capital Management owns 116.38 million shares of Turquoise Hill Resources Ltd (NYSE:TRQ) as of December 31.