Gold has enjoyed a strong rally since the beginning of 2016 amid intensifying concerns over the health of the global economy, as well as the strong depreciation of some currencies. After peaking at over $1,900 per ounce in 2011, gold prices stumbled over the next three years, ending 2015 at a five-year low of around $1,060 per ounce. Gold has since climbed to over $1,371 an ounce, the highest price level since March of 2014, as mounting post-Brexit economic uncertainty has re-established gold’s status as a safe haven in tumultuous times.
Just recently, Mark Carney, the Governor of the Bank of England, said the United Kingdom has “entered a period of uncertainty and significant economic adjustment”, hinting at immediate quantitative easing that may push gold prices higher. The Federal Reserve does not appear to be ready to raise interest rates either, so the current environment is perfect for the yellow metal. Having this in mind, the following article will discuss the second-quarter performance of the five gold stocks most favored by the hedge funds tracked by Insider Monkey.
Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#5. Agnico Eagle Mines Ltd (USA) (NYSE:AEM)
– Investors with long positions (as of March 31): 30
– Aggregate value of investors’ holdings (as of March 31): $873.84 Million
– Q2 Return: 48.2%
Agnico Eagle Mines Ltd (USA) (NYSE:AEM) received a lot of attention from the hedge funds followed by Insider Monkey during the first quarter of 2016, as the number of funds invested in the company spiked to 30 from 19 quarter-over-quarter. Those 30 money managers amassed nearly 11% of the company’s outstanding shares as of the end of March. And what a successful bet hedge fund vehicles made during the quarter, as AEM shares gained an impressive 48% during the April-to-June period. More importantly, the shares of the Canadian-based international gold producer, which has mining operations in Northwestern Quebec, Northern Mexico, Northern Finland and Nunavut, are trading near their 52-week high of $55.94 a share after advancing by 110% so far this year. Agnico Eagle Mines registered payable gold production of 411,336 ounces for the first quarter of 2016, up from 404,210 ounces in the first quarter of 2015. John Paulson’s Paulson & Co. owned 1.26 million shares of Agnico Eagle Mines Ltd (USA) (NYSE:AEM) on March 31.
#4. Goldcorp Inc. (USA) (NYSE:GG)
– Investors with long positions (as of March 31): 33
– Aggregate value of investors’ holdings (as of March 31): $1.03 Billion
– Q2 Return: 18.0%
Goldcorp Inc. (USA) (NYSE:GG) also received some love from the asset managers tracked by our team during the first three months of 2016, with the number of money managers invested in the company increasing to 33 from 25 quarter-over-quarter. The 33 managers hoarded almost 8% of the company’s outstanding shares. The shares of Goldcorp, one of the world’s largest gold producers, underperformed the 37% return enjoyed by gold in the second quarter of 2016, returning only 18% during the three month-period. In early May, the Vancouver-based mining company announced that it was acquiring Canadian gold exploration company Kaminak Gold Corporation for $520 million, which gives Goldcorp access to the the Coffee Gold project. Kaminak’s key asset is considered one of the most promising undeveloped gold projects in Canada, with total indicated gold mineral resources of 3 million ounces. Goldcorp shares are up by 72% year-to-date. Jim Simons’ Renaissance Technologies reported ownership of 3.59 million shares of Goldcorp Inc. (USA) (NYSE:GG) in its latest 13F filing.
Let’s head to the second page of this article, where we will discuss the performance of three other gold stocks favored by the hedge fund industry.