How Did Hedge Funds’ Top Gold Stocks Perform in Q2 Amid Post-Brexit Uncertainty?

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.

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#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.

#3. Freeport-McMoRan Inc. (NYSE:FCX)

 – Investors with long positions (as of March 31): 34

 – Aggregate value of investors’ holdings (as of March 31): $1.59 Billion

 – Q2 Return: 7.7%

Freeport-McMoRan Inc. (NYSE:FCX) fell out of favor with the hedge fund vehicles monitored by our team during the January-to-March period, as the number of funds with equity investments in the company fell to 34 from 37 quarter-over-quarter. Nonetheless, the overall value of those investments rose by 54% quarter-over-quarter to $1.59 billion, owing to the 53% gain in the value of Freeport-McMoRan shares. The world’s largest publicly-traded copper producer, which also engages in the sale of gold, saw its shares gain a mere 7.7% in the second quarter due to worries over the company’s heavy debt load. The disappointing stock performance reflects Freeport’s ill-timed decision to expand into the oil and gas business several years ago by acquiring McMoRan Exploration Co. and Plains Exploration, which significantly weakened the company’s balance sheet. The indebted company completed a series of asset sales earlier this year to strengthen its balance sheet, with two deals completed in May generating $3.65 billion in cash. Carl Icahn’s Icahn Capital LP had 104.00 million shares of Freeport-McMoRan Inc. (NYSE:FCX) among its holdings at the end of March.

#2. Newmont Mining Corp (NYSE:NEM)

 – Investors with long positions (as of March 31): 37

 – Aggregate value of investors’ holdings (as of March 31): $896.85 Million

 – Q2 Return: 47.3%

The number of hedge funds followed by Insider Monkey with long positions in Newmont Mining Corp (NYSE:NEM) climbed to 37 from 36 during the first quarter of 2016, while the overall value of those positions rose by 69% quarter-over-quarter to $896.85 million. The shares of the world’s second-largest gold producer gained an impressive 47% during the April-to-June quarter. Just recently, the U.S gold producer announced the sale of its 48.5% economic interest in the Batu Hijau copper and gold mine in Indonesia to a local company called PT Amman Mineral Internasional for $1.3 billion. The sale of its Indonesian copper and gold assets will reduce Newmont Mining’s dependence on copper, narrow its geographic focus, as well as strengthen its balance sheet and provide funding for other projects. The company reported sales of $2.03 billion for the first quarter of 2016, up from $1.97 billion posted a year earlier, due to higher sales volumes. Newmont’s shares are 124% in the green year-to-date. Ken Griffin’s Citadel Advisors LLC owns 2.35 million shares of Newmont Mining Corp (NYSE:NEM) as of March 31.

#1. Barrick Gold Corporation (USA) (NYSE:ABX)

 – Investors with long positions (as of March 31): 49

 – Aggregate value of investors’ holdings (as of March 31): $2.73 Billion

 – Q2 Return: 57.4%

The hedge fund sentiment towards Barrick Gold Corporation (USA) (NYSE:ABX) increased during the first quarter of 2016, as the number of funds in our system with stakes in the company jumped to 49 from 40 quarter-over-quarter. Meanwhile, the aggregate value of those stakes rose to $2.73 billion from $1.16 billion, owing partly to an 84% gain in the value of Barrick Gold’s shares during the first quarter. The shares of the world’s largest gold producer have gained an additional 57% in the second quarter, pushing the stock to whopping gains of 203% thus far in 2016. The Canadian gold producer plans to reduce its total debt by at least $2 billion in 2016, with 42% of its debt reduction target having already been met. The company has reduced its debt load by $3.95 billion since the start of 2015 and plans to reduce its current debt burden of $9.1 billion to below $5 billion in the medium-term. George Soros’ Soros Fund Management added a 19.42 million-share stake in Barrick Gold Corporation (USA) (NYSE:ABX) to its portfolio during the March quarter.

Disclosure: None