Market Overview

Short Interest in Barrick Gold, Randgold Resources Surges

Barrick Gold (NYSE: ABX), GoldCorp (NYSE: GG) and Randgold Resources (NASDAQ: GOLD) saw big upswings in short interest between the April 15 and April 30 settlement dates.

Other gold mining companies that also saw the number of shares sold short rise in the period include Agnico-Eagle Mines (NYSE: AEM), AngloGold Ashanti (NYSE: AU), Gold Fields (NYSE: GFI) and Newmont Mining (NYSE: NEM).

But note that short sellers shied away from Eldorado Gold (NYSE: EGO), Harmony Gold Mining (NYSE: HMY), IAMGOLD (NYSE: IAG), Kinross Gold (NYSE: KGC), Royal Gold (NASDAQ: RGLD) and Yamana Gold (NYSE: AUY) in the final weeks of April.

In addition, the shares sold short in silver companies Pan American Silver (NASDAQ: PAAS) and Silver Wheaton (NYSE: SLW) also increased during the period, while those in Coeur d'Alene Mines (NYSE: CDE) declined.

Barrick Gold

This Toronto-based gold and copper producer saw short interest swell more than 48 percent to about 13.82 million shares, on top of a gain or more than 44 percent in the previous period. That end-of-the-month figure was the greatest number of shares sold short in at least a year. The short interest was more than one percent of the float.

Barrick Gold posted better-than-expected quarterly results in April but still faces problems with its Pascua-Larna project. The company currently has a market capitalization of more than $20 billion and a dividend yield near 3.7 percent. But the long-term earnings per share (EPS) growth forecast is less than six percent and the return on equity is in the red.

Half the 26 analysts who follow the stock that were surveyed by Thomson/First Call recommend buying shares, with seven of them rating the stock at Strong Buy. Their mean price target, or where they expect the share price to go, represents lots of potential upside, relative to the current share price, because the stock plunged in April along with gold prices.

The share price reached a multiyear low in April and is still down more than 41 percent since the beginning of the year. The stock has underperformed competitor Newmont Mining, as well as the broader markets, over the past six months.

GoldCorp

The number of shares sold short in this precious metals producer surged about 40 percent to around 7.28 million. That followed a 26 percent gain in the previous period and was the highest level of short interest since last September. About one percent of the total float are sold short.

This Vancouver-based company has a market cap of less than $24 billion and a dividend yield near two percent. Like Barrick Gold, GoldCorp hit a multiyear low when gold prices plunged in the middle of the April. Its long-term EPS growth forecast is more than 14 percent. The price-to-earnings (P/E) ratio is less than the industry average and the long-term earnings per share (EPS) growth forecast is more than 12 percent. The operating margin is greater than the industry average.

Out of 23 analysts polled, 16 recommend buying shares, which has been the consensus recommendation for the past three months. Again, the analysts' mean price target indicates plenty of upside potential because of the share price plunge. But that target is less than the 52-week high from last September.

The share price is down more than 20 percent year-to-date, though it is up more than nine percent from the low in April. Over the past six months, the stock has outperformed competitors Barrick Gold and Kinross Gold, but underperformed the broader markets.

Randgold Resources

Short interest in this exploration and development company focused on Sub-Saharan Africa surged more about 69 percent in the latter weeks of April to more than 1.36 million shares. That was the highest number of shares sold short in at least a year, and more than double the number at the end of March. But days to cover is still about one.

Randgold Resources reported that gold production was up year-over-year in the first quarter. The company has a market cap near $7.1 billion and a dividend yield of about 0.6 percent. The long-term EPS growth forecast is a little more than eight percent, but the P/E ratio is less than the industry average. And the return on equity is about 18 percent.

All but one of the eight surveyed analysts recommend buying shares. They feel the stock has room to run, as their mean price target is well above the current share price. However, note that the target is less than the 52-week high reached last autumn.

The share price is more than 20 percent lower than at the beginning of the year, but it has climbed about 20 percent from a multiyear low in mid-April. The stock has outperformed peers Barrick Gold and Gold Fields, as well as the broader markets, over the past six months.

Posted-In: Agnico-Eagle Mines AngloGold Ashanti barrick gold coeur d'alene mines Eldorado Gold Gold FieldsShort Ideas Trading Ideas Best of Benzinga

 

Most Popular

Related Articles (ABX + AEM)

Around the Web, We're Loving...

Partner Network

Get Benzinga's News Delivered Free