Market Overview

Short Interest in AngloGold Ashanti, Harmony Gold Surges

Among gold stocks, AngloGold Ashanti (NYSE: AU), Harmony Gold Mining (NYSE: HMY) and IAMGOLD (NYSE: IAG) saw big upswings in short interest between the April 30 and May 15 settlement dates.

Other gold mining companies that also saw the number of shares sold short rise in the period include Barrick Gold (NYSE: ABX), Eldorado Gold (NYSE: EGO), Kinross Gold (NYSE: KGC) and Yamana Gold (NYSE: AUY).

But note that short sellers shied away from Agnico-Eagle Mines (NYSE: AEM), Gold Fields (NYSE: GFI), GoldCorp (NYSE: GG), Newmont Mining (NYSE: NEM), Randgold Resources (NASDAQ: GOLD) and Royal Gold (NASDAQ: RGLD) in the first weeks of May.

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

AngloGold Ashanti

This South African gold producer saw short interest swell almost 36 percent to about 5.10 million shares, on top of a gain of more than 14 percent in the previous period. That mid-month figure was the greatest number of shares sold short in at least a year. But the days to cover remains less than two.

AngloGold Ashanti posted a sixfold improvement in first-quarter earnings and named a new CEO in May. The company currently has a market capitalization of more than $6 billion and a dividend yield near 1.3 percent. The long-term earnings per share (EPS) growth forecast is about seven percent and the return on equity is almost 16 percent.

The consensus recommendation of analysts who follow the stock that were surveyed by Thomson/First Call is to buy shares. The mean price target, or where analysts expect the share price to go, represents more than 48 percent potential upside, relative to the current share price, though that target is less than the 52-week high.

The share price reached a multiyear low late last week and is still down almost 48 percent since the beginning of the year. The stock has underperformed larger competitors Barrick Gold and Newmont Mining, as well as the broader markets, over the past six months.

Harmony Gold Mining

The number of shares sold short in this South African miner of gold and other precious metals surged about 28 percent to around 3.11 million, taking back some of a 35 percent drop in the previous period. Short interest has only been higher twice so far this year. The days to cover is a little more than one.

Harmony Gold Mining has a market cap of about $1.6 billion and a dividend yield near 2.6 percent. In early May the company reported a big earnings miss. The price-to-earnings (P/E) ratio is less than the industry average but the long-term earnings per share (EPS) growth forecast is less than five percent. The operating margin is less than the industry average as well.

Again, the consensus recommendation of the analysts polled is to buy shares. And the analysts' mean price target indicates plenty of upside potential because of share price has been plunging. That consensus target is less than the 52-week high from last June.

The share price is down about 58 percent year-to-date, and shares are trading near a multiyear low. Over the past six months, the stock has underperformed the likes of Barrick Gold and Kinross Gold, as well as the broader markets.

IAMGOLD

Short interest in IAMGOLD rose more about 44 percent in the early weeks of May to more than 5.86 million shares, or about 1.6 percent of the total float. That was the highest number of shares sold short in at least a year, and about double the number at the end of February.

This Toronto-based miner of gold, silver and copper fell short of revenue estimates in the most recent report. The company has a market cap of less than $2 billion and a dividend yield of about 4.9 percent. The P/E ratio is less than the industry average, but the return on equity is less than 10 percent.

The consensus recommendation of the surveyed analysts is to hold shares of IAMGOLD. Here too, their mean price target is well above the current share price, even though that target is much less than the 52-week high reached last autumn.

The share price is almost 57 percent lower than at the beginning of the year. Shares have traded mostly between $5 and $6 for the past six weeks. The stock has underperformed peers Barrick Gold and Randgold Resources, 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

 

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