Market Overview

Short Interest in AngloGold Ashanti, IAMGOLD Continues to Surge (AU, IAG, KGC)

Among gold stocks, AngloGold Ashanti (NYSE: AU), IAMGOLD (NYSE: IAG) and Kinross Gold (NYSE: KGC) saw big upswings in short interest between the May 15 and May 31 settlement dates.

Other gold mining companies that also saw the number of shares sold short increase in the period include Eldorado Gold (NYSE: EGO), Newmont Mining (NYSE: NEM) and Royal Gold (NASDAQ: RGLD).

The short interest in Randgold Resources (NASDAQ: GOLD) was essentially flat compared to the previous period.

But note that short sellers retreated from Agnico-Eagle Mines (NYSE: AEM), Barrick Gold (NYSE: ABX), Gold Fields (NYSE: GFI), GoldCorp (NYSE: GG), Harmony Gold Mining (NYSE: HMY) and Yamana Gold (NYSE: AUY) in the final weeks of May.

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 short interest in Coeur d'Alene Mines (NYSE: CDE) declined.

AngloGold Ashanti

This South African gold producer saw short interest swell more than 40 percent to about 7.16 million shares, on top of a gain of almost 36 percent in the previous period. That end-of-month figure was the greatest number of shares sold short in at least a year. The days to cover rose to two.

The share price of AngloGold Ashanti fell to a multiyear low in the waning days of 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.

Half of the six analysts who follow the stock and were surveyed by Thomson/First Call recommend buying shares. The mean price target, or where analysts expect the share price to go, suggests that they feel the share price may almost double. Note though that their target is less than the 52-week high.

The share price is down more than 47 percent since the beginning of the year. It pulled back almost seven percent just in the past week. The stock has underperformed larger competitors Barrick Gold and Newmont Mining, as well as the broader markets, over the past six months.

IAMGOLD

The short interest in IAMGOLD increased more than 24 percent in the latter two weeks of May to more than 7.31 million shares. That was about two percent of the total float. And it was the highest number of shares sold short in at least a year, on the highest average daily volume since March.

This Toronto-based miner of gold, silver and copper reelected its board of directors at the annual meeting in May. The company has a market cap of about $2 billion and a dividend yield near 4.7 percent. The price-to-earnings (P/E) ratio is less than the industry average, but the return on equity is less than seven percent.

The consensus recommendation of the surveyed analysts is to hold shares of IAMGOLD. Their mean price target is about 39 percent higher than the current share price, though that target is much less than the 52-week high reached last autumn.

The share price is about 55 percent lower than at the beginning of the year. But shares have traded mostly between $5 and $6 since April. The stock has underperformed peers Barrick Gold and Randgold Resources, as well as the broader markets, over the past six months.

Kinross Gold

The number of shares sold short in this Toronto-based gold and silver miner surged more than 65 percent to around 7.35 million, which was the highest level of short interest since last October. However, that was less than one percent of the total float. The days to cover is about one.

Kinross Gold has a market cap of more than $6 billion and a dividend yield near 2.6 percent. Analysts forecast declining earnings and revenues in the most recent and the current quarters. The forward earnings multiple is less than the industry average P/E ratio, but the long-term EPS growth forecast is only about six percent. The operating margin is greater than the industry average.

The consensus recommendation of the analysts polled is to buy shares, with only two out of 23 of them rating the stock at Underperform. The analysts' mean price target indicates more than 29 percent upside potential, relative to the current share price. That consensus target is less than the 52-week high, though.

The share price is more than 40 percent lower year-to-date, including a pullback of about nine percent in the past week. Over the past six months, the stock has underperformed the likes of GoldCorp and Newmont Mining, as well as the broader markets.

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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