Market Overview

Short Interest in Agnico-Eagle and Harmony Gold Rises (AEM, HMY, GFI)

Among gold stocks, Agnico-Eagle Mines (NYSE: AEM), Gold Fields (NYSE: GFI) and Harmony Gold Mining (NYSE: HMY) saw significant upswings in short interest between the May 31 and June 15 settlement dates.

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

But note that short sellers retreated from AngloGold Ashanti (NYSE: AU), Barrick Gold (NYSE: ABX), IAMGOLD (NYSE: IAG), Newmont Mining (NYSE: NEM), Randgold Resources (NASDAQ: GOLD) and Yamana Gold (NYSE: AUY) in the first weeks of June.

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

Agnico-Eagle Mines

This Toronto-based producer of gold, silver and copper saw short interest swell about 49 percent to around 1.77 million shares, more than erasing a decline of more than 29 percent in the previous period. However, that mid-month figure represented about one percent of the float.

Analysts are looking for much lower earnings and revenue from Agnico-Eagle for the current quarter. The company currently has a market capitalization of more than $4 billion and a dividend yield near 3.3 percent. The long-term earnings per share (EPS) growth forecast is less than four percent and the return on equity is less than eight percent.

The consensus recommendation of the analysts who follow the stock and were surveyed by Thomson/First Call is to hold shares. Yet the mean price target, or where analysts expect the share price to go, suggests more than 39 percent potential upside. However, their target is less than the 52-week high.

The share price is down more than 50 percent since the beginning of the year. Shares hit a multiyear low today. The stock has underperformed larger competitor Newmont Mining, as well as the broader markets, over the past six month. But it also outperformed Barrick Gold in that time.

Gold Fields

The number of shares sold short in this South African gold and copper producer rose more than 10 percent to around 3.85 million. The average daily volume was more than 3.6 million shares, and the days to cover was about one.

Gold Fields has a market cap of more than $3 billion and a dividend yield near 2.7 percent. It has fallen short of consensus EPS estimates in recent quarters. The price-to-earnings (P/E) ratio is less than the industry average, but the long-term EPS growth forecast is less than 10 percent. The operating margin is greater than the industry average.

All four analysts polled recommend holding shares. That has been the consensus recommendation for at least three months. The analysts' mean price target indicates about 44 percent upside potential, relative to the current share price. That consensus target is well less than the 52-week high, though.

Here too, the share price fell to a multiyear low Wednesday. The share price is more than 52 percent lower year-to-date. Over the past six months, the stock has outperformed the likes of AngloGold Ashanti, but it has underperformed the broader markets.

Harmony Gold Mining

Short interest in this South African gold miner rose about 21 percent in the early weeks of June to more than 3.31 million shares. That was the second highest number of shares sold short in at least a year, after the 3.7 million in mid-April. The days to cover was still about one.

Like other South African miners, Harmony Gold benefited from rising gold prices in mid-June. The company has a market cap near $1.5 billion and a dividend yield of about 2.7 percent. The long-term EPS growth forecast is a little above five percent, but the P/E ratio is less than the industry average. The return on equity is less than four percent, though.

Two of the three surveyed analysts recommend buying shares. They feel the stock has room to run, as their mean price target is nearly double the current share price. However, note that the target is less than the 52-week high reached last summer.

The share price has retreated more than 60 percent since the beginning of the year and this week sank to a new multiyear low. The stock has underperformed peers AngloGold Ashanti 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 Fields goldcorp Harmony Gold Mining IAMGOLD kinross gold newmont mining pan american silver Randgold Resources Royal Gold silver wheaton yamana goldShort Ideas Commodities Markets Trading Ideas Best of Benzinga

 

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