Market Overview

Short Sellers Still Moving into with Gold Miners (ABX, KGC, NEM)

Among gold stocks, Barrick Gold (NYSE: ABX), Kinross Gold (NYSE: KGC) and Newmont Mining (NYSE: NEM) saw significant upswings in short interest between the June 28 and July 15 settlement dates.

Other gold mining companies that also saw the number of shares sold short increase by double-digit percentages in the period include Agnico-Eagle Mines (NYSE: AEM), GoldCorp (NYSE: GG) and Yamana Gold (NYSE: AUY).

See also: Short Interest in Peabody Energy Rises

Short interest in AngloGold Ashanti (NYSE: AU), Eldorado Gold (NYSE: EGO), IAMGOLD (NYSE: IAG), Royal Gold (NASDAQ: RGLD), increased more modestly.

However, note that short sellers retreated somewhat from Gold Fields (NYSE: GFI), Harmony Gold Mining (NYSE: HMY) and Randgold Resources (NASDAQ: GOLD) in the first weeks of July.

In addition, the number of shares sold short in silver companies Coeur Mining (NYSE: CDE), First Majestic Silver (NYSE: AG), Pan American Silver (NASDAQ: PAAS) and Silver Wheaton (NYSE: SLW) also increased during the period.

Here is a quick look at how Barrick Gold, Kinross Gold and Newmont Mining have fared and what analysts expect from them.

Barrick Gold

This gold and copper producer saw short interest jump about 31 percent to about 27.41 million shares. That was the greatest number of shares sold short in at least a year, and more than double the short interest in mid-June. Short interest was about two percent of the float at mid-July.

There was speculation during the period that Toronto-based Barrick Gold may cut its dividend. The company has a market capitalization of less than $18 billion and a dividend yield near 5.1 percent. But the long-term earnings per share (EPS) growth forecast is less than four percent and the return on equity is less than one percent.

The consensus recommendation of analysts who follow the stock and were surveyed by Thomson/First Call is to hold shares, and it has been for the past three months. The upside implied by their mean price target is more than 21 percent, due to the falling share price.

The share price has risen more than 29 percent since falling to a recent multiyear low, but it is still almost 50 percent lower than at the beginning of the year. The stock has underperformed competitor Newmont Mining, but outperformed AngloGold Ashanti, over the past six months.

See also: Barrick Announces Deal to Sell Barrick Energy

Kinross Gold

This Toronto-based gold and silver producer saw short interest surge more than 47 percent in the period to more than 10.63 million shares, or about one percent of the float. That was the highest number of shares sold short in at least a year, having more than doubled since mid-May.

Kinross Gold's stock received analyst downgrades in both the beginning and end of the period. The company currently has a market cap of more than $6 billion and a dividend yield of about 3.3 percent. The long-term EPS growth forecast is about six percent and the return on equity is in negative territory.

Half of the 22 analysts surveyed recommend buying shares, with three of them rating the stock at Strong Buy. The mean price target is more than 22 percent higher than the current share price. Note though that the consensus target is well less than the 52-week high.

The share price is up almost 18 percent in the past month, but it is still more than 45 percent lower than at the beginning of the year. Over the past six months, the stock has underperformed Newmont Mining and the broader markets, but it also outperformed Barrick Gold in that time.

Newmont Mining

This Colorado-based producer of gold and copper saw short interest swell more than 36 percent to more than 24.30 million shares, on top of a rise of almost 11 percent in the previous period. That mid-July figure represented about five percent of the float, and days to cover rose to more than two.

In the period, Newmont agreed to sell its stake in Canadian oil sands, and it released preliminary second-quarter operating results. The company now has a market capitalization of about $15 billion and a dividend yield near 5.0 percent. The return on equity is about 12 percent and the P/E ratio is less than the industry average.

For at least three months, the consensus recommendation of the analysts polled has been to hold shares. The mean price target, or where analysts expect the share price to go, suggests about nine percent potential upside. However, their target is much less than the 52-week high here too.

The share price is up more than nine percent in the past month, though it reached a multiyear low in early July. The stock has underperformed competitor GoldCorp, as well as the broader markets, over the past six months. But it outperformed AngloGold Ashanti and Barrick Gold in that time.

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

 

Related Articles (ABX + AEM)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters