Short Sellers Retreat From Gold Stocks (EGO, HMY, IAG)
September ended with gold back under $1,300 an ounce, and short sellers fled from the leading gold stocks between the September 13 and September 30 settlement dates.
The short interest in Agnico Eagle Mines (NYSE: AEM), AngloGold Ashanti (NYSE: AU), Barrick Gold (NYSE: ABX), GoldCorp (NYSE: GG), Gold Fields (NYSE: GFI), Kinross Gold (NYSE: KGC), Randgold Resources (NASDAQ: GOLD), Royal Gold (NASDAQ: RGLD) and Yamana Gold (NYSE: AUY) also declined by double-digit percentages in the period.
The number of shares sold short in Newmont Mining (NYSE: NEM) declined modestly to the end of September.
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 shrank by double-digit percentages during the period.
Below is a quick look at how Eldorado Gold, Harmony Gold Mining and IAMGOLD have fared and what analysts expect from them.
This Vancouver-based gold miner and producer saw its short interest drop about 68 percent from a year-to-date peak in the previous period to around 3.66 million shares by the end of the month. That was the lowest number of shares sold short since April, and it was still less than one percent of the float.
At least one analyst sees Eldorado Gold as positioned to prosper despite lower gold prices. The company's market capitalization is around $4 billion and the dividend yield is near 1.5 percent. It has a long-term earnings per share (EPS) growth forecast of more than nine percent.
The consensus recommendation of the analysts who follow the stock and were surveyed by Thomson/First Call is to buy shares. The mean price target, or where analysts expect the share price to go, suggests about 42 percent potential upside. Yet, their target is well short of the 52-week high.
The share price has retreated more than 10 percent in the past month and is again approaching the 52-week low. Though the stock has outperformed the likes of Agnico Eagle Mines and Kinross Gold over the past six months, it has underperformed the broader markets in that time.
Harmony Gold Mining
Short interest in this South African gold miner declined about 62 percent during the latter two weeks of September to more than 2.87 million shares. That was the lowest number of shares sold short since back in May. During the period, shares traded at the highest average daily volume in the past year.
Forbes recently identified Harmony Gold as popular with guru investors. The company has a market cap of more than $1 billion and a dividend yield of about 2.9 percent. The long-term EPS growth forecast is about five percent, but the return on equity and operating margin are in negative territory.
Just one of the three surveyed analysts recommends buying shares. Yet they feel the stock has room to run when it bottoms, as their mean price target is about 42 percent higher than the current share price. However, that the consensus target is less than the 52-week high reached back in January.
Shares ended last week at a new multiyear low after falling more than 65 percent since the beginning of the year. Over the past six months, the stock has underperformed not only competitors such as Gold Fields, but the broader markets as well.
See also: Short Sellers Move On Amgen, Vertex
The short interest in this Toronto-based miner of gold, silver and copper fell about 62 percent in the period to more than 4.69 million shares. That was more than one percent of the total float. And it was the lowest number of shares sold short since April, on the highest average daily volume in a least a year.
IAMGOLD suspended mining activities in Mali in mid-September. The company has a market cap of less than $2 billion and a dividend yield near 5.5 percent. The price-to-earnings (P/E) ratio is less than the industry average, but the return on equity is less than four percent.
The consensus recommendation of the surveyed analysts is to hold shares of IAMGOLD. Their mean price target is more than 33 percent higher than the current share price, though that target is much less than the 52-week high reached almost a year ago.
The share price has retreated about 15 percent in the past month, and it is almost 69 percent lower than at the beginning of the year. The stock has underperformed competitors such as Randgold Resources, as well as the broader markets, over the past six months.
At the time of this writing, the author had no position in the mentioned equities.
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