Market Overview

Short Interest In Harmony Gold Resumes Rise (EGO, HMY, KGC)

Short Interest In Harmony Gold Resumes Rise EGO, HMY, KGC

After fleeing from all the leading gold stocks in the previous period, short sellers found renewed interest in Harmony Gold Mining (NYSE: HMY) between the September 30 and October 15 settlement dates.

The number of shares sold short in AngloGold Ashanti (NYSE: AU), New Gold (NYSE: NGD) and Randgold Resources (NASDAQ: GOLD) also grew somewhat. In Agnico Eagle Mines (NYSE: AEM), it was essentially unchanged from the previous period.

However, the short interest in Eldorado Gold (NYSE: EGO) and Kinross Gold (NYSE: KGC) continued to pull back, shrinking more than 20 percent further in the first two weeks of the month.

Barrick Gold (NYSE: ABX), GoldCorp (NYSE: GG), Gold Fields (NYSE: GFI), IAMGOLD (NYSE: IAG), Newmont Mining (NYSE: NEM), Royal Gold (NASDAQ: RGLD) and Yamana Gold (NYSE: AUY) also saw their short interest decline.

In addition, the number of shares sold short in silver companies First Majestic Silver (NYSE: AG) and Silver Wheaton (NYSE: SLW) also shrank by double-digit percentages during the period.

But short interest in Coeur Mining (NYSE: CDE), Hecla Mining (NYSE: HL) and Pan American Silver (NASDAQ: PAAS) grew somewhat.

See also: Short Sellers Retreat From Biogen Idec, Move On Pharmacyclics

Below is a quick look at how Eldorado Gold, Harmony Gold Mining and Kinross Gold have fared and what analysts expect from them.

Eldorado Gold

This Vancouver-based gold miner and producer saw its short interest drop more than 25 percent to around 2.73 million shares by the middle of the month. That was the lowest number of shares sold short since February, though it was well less than one percent of the float.

Eldorado Gold narrowly fell short of EPS estimates in its two most recent reports, and expectations remain low. The company's market capitalization is around $5 billion and the dividend yield is near 1.6 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 more than 28 percent potential upside. Yet, their target is well short of the 52-week high.

The share price flirted with the 52-week low mid-month but since has risen almost 20 percent. The stock has narrowly underperformed the likes of Agnico Eagle Mines and Kinross Gold over the past six months, it has underperformed the broader markets in that time as well.

Harmony Gold Mining

Short interest in this South African gold miner increased about 17 percent during the first two weeks of the month to more than 3.35 million shares. That was still less than half the number of shares sold short in mid-September, which was the year-to-date peak.

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 some head room, as their mean price target is more than 16 percent higher than the current share price. However, that the consensus target is much less than the 52-week high reached back in January.

Shares recently reached a new multiyear low after falling more than 65 percent since the beginning of the year. The share price is up about 10 percent in the past week. Over the past six months, the stock has outperformed competitor Gold Fields, but it has underperformed the broader markets.

See also: Short Interest In Facebook Falls, In Groupon Rises

Kinross Gold

The short interest in this Toronto-based miner and processor of gold and silver fell more than 21 percent in the period to more than 5.47 million shares. That was less than one percent of the total float. It also was the lowest number of shares sold short since back in May.

In early October, Kinross announced that production had begun at its Dvoinoye mine in Russia. The company has a market cap of around $6 billion and a dividend yield near 3.1 percent. Here too the return on equity is in the red, and year-over-year revenue declines are forecast for this year and the next.

The consensus recommendation of the surveyed analysts is to hold shares of Kinross Gold. Their mean price target is about 23 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 risen almost 12 percent in the past month, but it is still more than 47 percent lower than at the beginning of the year. The stock has narrowly underperformed peer Randgold Resources over the past six months. Of course, it has underperformed the broader markets as well.

At the time of this writing, the author had no position in the mentioned equities.

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

 

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