Market Overview

Short Sellers Flee AngloGold Ashanti and Gold Fields (AU, GFI, AUY)

The price of gold fell to less than $1,200 an ounce in December, the low for the year, but began to rise again as the year wound down. Short sellers again seemed to be looking for direction late in the month, as the swings in short interest were strong in many cases but mixed.

The number of shares sold short in AngloGold Ashanti (NYSE: AU), Gold Fields (NYSE: GFI) and Yamana Gold (NYSE: AUY) fell by more than 20 percent between the December 13 and December 31 settlement dates.

Short sellers also shied away from Kinross Gold, Eldorado Gold, New Gold and Randgold Resources in the period. Agnico Eagle Mines saw little change from the previous period.

However, Barrick Gold, GoldCorp and IAMGOLD saw double-digit percentage increases in short interest, and the number of shares short in Harmony Gold Mining, Newmont Mining and Royal Gold also increased somewhat.

Furthermore, the number of shares sold short in silver companies First Majestic Silver, Pan American Silver and Silver Wheaton shrank during the period, while the short interest in Coeur Mining and Hecla Mining swelled.

See also: Short Interest Swings in Semiconductor Stocks

Below is a quick look at how AngloGold Ashanti, Gold Fields and Yamana Gold have fared and what analysts expect from them.

AngloGold Ashanti

This South African gold producer saw short interest fall more than 38 percent in the period to more than 4.79 million shares. That was about half the number of shares sold short in October, and the lowest level of short interest since last April. It would take less than two days to close out all of the short positions

Analysts have overestimated AngloGold Ashanti's earnings per share (EPS) in recent quarters. The company currently has a market capitalization near $5 billion and a dividend yield of about 2.3 percent. The long-term EPS growth forecast is about seven percent but the return on equity is in the red.

Just one of the five analysts surveyed by Thomson/First Call recommends buying shares. That has been the case for at least three months. The mean price target, which is where analysts expect the share price to go, is almost 54 percent higher than the current share price. But that consensus target is well less than the 52-week high.

The share price is more than five percent higher than the 52-week low hit just before Christmas, but it is still about 60 percent lower than the 52-week high reached about a year ago. Over the past six months, the stock has outperformed competitor Newmont Mining, but it also underperformed Barrick Gold.

Gold Fields

Short interest in this South Africa-based miner and producer of gold and copper decreased from around 9.54 million shares mid-month to more than 7.08 million shares as of the most recent settlement date. It take would about one day to close out all of the short positions.

Gold Fields has fallen short of consensus EPS expectations in recent quarters. The company has a market cap of more than $2 billion and a dividend yield of near 4.6 percent. The long-term EPS growth forecast is more than nine percent, but the return on equity is less than eight percent.

Just three analysts were surveyed, and none of them recommend buying shares. Yet they appear to feel the stock has some room to run, as their mean price target is more than 31 percent higher than the current share price. However, that may have to do more with the dropping share price than enthusiasm on the analysts' part.

Shares reached a new multiyear low in mid-December. The share price is still almost 40 percent lower than six months ago. In that time, Gold Fields stock has underperformed not only the broader markets, but the likes of AngloGold Ashanti and Barrick Gold as well.

See also: SunEdison Sees Short Interest Surge

Yamana Gold

Short interest in this Toronto-based miner of precious metals dwindled more than 21 percent in the final weeks of the year to around 7.02 million shares. That was about one percent of Yamana's float, and the lowest number of shares sold short since last August. The days to cover was a little more than one.

Per-share earnings for the year just ended are forecast to have halved from the previous year, but 2014 is expected to include earnings growth. Yamana has a market cap near $7 billion and a dividend yield of about 2.9 percent. Unlike larger peers Barrick and Newmont, Yamana's return on equity is in the black.

Of the 19 surveyed analysts, 16 of them recommend buying Yamana shares. Their mean price target is more than 21 percent higher than the current share price, but note that it is less the 52-week high from almost a year ago. Even the street-high price target is less than the 52-week high.

The share price sank to a new multiyear low in early December and since then has struggled to make gains again. The stock has outperformed the likes of Eldorado Gold, Goldcorp and Newmont Mining over the past six months, though it has underperformed the broader markets in that time.

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 minesShort Ideas Commodities Markets Trading Ideas Best of Benzinga

 

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