Gold Miners See Wild Swings In Short Interest (AEM, AU, HMY)

The price of gold swung up and down in late January but was near $1,245 both in the middle of the month and at the end.

Short sellers likewise were moving into and out of leading gold stocks during the period. The most significant percentage swings happening to Agnico Eagle Mines AEM, AngloGold Ashanti AU and Harmony Gold Mining HMY.

Kinross Gold, New Gold and Yamana Gold also saw double-digit percentage increases in short interest between the January 15 and January 31 settlement dates, while the number of shares short in Eldorado Gold, GoldCorp and Royal Gold increased somewhat.

Short sellers shied away from Newmont Mining and IAMGOLD in the final two weeks of the month, but the number of shares sold short in Barrick Gold, Gold Fields and Randgold Resources fell by more than 18 percent.

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

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Below is a quick look at how Agnico Eagle Mines, AngloGold Ashanti and Harmony Gold Mining have fared and what analysts expect from them.

Agnico Eagle Mines

This Toronto-based producer of gold, silver and copper saw short interest surge about 60 percent to around 3.77 million shares, or more than two percent of the float. That was the highest number of shares short in the past year. Short interest has risen above three million shares just two other times in that year.

An analyst's upgrade with raised price target helped boost shares during the period. Agnico Eagle Mines has a market capitalization of more than $5 billion and a dividend yield near 2.7 percent. The price-to-earnings (P/E) ratio is greater than the industry average, and the return on equity is less than four percent.

The consensus recommendation of the analysts who follow the stock and were surveyed by Thomson/First Call is to hold shares. And the mean price target, or where analysts expect the share price to go, is near the current share price, meaning at this time they see little upside potential.

The share price is up about 19 percent since the beginning of the year but still more than 25 percent less than a year ago. The stock has outperformed larger competitors Barrick Gold and Newmont Mining, as well as the broader markets, over the past six months.

AngloGold Ashanti

This South African gold producer saw short interest swell more than 37 percent to about 6.41 million shares. However, that was still less than two percent of the shares available, and the number of shares short in the previous period was the lowest since last spring. The days to cover is now less than two.

AngloGold Ashanti faced strike threats during the period, though some analysts saw the risks as already priced in. The company currently has a market cap of less than $7 billion and a dividend yield near 1.5 percent. The long-term earnings per share (EPS) growth forecast is almost seven percent, but the return on equity is in the red.

Only three analysts were polled; two of them recommend holding shares and one buying them. The current share price has overrun their mean price target, meaning they see no upside potential here either. Even the street-high price target is less than the current share price.

Shares are up more than 34 percent since the beginning of the year, as well as above both the 50-day and 200-day moving averages. The stock has outperformed larger competitors Barrick Gold and Newmont Mining, and the broader markets, over the past six months.

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Harmony Gold Mining

Short interest in this South African gold miner tumbled more than 45 percent in the latter weeks of January to more than 3.31 million shares. That was the smallest number of shares sold short since last November. It would take less than two days to close out all of the short positions.

Like AngloGold Ashanti, Harmony faced strike threats during the period, but the risks may already be priced in. The company has a market cap of more than $1 billion and a dividend yield of about 3.4 percent. The long-term EPS growth forecast is about five percent, but here too the return on equity is in negative territory.

One surveyed analyst recommends buying shares and the other rates the stock at Hold. But they feel the stock has some room to run, as their mean price target is about 14 percent more than the current share price. However, note that the target is far less than the 52-week high reached almost a year ago.

The share price has risen about 17 percent since the beginning of the year but still less than the 200-day moving average. The stock has underperformed peer AngloGold Ashanti, as well as the broader markets, over the past six months. But it has outperformed and Gold Fields in that time.

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

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