Short Sellers Load Up On GoldCorp, Gold Fields (GFI, GG, HMY)
The price of gold started November around $1,315 but declined to end the month to near $1,250. Short sellers again seemed to be looking for direction late in the month, as the swings in short interest were mixed.
The number of shares sold short in GoldCorp (NYSE: GG), Gold Fields (NYSE: GFI) and Harmony Gold Mining (NYSE: HMY) increased by double-digit percentages between the November 15 and November 29 settlement dates.
AngloGold Ashanti, Kinross Gold, Royal Gold and Yamana Gold also saw their short interest grow somewhat in the final weeks of the month, while IAMGOLD saw little change from the previous period.
However, short interest in Barrick Gold and Randgold Resources fell more than 18 percent. Short sellers also shied away from Agnico Eagle Mines, Eldorado Gold, Newmont Mining and New Gold in the period.
Furthermore, the number of shares sold short in silver companies Coeur Mining, First Majestic Silver and Pan American Silver shrank during the period, while the short interest in Hecla Mining and Silver Wheaton swelled.
Below is a quick look at how GoldCorp, Gold Fields and Harmony Gold Mining have fared and what analysts expect from them.
The number of shares sold short in this precious metals producer rose more than 27 percent to around 5.89 million. That took back most of a retreat in short interest in the previous period. Less than one percent of the total float was sold short at the end of the month.
This Vancouver-based company has a market capitalization of more than $17 billion and a dividend yield near 2.8 percent. It announced the delay of a project in Argentina during the period. Its long-term earnings per share (EPS) growth forecast is less than five percent. The return on equity is in the red.
Out of 21 analysts polled by Thomson/First Call, 13 recommend buying shares. Buy has been the consensus recommendation for the past three months. The analysts’ mean price target indicates more than 31 percent upside potential. Yet that consensus target is less than the 52-week high from early this year.
The share price is down more than 12 percent in the past month, and shares are trading near a multiyear low. Over the past six months, the stock has underperformed not only the broader markets, but competitors Barrick Gold and Kinross Gold as well.
Short interest in this South Africa-based miner and producer of gold and copper increased from around 6.38 million shares mid-month to more than 8.93 million shares as of the most recent settlement date. It would approximately two days 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 3.9 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 35 percent higher than the current share price. However, that consensus target is much less than the 52-week high.
Shares reached a new multiyear low Thursday after falling more than 67 percent since the beginning of the year. Over the past six months, Gold Fields stock has underperformed the likes of AngloGold Ashanti and Barrick Gold, as well as the broader markets.
See also: Qualcomm Bucks Short Interest Trend
Harmony Gold Mining
Short interest in this South African gold miner increased almost 12 percent in the final weeks of November to more than 3.93 million shares. That was the highest number of shares sold short since last September when it hit a year-to-date peak of more than 8 million. The days to cover was less than two.
Harmony Gold said its most recent quarterly revenues were down year over year but higher sequentially. The company has a market cap near $1 billion and a dividend yield of about 3.6 percent. The return on equity and return on investment are both in negative territory.
One of the three surveyed analysts rates the stock at Strong Buy, while the other recommend holding shares. Their mean price target is more than 43 percent higher than the current share price. However, here too that is likely due to the ongoing decline in the share price.
The share price has retreated more than 21 percent in the past month and this week sank to a new multiyear low. The stock has underperformed peer Gold Fields, 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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