Market Overview

Short Sellers Flee Randgold, Pile On GoldCorp (GG, KGC, GOLD)

Share:
Short Sellers Flee Randgold, Pile On GoldCorp GG, KGC, GOLD

The price of gold rose from near $1,200 an ounce at the beginning of January to above $1,250 by the middle of the month.

Short interest in leading gold stocks was mixed again in the period, with the most significant swings happening to GoldCorp (NYSE: GG), Kinross Gold (NYSE: KGC) and Randgold Resources (NASDAQ: GOLD).

Harmony Gold Mining and Yamana Gold also saw double-digit percentage increases in short interest between the December 31 and January 15 settlement dates, while the number of shares short in Agnico Eagle Mines increased somewhat.

Gold Fields and New Gold saw little change in short interest from the previous period.

Short sellers shied away from AngloGold Ashanti, Eldorado Gold, IAMGOLD, Newmont Mining and Royal Gold early in the month, but the number of shares sold short in Barrick Gold fell by more than 13 percent.

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

See also: LinkedIn, Twitter On New Year Short Interest Surge

Below is a quick look at how GoldCorp, Kinross Gold and Randgold Resources have fared and what analysts expect from them.

GoldCorp

The number of shares sold short in this precious metals producer rose about 29 percent to around 9.72 million. Short interest has been rising since mid-November, but only a little more than one percent of the total float was sold short at the middle of the month. Days to cover was about one.

This Vancouver-based company has a market capitalization of more than $19 billion and a dividend yield near 2.5 percent. It made a bid to buy out Osisko Mining during the period. Its long-term earnings per share (EPS) growth forecast is about 10 percent, but its return on equity is in the red.

Out of 19 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 12 percent upside potential. Shares last traded at that level back in October.

The share price is up more than eight percent from a month ago, when shares were 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.

Kinross Gold

The short interest in this Toronto-based miner and processor of gold and silver grew about 16 percent in the first weeks of the new year to almost 8.46 million shares. That was less than one percent of the total float. It also was the highest number of shares sold short since last September.

The consensus forecast calls for a double-digit percentage drop in both EPS and revenue for the most recent quarter and for all of 2013. The company has a market cap of more than $5 billion and a dividend yield near 3.4 percent. Here too the return on equity is in the red.

The consensus recommendation of the surveyed analysts is to hold shares of Kinross Gold. Their mean price target, or where they expect the share price to go, is more than 19 percent higher than the current share price. Note though that consensus target is much less than the 52-week high from almost a year ago.

The share price has retreated more than four percent in the past week, giving up the year-to-date gain and again nearing the 52-week low. The stock has underperformed not only peer Randgold Resources over the past six months, but it has underperformed the broader markets as well.

See also: Gold Rally Stalls Ahead Of FOMC

Randgold Resources

Short interest in this exploration and development company focused on Sub-Saharan Africa dropped almost 26 percent in the period to around 1.03 million shares. That was the lowest number of shares sold short since last April, but still double the number a year ago. The days to cover is about one.

Randgold Resources beat earnings estimates in its most recent report, after three straight misses. The company has a market cap of more than $6 billion and a dividend yield of about 0.7 percent. The long-term EPS growth forecast is about five percent, and the return on equity is almost 12 percent.

Six of the eight surveyed analysts recommend buying shares. They feel the stock has room to run, as their mean price target is more than 18 percent higher than the current share price. However, that the target is well less than the 52-week high from almost a year ago.

The share price is about four percent higher than at the beginning of the year but more than seven percent lower than six months ago. The stock has underperformed peer Barrick Gold and the broader markets over the past six months, but it has outperformed Gold Fields in that time.

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

Follow us on Twitter.

 

Related Articles (GG)

View Comments and Join the Discussion!

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