Short Interest In First Majestic Silver And Harmony Gold Doubles

April 13, 2016 1:52 pm
Share to Linkedin Share to Twitter Share to Facebook Share to Print License More
Short Interest In First Majestic Silver And Harmony Gold Doubles

  • Short interest in a number of stocks surged in the most recent settlement period.
  • Two precious metals miners were among those stocks leading that trend in the final weeks of March.
  • Shares of both of them rose in the period, as did the broader markets.

As the first quarter drew to a close, it seemed the markets definitely had found their footing after a rough first six weeks or so of the year, with many stocks clearly headed north again. The prices of gold and silver rose early in the period, only to retreat in the wake of the Federal Reserve’s decision not to raise interest rates.

Two precious metals mining stocks in particular caught the eye of short sellers in that time. First Majestic Silver Corp (NYSE: AG) and Harmony Gold Mining Co. (NYSE: HMY) each saw the number of their shares sold short more than double between the March 15 and March 31 settlement dates.

Of course these companies were not alone in seeing a short interest surge in the latter two weeks of last month. Others include Flowers Foods, Gerdau, Symantec and Transcanada. On the other hand, short sellers fled from the likes of Fortress Investment Group and Tyson Foods in that time.

Related Link: Be Warned Metals Investors: Deutsche Bank Just Moved To The Sidelines

Here we take a quick look at how First Majestic Silver and Harmony Gold Mining have fared recently and what analysts expect from them.

First Majestic Silver

This Vancouver-based silver mining company with operations primarily in Mexico saw its short interest spike by around 104 percent to nearly 8.44 million shares, which is 5.6 percent of the total float, in the final weeks of the month. That was the greatest number of shares short in at least a year. It would take more than a day to cover all short positions.

First Majestic Silver stock saw an analyst downgrade to Sell near the end of the settlement period, which knocked back shares but only briefly. The consensus recommendation of analysts remains to hold the shares, as it has been for at least three months. Note, however, their mean price target suggests about 27 percent upside to the current share price.

Short sellers watched the shares surge about 20 percent at the beginning of the two-week short interest period, and then it pulled back to end the month with a gain of less than 12 percent. The stock has climbed further since that time and reached a new 52-week high early this week. It is up about 106 percent year-to-date, compared to gain of less than 1 percent for the S&P 500.

Harmony Gold Mining

The number of shares sold short in the third largest gold miner in South Africa jumped more than 175 percent during the two weeks to more than 15.08 million. That also was by far the highest level of short interest in the past 52 weeks. Note that the average daily volume nearly doubled as well, which kept the days to cover at around one.

Related Link: Upside In Gold Stocks Might Be Limited Without Gold Appreciation

As with many of its peers, shares of Harmony Gold rise and fall pretty much in line with the changes in the price of gold. Here too, the consensus analyst recommendation remains to hold the shares, though only three analysts were surveyed by Thomson/First Call. And in this case the current share price has overrun the analysts’ mean price target, suggesting they see no further upside at this time.

Early in the short interest period, shares jumped more than 16 percent, reaching a new 52-week high. However, they had given up almost all of that gain by the settlement date, though they have climbed again since that time. Note that Harmony Gold shares are up more than 335 percent year-to-date; however, they were trading at well less than a dollar apiece late last year.

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

Image Credit: Public Domain

Related Articles

Gold Short Sellers Seek Direction (AU, NEM, NGD)

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

Short Sellers Retreat From Gold Stocks (EGO, HMY, IAG)

Short Sellers Pile On Gold Fields And Other Gold Stocks (EGO, GFI, HMY)