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Mega fund managers, managing between $100 billion and over a trillion dollars, are slightly bearish on gold stocks, which is understandable given the huge rally we have had since 2005, during which the SPDR Gold Shares Index (NYSEARCA:GLD) quadrupled to its top at the beginning of last month.
During the June quarter, mega fund managers together sold a net $1.53 billion from their prior $106.00 billion position in the group, selling $8.79 billion and buying $7.26 billion worth of stocks in the group. Furthermore, overall they are underweight in the group by a factor of 0.68; that is, taken together, the 30+ mega funds have invested 2.1% of their assets in the group, significantly less than the 3.0% weighting of the group in the overall market.
A majority of the hedge fund and mutual fund managers included in the mega funds list manage well over $100 billion in U.S. equity assets, with some managing between $50 and $100 billion. The list includes prominent managers such as Wellington Management ($1.6 trillion in total assets under management), Vanguard Group ($1.4 trillion), Fidelity Investments ($640 billion), T Rowe Price ($330 billion), and Goldman Sachs Asset Management ($580 billion), among others. The following are the gold mining companies that these mega fund managers are most bullish and bearish about (also see table):
Mega Funds Bullish on Value Buy Kinross Gold Corp. (NYSE:KGC): KGC is engaged in mining and processing gold, silver, and copper in the U.S., Brazil, Ecuador, Chile and Russia. Mega funds together added $263 million to their $3.82 billion prior quarter position, adding $412 million and cutting $149 million worth of stock. Major Buyers include Wellington Capital Management ($244 million) and BlackRock ($70 million); and major holders include BlackRock ($1.37 billion), Wellington Capital Management ($674 million) and Fidelity Investments ($579 million). KGC trades at a forward 11 P/E, at the bottom of its historic trading range, and their price-to-book (P/B) ratio of 1.04 is a steep discount to the 4.5 average for the group.
Mega Funds Bullish on Value Buy Goldcorp Inc. (NYSE:GG): GG is a Canadian company engaged in mining and exploration of silver, copper and gold throughout North and South America. Mega funds together added $454 million to their $8.64 billion prior quarter position, adding $550 million and selling $96 million worth of stock; and together they control 22.1% of the equity, comparable to their average 23.5% weighting in the group. Major buyers included Fidelity Investments ($364 million) and BlackRock ($116 million); and major holders included Fidelity Investments (4.01 billion), Royal Bank of Canada ($1.49 billion) and BlackRock ($1.48 billion). GG trades at a forward 15 P/E, at the bottom of its historic trading range, and their P/B ratio at 1.7 is a steep discount to the average of 4.5 for the group.
Mega Funds Bullish on Value Buy Harmony Gold Mining (NYSE:HMY): HMY is a South African gold mining company. Mega funds together added a net $16 million to their $372 million prior quarter position in the group. Major holders of HMY included BlackRock ($277 million) and Fidelity Investments ($68 million). HMY trades at a discount forward 6 P/E, and its P/B ratio at 1.3 is a discount to the 4.5 average for the group.
Mega Funds Bullish on Value Buy New Gold Inc. (NYSEMKT:NGD): NGD is a Canadian mining company engaged in the exploration of gold, silver and copper in Brazil, Australia, Mexico, Canada and Chile. Mega funds together added a net $58 million to their $750 million position in the group, buying $144 million and selling $85 million worth of stock. Major buyers included Royal Bank of Canada ($88 million) and BlackRock ($24 million). NGD trades at a premium 16 forward P/E, and a P/B ratio of 2.3 that is a discount to the 4.5 average for the group.
Mega Funds Bearish on Freeport McMoran Copper & Gold (NYSE:FCX): FCX is engaged in the exploration and development of copper, gold, silver and molybdenum mines in Indonesia, North and South America. Mega funds together cut $606 million from their $15.67 billion prior quarter position, buying $583 million and selling $1.19 billion worth of stock. However, together mega funds are over-concentrated in the company and control 37.1% of the outstanding shares, which is far in excess of their 23.5% average weighting in the group. Major holder of FCX included State Street Corp. ($1.78 billion), Vanguard Group Inc. ($1.66 billion), BlackRock ($1.39 billion) and Barclays Global Investors ($1.06 billion). FCX trades at a forward 5 P/E, at the bottom of its historic range; and at a price-to-book (P/B) ratio of 2.6, a discount to the average of 4.5 for the gold industry.
Mega Funds Bearish on Yamana Gold Inc. (NYSE:AUY): AUY is a Canadian company engaged in the exploration and development of gold properties in South America and Mexico. Mega funds together cut $225 million from their $2.50 billion prior quarter position, buying $175 million and selling $400 million worth of stock. Fidelity Investments ($354 million) was the sole major seller of AUY stock. AUY trades at a premium forward 11 P/E; and at a P/B ratio of 3.3, at a discount to the average of 4.5 for the industry.
Mega Funds Bearish on Ivanhoe Mines Limited (IVN): Canadian mining company IVN is engaged primarily in the exploration of gold and copper mines in Central Asia and the Asian Pacific region. Mega funds together cut $110 million from their $1.74 billion prior quarter position, and they are under-concentrated in IVN as together they control 12.0% of the outstanding shares versus the 23.5% average weighting for the group. IVN has historically incurred losses, so P/E is irrelevant; however, it trades at a P/B ratio of 4.6, slightly over the average for the group.
Mega Funds Bearish on Endeavour Silver Corp. (NYSE:EXK): EXK is a Canadian company engaged in the acquisition, exploration and development of silver and gold properties in Mexico. Mega funds together cut a net $11 million from their $33 million prior quarter position, and only eight of the 31 mega funds together hold only 2.5% of the outstanding shares, and are thus under-concentrated in the company. EXK trades at a premium forward 10 P/E; and its P/B ratio at 4.1 is near the average of 4.5 for the group.
Mega Funds Bearish on Gold Fields Ltd. (NYSE:GFI): GFI is a South African mining company engaged in the exploration and extraction of gold in South Africa, Ghana, Australia and Peru. Mega funds together cut a net $23 million from their $560 million prior quarter position. GFI trades at a discount forward 5.4 forward P/E, at the bottom of its historic trading range; and its P/B ratio at 1.8 is a discount to the 4.5 average for the group.
Mega Funds Bearish on Newmont Mining Corp. (NYSE:NEM): NEM produces gold in the U.S., Australia, Peru, Indonesia, Canada, New Zealand, Ghana and Mexico. Mega funds together cut a net $522 million from their $10.2 billion prior quarter position, including buying $209 million and selling $731 million worth of stock. Major sellers included Janus Capital Management ($182 million), Fidelity Investments ($72 million) and BlackRock ($60 million). NEM trades at a forward 10 P/E, at the bottom of its historic trading range, and its P/B ratio at 2.3 is a discount to the 4.5 average for the group.
Mega Funds Neutral on Barrick Gold Corporation (NYSE:ABX): ABX is a Canadian company engaged in production of gold and copper in Peru, Canada, U.S., Australia, Chile, and five other countries. Mega funds together sold a net $225 million from their $10.88 billion prior quarter position, selling $786 million and buying $561 million worth of stock; and together they control 21.1% of the equity, comparable to their average 23.5% weighting in the group. Major sellers included T Rowe Price ($212 million) and Bank of New York Mellon Corp. ($112 million). ABX trades at a forward 8 P/E, at the bottom of its historic range, and its P/B ratio at 2.5 is a discount to the average of 4.5 for the group.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
General Methodology and Background Information: The latest available institutional 13-F filings of over 30+ mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our ‘opinions’ and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Source: Fund Managers' Moves In 11 Gold Value Stocks