Seeking Alpha
Consensus Picks DIY Tools, Top 20 Small-cap Newsletter, Trade Alert Service (Auto)
Profile| Send Message|
( followers)  

Many leading funds filed forms 13-D and 13-G (and form 4) with the SEC this week, including mega fund Blackrock Inc. with over $3.3 trillion in assets, and Ontario-based Goodman & Co. Investment Counsel Ltd., indicating that they had amended their ownership in U.S. traded public companies operating in the basic materials sector. Blackrock, in particular, filed over 80 13D/G forms with the SEC, with 15 in the basic materials sector, in what seems like year-end portfolio re-balancing.

The forms are required to be filed within ten days, so the institutions traded these shares sometime during and after the last few days of December. Also, we have included, when applicable, SEC Form 4 filings by Institutions that are considered corporate insiders by virtue of their holding more than 10% ownership, and in many cases having representation on the Board of Directors. The following are the most notable filings in the basic materials sector this week (for more info on Forms 13-D and 13-G, and how to interpret that, please refer to the end of this article):

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. On Tuesday, the world's largest and most prominent asset manager, Blackrock Inc. (NYSE:BLK), with more than $3.3 trillion in assets under management filed SEC Form SC 13G/A indicating that it held 149.2 million or 13.1% of outstanding KGC shares, an increase of 11.4 million shares from the 137.8 million shares that it held at the end of Q3. Blackrock, which was already the largest institutional holder of KGC at the end of Q3, ranks well ahead now of second place Van Eck Associates that held 46.8 million shares at the time of its Q3 filing. KGC trades at a discount 10 forward P/E compared to the 11.2 average for the gold mining group, while earnings are projected to increase from 57c in 2010 to $1.28 in 2012, at an annualized growth rate of 49.9%.

Peabody Energy Corp. (NYSE:BTU): BTU is engaged in coal production and sale through 28 operations in the U.S. and Australia. On Tuesday, Blackrock Inc. filed SEC Form SC 13G/A indicating that it held 29.9 million or 11.1% of outstanding shares, an increase of 7.5 million shares from the 22.4 million it held at the end of Q3. In mid-October, we also reported that T Rowe Price increased its holdings in BTU to 28.2 million shares. This buy by Blackrock catapults it into first place as the largest institutional hold of BTU, ahead of T Rowe Price. BTU trades at a discount 7-8 forward P/E and 1.8 P/B compared to averages of 10.7 and 2.6 for the coal mining group, while earnings are projected to increase at 28.2% compound growth rate from $3.09 in 2010 to $4.87 in 2012. Recently, the stock appeared on Credit Suisse's list of eleven top stock picks to buy, with the second highest score among the eleven that is a measure of the possible upside from current prices. Also, analysts have a mean target of $60, well above current prices in the $36 range; and of the 25 analysts that track the company, 21 rate it at buy/strong buy, three at hold and only one at hold.

Allied Nevada Gold Corp. (NYSEMKT:ANV): ANV is engaged in the exploration, acquisition, development and operation of gold properties in NV. On Tuesday, Ontario-based Goodman & Co. Investment Counsel Ltd., with $20.2 billion in equity assets under management filed SEC Form SC 13G indicating that it held 6.7 million or 7.5% of outstanding shares, a decrease of 0.9 million from the 0.6 million it held at the end of Q3. Last week, we also reported that Royce & Associates. increased its holdings in ANV to 7.2 million shares, so the distribution by Goodman now makes them the second largest institutional holder of ANV shares behind Royce. ANV trades at a premium 18-19 forward P/E and 5.3 P/B compared to averages of 11.2 and 3.6 respectively for its peers in the gold mining group, while earnings are projected to rocket up from 27c in 2010 to 40c in 2011 to $1.77 in 2012.

Alpha Natural Resources (NYSE:ANR): ANR is engaged in the production, sale, and processing of coal from mines and preparation plants in VA, WV, KY and PA. On Tuesday, Blackrock Inc. filed SEC Form SC 13G/A indicating that it held 26.5 million or 12.1% of outstanding shares, an increase of 6.6 million shares from the 19.9 million it held at the end of Q3. This makes Blackrock the largest institutional holder of ANR shares, slipping past Fidelity Investments that held 25.1 million shares at the end of Q3. ANR shares are currently near three-year lows, down almost 70% in the past year. They trade at a premium 12-13 forward P/E, and at 0.6 P/B, compared to averages of 10.7 and 2.6 for its peers in the coal mining group.

Consol Energy Inc. (NYSE:CNX): CNX is a producer of bituminous coal and coal-bed methane gas primarily in the northern and central Appalachian and Illinois basins. On Tuesday, Blackrock Inc. filed SEC Form SC 13G/A indicating that it held 26.9 million or 11.8% of outstanding shares, an increase of 5.6 million shares from the 21.3 million it held at end of Q3. This makes Blackrock the largest institutional holder of CNX, just ahead of Wellington Management with 21.3 million shares at the end of Q3. CNX shares have fared about average for the group, down 27% in the past year, and they trade at a 10-11 fair forward P/E and 2.5 P/B compared to averages of 10.7 and 2.6 for the coal mining group, while earnings are projected to increase at 27.3% compound growth rate from $2.22 in 2010 to $3.60 in 2012.

Aurizon Mines Ltd. (AZK): AZK is a Canadian gold mining company engaged in the exploration and development of mineral properties in Quebec, Canada. On Tuesday, Ontario-based Goodman & Co. Investment Counsel Ltd. filed SEC Form SC 13G indicating that it held 13.29 million or 8.15% of outstanding shares, a decrease of 50,000 shares from the 13.34 million shares it held at the end of Q3. AZK trades at 12-13 forward P/E and 3.0 P/B compared to averages of 11.2 and 3.6 for its peers in the gold mining group, while earnings are projected to increase from 10c in 2010 to 43c in 2012.

Eldorado Gold Corp. (NYSE:EGO): EGO is a Canadian company acquiring, exploring and producing gold and mineral properties in Turkey, China, Brazil and Greece. On Tuesday, Blackrock Inc. filed SEC Form SC 13G/A indicating that it held 70.1 million or 12.7% of outstanding shares, an increase of 7.7 million shares from the 62.4 million shares it held at the end of Q3. This makes it the second largest institutional holder of EGO, behind first place Fidelity Investments with 72.3 million shares. EGO trades at a premium 14-15 forward P/E and 2.4 P/B compared to averages of 11.2 and 3.6 respectively for its peers in the gold mining companies, while earnings are projected to grow at a strong rate from 40c in 2010 to $1.00 in 2012.

Other basic materials companies in which Blackrock filed 13D/G forms included South African gold mining company Harmony Gold Mining Co. (NYSE:HMY) in which it added 35.6 million shares to its 23.8 million share position at the end of Q3; Canadian gold mining company Iamgold Corp. (NYSE:IAG) in which it added 6.8 million shares to its 50.8 million share position at the end of Q3; and Canadian gold mining company Agnico Eagle Mines Ltd. (NYSE:AEM) in which it added 3.7 million shares to its 14.5 million shares position at the end of Q3.

Credit: Fundamental data in this article were based on SEC filings, 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.

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: Analysis Of Institutional 5% Ownership Filings This Week In Basic Materials Sector