Hedge funds continue to polish up their portfolios with gold-related investments.
For example, last week, Paulson & Co.’s John Paulson disclosed he lifted his stake in NovaGold Resources to 9.1 percent. What’s more, he announced this holding in a 13-D filing, which means the position could become activist. In the filing, Paulson said he “may communicate with the Issuer’s management and/or Board of Directors or with other shareholders or third parties to discuss any purposes, plans or proposals.”
Well, at least he put the company on notice.The company is engaged in the exploration and development of gold and copper-gold properties in Alaska and British Columbia.
Paulson also likes to bet on the metal itself. At the end of the second quarter, he remained by far the largest shareholder of SPDR Gold Trust PSE with more than 7.2 percent of the total common stock. The Trust holds gold bars and seeks to reflect the performance of the price of gold bullion.
Meanwhile, in the second quarter, Eric Mindich’s Eton Park bought nearly 6.6 million shares of SPDR Gold Trust, worth more than $801 million at the end of the three-month period, making him the sixth largest shareholder.
Phil Falcone’s Harbinger Capital increased its stake in the stock by nearly 150 percent.
In addition, Leon Cooperman took a new 542,000-share position while Balyasny Asset management took an initial 320,000-share position in the second quarter. In the second quarter, Paulson also lifted his stake in Gold Fields Ltd., a gold miner in South Africa, Ghana, Australia, and Peru, making him the fourth largest holder.
Other sizable buyers included Balyasny, Millennium Management and D.E. Shaw.
Meanwhile, two other high profile hedge fund managers are major shareholders of Market Vectors ETF Trust, which seeks to replicate the performance of the AMEX Gold Miners index. The fund generally invests at least 80 percent of its assets in companies involved in the gold mining industry.
At the end of the second quarter, John Griffin’s Blue Ridge Capital was the second largest holder while David Einhorn’s Greenlight Capital was the fourth largest investor. In addition, Stan Druckenmiller’s Duquesne Capital bought 400,000 shares in the second quarter. So far the smart money is looking rather smart.
The price of gold is up 14 percent this year while shares of SPDR Gold Trust are up 13 percent.
Stephen Taub , who has covered the hedge fund industry for 30 years, is a contributing editor to Institutional Investor and Absolute Return-Alpha magazines.
