Are Hedge Funds Still Betting on Gold?
Many institutional investment managers recently filed their mandatory 13-F with the U.S. Securities and Exchange Commission. The filing is a quarterly report of equity holdings required by managers that oversee more than $100 million in qualifying assets, and it must be filed within 45 days of the end of each quarter. The 13-F provides a peek at what hedge funds did in the previous quarter, but investors should keep in mind that hedging and trading strategies of each fund are still unknown.
Let’s take a look at how popular hedge funds invested in gold names in the third quarter of 2013.
Billionaire fund manager John Paulson is known for betting against subprime mortgages during the housing bubble, but he is also a vocal advocate for gold. Last year, he said in a letter to investors, “By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold.” He reaffirmed his belief that gold is a good hedge against inflation over the summer and added exposure to at least one gold miner by the end of the third quarter.
As of September 30, his firm, Paulson & Co., held 10.2 million shares of the SPDR Gold Trust (NYSEARCA:GLD) — the most popular exchange-traded gold product in the market. That is down 53 percent from the 21.8 million shares held at the end of the first quarter but unchanged from the second quarter.
Paulson increased his stake in AngloGold Ashanti (NYSE:AU) from 27.9 million shares in the second quarter to 31.4 million shares in the third quarter. His total position in the company was worth about $417.3 million at the end of September. Paulson did not change his stakes in Agnico Eagle Mines (NYSE:AEM), Gold Fields (NYSE:GFI), IAMGOLD (NYSE:IAG), and Freeport-McMoRan Copper & Gold (NYSE:FCX).
George Soros, the billionaire hedge fund manager known for breaking the Bank of England, once claimed that the “ultimate asset bubble is gold.” His management team kept exposure to gold and the miners long after the statement and even decided to do some buying in the third quarter.
Soros Management added a new stake in the Market Vectors Gold Miners ETF (NYSEARCA:GDX) of 1.1 million shares, worth about $27.6 million. Meanwhile, the firm held its position in the Market Vectors Jr. Gold Miners ETF (NYSEARCA:GDXJ) unchanged, at 300,000 shares. Soros also held call options in Barrick Gold (NYSE:ABX) worth about $35.6 million at the end of September.
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