Hedge funds return to gold in Q1
Gold and the companies that produce it were back in favour with fund managers last quarter, when the metal posted the best quarterly performance in a year.
Billionaire hedge- fund manager John Paulson maintained his position in SPDR Gold Shares, the world’s biggest exchangetraded product backed by the metal, a regulatory filing showed Monday. Stan Druckenmiller’s Duquesne Family Office LLC bought 2.85 million shares in Barrick Gold Corp., adding the company to its holdings in the period ended March 31, while Templeton Global Advisors Ltd. more than tripled its stake in the Torontobased miner.
Investors poured US$ 460 million into SPDR Gold in the first quarter, rebuilding their stake after the biggest redemption since June, 2013. Investors returned to bullion and gold miners as they dialed back expectations of faster U. S. economic growth amid concerns about U. S. President Donald Trump’s ability to push his pro-growth policies through Congress.
In February, hedge- fund manager David Einhorn said he’s betting on declines in government debt and a rebound in gold to guard against the risk of inflation under Trump. Druckenmiller said in the same month that he bought gold in late December and January, reversing the sale he made after the U. S. presidential election. Even on May 2, when the bullion rally was slowing, DoubleLine Capital LP CEO Jeffrey Gundlach said “it is not the time to give up on gold,” adding that prices are likely to head higher.
Templeton bought 12.2 million shares in Barrick, taking its holdings to 18.2 million shares in the first quarter, a filing on May 12 showed. Capital Group Companies Inc. added Barrick to its portfolio, buying 35.3 million shares to become the miner’s third- largest shareholder, according to a separate filing Monday.
LPL Financial LLC bought 1.03 million shares in iShares Gold Trust valued at US$12.4 million in the first quarter, adding the second- largest gold- backed ETF to its total holdings, a filing showed Monday. Hedge fund Adage Capital Partners GP LLC sold 7.5 million shares in Barrick in the first quarter, paring its holdings by almost twothirds to to 4.67 million, according to a regulatory filing on May 15.
Gold for immediate delivery rebounded 8.9 per cent in the first quarter, after slumping 13 per cent in the prior three months. The metal has lost about one per cent since the end of March to US$ 1,235.96 an ounce in London on Tuesday.
Filings released reflect hedge funds’ positions in the first quarter, when Barrick climbed 18 per cent in the three months ended March, after losing more than a fifth of its market value in the second half of 2016 as prices of the metal fell. The documents filed with the U.S. Securities and Exchange Commission do not include the funds’ current position, which may have changed since the first quarter. Barrick has slumped 8.5 per cent this quarter. On April 25, shares tumbled 11 per cent, the steepest daily loss in 21 months, after the company missed analysts’ estimates on first-quarter earnings and production costs rose.
Paulson kept his stake in SPDR at 4.36 million shares in the first quarter. He started his foray into gold in early 2009, betting that prices would rise amid unprecedented monetary stimulus. Bullion climbed 70 per cent from December, 2008, to June, 2011, as the U. S. Federal Reserve bought debt and held borrowing costs near zero per cent.
Paulson uses the SPDR ETF to back his funds’ gold share classes, which offer holdings denominated in bullion for investors interested in decoupling their assets from the value of the dollar. Armel Leslie, a spokesman of New Yorkbased Paulson & Co., declined to comment when reached by email.