3. Royal Gold, Inc. (NASDAQ:RGLD)
Number of Hedge Fund Holders: 22
Royal Gold, Inc. (NASDAQ:RGLD) acquires and manages precious metal streams, royalties, and related interests, primarily consisting of gold, silver, copper, nickel, zinc, lead, and other metals. They finance projects that are in production, development, or exploration stages, and acquire stream or royalty interests in exchange. The company has stream and royalty interests on properties located in various countries such as the United States, Canada, Chile, Australia, Mexico, and others. It is one of the best gold stocks to invest in.
On May 3, Royal Gold, Inc. (NASDAQ:RGLD) reported a Q1 non-GAAP EPS of $0.96, in line with market estimates. Revenue for the period came in at $170.4 million, up 4.9% year-over-year, beating Wall Street consensus by $7.63 million.
Matthew Murphy, an analyst from Barclays, increased the price target for Royal Gold, Inc. (NASDAQ:RGLD)’s shares from $119 to $122 and maintained an Equal Weight rating. In a research note to investors, Murphy stated that the global economy has exceeded expectations in the first quarter, and the supply side has encountered difficulties. The firm has once again increased its medium-term projections for copper and gold prices, but still anticipates a decline from current levels. As “consolidation takes hold,” the analyst has raised the targets and multiples for base metal prices but continues to favor gold over base equities.
According to Insider Monkey’s fourth quarter database, 22 hedge funds were bullish on Royal Gold, Inc. (NASDAQ:RGLD), compared to 24 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with 3.5 million shares worth $404 million.
Argosy Investors released its Q1 2021 investor letter and mentioned Royal Gold, Inc. (NASDAQ:RGLD). Here is what the firm said:
“Gold royalties business achieve 2 objectives for us: 1) It’s a good business model with strong returns through the gold price cycle; and 2) it provides some protection from inflation, should it materialize due to the increasingly loose fiscal and monetary policy decisions the United States (and other developed market economies) is making.
I don’t want to stay on my soapbox for too long, but this is the first time in history that I’m aware of politicians openly stating that debt levels don’t matter, even in the long term. In 2019, the government spent $4.4 trillion. Of those expenditures, $0.4 trillion was spent making interest payments on existing debt at the time of $16.9 trillion. The interest rate on that debt was 2.4%. Debt for 2021 is projected to increase to $22.5 trillion, and then to $33 trillion by the end of the decade.
I don’t have a crystal ball, but if interest rates increased to previously “normal” levels of only 5%, U.S. interest payments would be over $1.1 billion in 2021, 25% of U.S. total expenditures in 2019. In the event that happens, there are a few choices: 1) run a larger deficit which could lead to accelerating debt levels; 2) reduce government spending on things like the military, Medicare, Social Security, pensions, and other programs; or 3) the government allows or encourages inflation to reduce the value of its debt obligations.
To be clear, this spiraling debt outcome currently seems and likely is not happening within the next several years, but the probability of it occurring is not zero and things have changed rapidly before. For that reason, I think an investment in Royal Gold provides some minor insulation against inflation.”
