A downturn in the resources industry has made the current economic climate particularly hard for mining companies. However, owing to their prevalent low valuations, this might be the ideal time to add some of these companies to your portfolio. With this in mind we decided to look at how some of the 62 billionaires that we track have positioned their portfolios to take advantage of this situation. Mining companies that have seen the most billionaire investment flowing into them based on the latest round of 13F filings include Chevron Corporation (NYSE:CVX), Barrick Gold Corporation (USA) (NYSE:ABX), and Newmont Mining Corp (NYSE:NEM), which we’ll look at in this article.
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An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects. It is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 84 percentage points and returning over 144%, while hedge funds themselves have collectively underperformed the market (read the details here).
Chevron Corporation (NYSE:CVX) earned the trust of eight billionaires, who collectively held positions in the company valued at $581.85 million at the end of March, compared to seven billionaires holding $473.12 million worth of shares at the end of 2014. The $197.43 billion company engaged in both petroleum and mining operations has depreciated by nearly 8% year-to-date. Currently trading at a twelve month trailing multiple of 11.48, which is significantly lower than the industry’s average of 21.9, Chevron Corporation (NYSE:CVX) looks like an attractive investment. The company’s beta of 1.15 is also lower than the 1.41 that the currently volatile industry averages. Moreover, Chevron also sports a high dividend yield of 4.14%. However, Goldman Sachs downgraded Chevron Corporation (NYSE:CVX) to ‘Sell’ from ‘Neutral’ and revised downward its 12-month price target to $99 (below its current trading levels) from $111, owing to the investment bank’s negative outlook on crude oil prices for the foreseeable future. Billionaire Ken Fisher‘s Fisher Asset Management held 3.48 million shares of Chevron Corporation (NYSE:CVX) valued at $365.66 million at the end of the first quarter.
With eight billionaires holding a total investment of $400.51 million, Barrick Gold Corporation (USA) (NYSE:ABX) occupies the second spot. In comparison, seven billionaires held $455.75 million worth of Barrick Gold’s stock in their fund’s equity portfolios at the end of last year. Jim Simons‘ Renaissance Technologies trimmed its stake in Barrick Gold Corporation (USA) (NYSE:ABX) by 5% during the first quarter to 13.36 million shares valued at $146.39 million. The $14.34 billion mining company promised its shareholders that it would reduce its debt by at least $3 billion by the end of this year. With regards to that, Barrick Gold Corporation (USA) (NYSE:ABX) has sold a stake in its Porgera mine in Papua New Guinea to China’s Zijin Mining, thereby formulating a partnership with the company as well. Barrick Gold also sold its Cowal mine in Australia for $550 million, bringing the total proceeds from the two sales to $1 billion. Although down by nearly 30% over the past year, Barrick Gold Corporation (USA) (NYSE:ABX)’s stock has returned about 8.9% so far in 2015.
Lastly we come to Newmont Mining Corp (NYSE:NEM), which also has the backing of eight billionaires, who hold $246.66 million of the company’s shares in their portfolios, up from seven billionaires with $215.09 million as of the previous reporting period. Newmont Mining Corp (NYSE:NEM)’s stock is up by a staggering 40.4% so far this year. The company was recently upgraded by Bank of America to a ‘Neutral’ rating from an ‘Underperform’ one. Newmont Mining Corp (NYSE:NEM) agreed to sell its Waihi gold mining operation in New Zealand to OceanaGold for about $106 million. Both D E Shaw and Israel Englander‘s Millennium Management increased their stakes in Newmont Mining Corp (NYSE:NEM) by 4% during the first three months of the year, to 2.67 million shares valued and 2.56 million shares respectively.
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