Gold Stocks Are on the Rise Following Brexit Vote

The UK’s decision to part ways with the EU catapulted gold prices above $1,300 per ounce on Friday, the highest level since March 2014. Investors always flock to Gold, a precious safe-haven asset, in times of political and financial uncertainty. The plunging sterling following Brexit vote is making gold even more expensive in terms of pounds. Gold prices had hit a two-week low of $1,251.16 an ounce on Thursday after pre-vote polling suggested that the UK would opt to remain in the EU. But the surprising results have turned the tables, resulting in a chaotic market sentiment, favoring gold. According to Julian Jessop, head of commodities research at Capital Economics, apart from the Brexit, Gold is surging due to a “growing appetite” for inflation hedges and increasing demand from the emerging markets.

Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 760 hedge funds, whose quarterly 13F filings we analyze to determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (read more details here).

Gold prices gained as much as 8.2% to hit $1,358.2 an ounce, but later pared gains and fell to $1,320.61 an ounce today. Most gold stocks are gaining heavily after the Brexit news, including Goldcorp Inc. (USA) (NYSE:GG), Kinross Gold Corporation (USA) (NYSE:KGC), Barrick Gold Corporation (USA) (NYSE:ABX), Yamana Gold Inc. (USA) (NYSE:AUY) and IAMGOLD Corp (USA) (NYSE:IAG). Let’s examine their latest activity and see what the investors we track think about them.

Goldcorp Rebounds

Goldcorp Inc. (USA) (NYSE:GG)’s stock has surged more than 6% so far today. The Vancouver-based gold producer made a strong rebound today after trading in the red on Thursday. Investment firm RBC Capital Markets has recently upped its target price for the stock to $22. A total of 33 hedge funds from our database are bullish on Goldcorp Inc. (USA) (NYSE:GG) as of the end of the first quarter, up from 25 funds a quarter earlier. First Eagle Investment Management owns around 39.47 million shares of the company, according to its latest 13F filing.

Kinross Gold Rising After Brexit Results

Kinross Gold Corporation (USA) (NYSE:KGC)’s stock is trading 3.60% in the green so far today. Aside from the rally on the back of gold prices, the company also has announced recently that it had entered into an arrangement with Yorbeau Resources Inc to buy 100% stake in Yorbeau’s Rouyn property in Quebec, Canada. The company temporarily has suspended operations at Tasiast mine amid allegations of issuing invalid work permits. Jim Simons’ Renaissance Technologies is among the 28 funds tracked by us that owned shares of Kinross Gold Corporation (USA) (NYSE:KGC) at the end of the first quarter.

On the next page, we will discuss Barrick, Yamana and IAMGOLD.

Barrick Gold In the Spotlight

Barrick Gold Corporation (USA) (NYSE:ABX)’s has gained 4.75% so far today. In a report published on Thursday, financial services firm Schaeffer’s Research Research said that Barrick Gold Corporation is a major “market outperformer” and it will continue to advance in the coming weeks. From our database, 49 funds were long Barrick Gold Corporation (USA) (NYSE:ABX) at the end of the first quarter. Among them, First Eagle Investment Management owns more than 37.96 million shares of the company.

Yamana Gold’s Stock Continues to Grow

Yamana Gold Inc. (USA) (NYSE:AUY) is up more than 4% after the UK voters decided to leave Europe. The Toronto-based gold and copper exploration company also inched up in the green on Wednesday when a majority of gold stocks were taking a beating. Phill Gross and Robert Atchinson’s Adage Capital Management owns 12 million shares of Yamana Gold Inc. (USA) (NYSE:AUY), as of the end of March. It is one of the 18 funds from our database that are bullish on the company.

IAMGOLD Up More than 4%

IAMGOLD Corp (USA) (NYSE:IAG)’s stock is up 4.74% so far today. However, a report on Seeking Alpha on Friday advised investors to avoid the Canadian company. The source said IAMGOLD is facing major problems at all of its mines. Jim Simons’ Renaissance Technologies has around 12.61 million shares of IAMGOLD Corp (USA) (NYSE:IAG), as of the end of the first quarter. Overall, 11 funds tracked by us have stakes in the company, according to the last round of 13F filings.

Disclosure: None