Kopernik Global Investors Hits the Jackpot with Gold Bets in Q1

David Iben‘s Kopernik Global Investors has remained a bullish believe in industries that many other investors have been too scared to touch. Thus, it is no surprise the $1.5 billion contrarian fund is named after the 16th century cleric and astronomer Copernicus, who decided to take on the church by declaring that it was in fact the Earth that rotates around the sun and not the other way around. Mr. Iben has been touting a recovery in gold prices for a long time and that belief paid off handsomely in the first quarter, when the precious metal’s price appreciated by a staggering 16.5%. Kopernik fully rode this rally, as the fund’s top 15 equity holdings with a market cap of over $1 billion recorded weighted average gains of 33% during the first quarter, according to our calculations. Hence, today we have decided to take a look at the investment firm’s holdings that made big moves in the first quarter (though not all of them were positive).

Our research determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

#5 Royal Gold, Inc USA) (NASDAQ:RGLD)

 – Shares Owned by Kopernik Global (as of December 31): 535,400

 – Value of Holding (as of December 31): $19.52 Million

Shares of the $3.35 billion investor in gold royalties have risen by more than 40% this year, despite an 18% slump in January, when sales data for the fourth quarter showed that the company earned less per ounce both sequentially and when compared to the same period a year ago. It’s been a different story since then however, as in early February, Royal Gold, Inc USA) (NASDAQ:RGLD) reported record quarterly revenue of $98.1 million for its second quarter of fiscal year 2016, ending December 31, which marked a 60% year-over-year increase. Jorge Paulo Lemann‘s 3G Capital more than doubled its stake in Royal Gold, Inc USA) (NASDAQ:RGLD) during the fourth trimester, to 600,000 shares.

#4 Goldcorp Inc. (USA) (NYSE:GG)

 – Shares Owned by Kopernik Global (as of December 31): 1.94 million

 – Value of Holding (as of December 31): $22.38 Million

Kopernik added Goldcorp to its portfolio during the second quarter of 2015 and inched up its stake in the company by 1% during the fourth quarter. Goldcorp Inc. (USA) (NYSE:GG)’s shares have skyrocketed by nearly 39% so far this year, despite the company taking a $4.15 per share impairment charge in the fourth quarter and reducing its dividend payments. Investors bullish on the company during the fourth trimester include Jonathon Jacobson of Highfields Management, who increased his fund’s Goldcorp Inc. (USA) (NYSE:GG) holding by 30% to 3.25 million shares and Jim Simons‘ Renaissance Technologies, which hiked its stake in Goldcorp by 125% to 2.22 million shares.

Three more of Kopernik Global’s trending stock picks are reviewed on the next page.

#3 Pandora Media Inc (NYSE:P)

 – Shares Owned by Kopernik Global (as of December 31): 1.68 Million

 – Value of Holding (as of December 31): $22.49 Million

While gold-related companies provided a big boost to Kopernik’s returns, Pandora Media Inc (NYSE:P) put a dent in some of those golden profits. The stock has lost more than 31% of its value since the start of the year, which came at a bad time for Kopernik, which hiked its Pandora holding by 183% during the fourth quarter. The streaming-music specialist recently announced the departure of CEO Brian McAndrews, who will be replaced by the company’s founder Tim Westergren. Pandora’s vision appears to be the creation of a massive music marketplace according to the new CEO, which is reflected by Pandora Media Inc (NYSE:P)’s recent acquisition of TicketFly and some assets of the bankrupt on-demand streaming service Rdio. Eminence Capital, which is managed by Ricky Sandler, also upped its Pandora holding during the October-to-December period, by 53% to 10.73 million shares.

#2 Barrick Gold Corporation (USA) (NYSE:ABX)

 – Shares Owned by Kopernik Global (as of December 31): 6.37 Million

 – Value of Holding (as of December 31): $46.99 Million

Kopernik benefited greatly from Barrick Gold Corporation (USA) (NYSE:ABX)’s stock price appreciation of nearly 84% during the first three months of the year, though the rewards could have been even greater had the investment firm not slashed its stake in the company by 21% during the fourth quarter. Deutsche Bank analyst Jorge Beristain recently downgraded the stock to ‘Hold’ from ‘Buy’ and assigned a price target of $14.50 to it, which declares minimal upside of 7.4%. Mr. Beristain believes that the ensuing rally in the commodities sector will not last long, as supply cuts are needed across the board. Renaissance Technologies also boosted its stake in Barrick Gold Corporation (USA) (NYSE:ABX) during the fourth quarter, by 43% to 25.71 million shares.

#1 Kinross Gold Corporation (USA) (NYSE:KGC)

 – Shares Owned by Kopernik Global (as of December 31): 26.42 Million

 – Value of Holding (as of December 31): $48.09 Million

Kopernik also trimmed its second-largest equity holding during the fourth quarter, by 14%. Shares of the $4.36 billion gold mining company have risen by almost 88.5% this year, providing a $42.5 million windfall for the firm. Kinross Gold Corporation (USA) (NYSE:KGC) has decided to go ahead with the expansion of its Tasiast gold mine in Mauritania, which will effectively increase annual production by 87%. Upon completion of the first expansion phase the production cost is expected to come down to $760 an ounce compared with $1400 an ounce right now. Cliff Asness‘ AQR Capital Management raised its Kinross Gold Corporation (USA) (NYSE:KGC) holding by 25% during the fourth quarter, to 7.43 million shares.

Disclosure: None