Top 5 Gold Stock Picks Of Precious Metals Maven Eric Sprott

If one starts a discussion on precious metals, there’s only a remote chance that the name of Eric Sprott won’t be mentioned in that discussion. There are very few people who can boast of having made a fortune betting on gold and silver like Mr. Sprott has. Although he retired from active portfolio management duties at his firm, Sprott Asset Management, in January of this year to focus on his role as its Chairman and Chief Investment Officer, his opinion on the future trajectory of gold and silver is still followed and valued by most precious metal speculators. Sprott Asset Management recently filed its 13F with the SEC for the reporting period ending September 30, which revealed that its U.S equity portfolio at the end of that period was worth slightly over $1.63 billion. Given Mr. Sprott’s reputation as a maverick gold trader, we felt it would be worthwhile to take a closer look at Sprott Asset Management’s Top Gold Stock Picks and analyze them in detail. Read further to know which are the top five gold stocks that Mr. Sprott is betting on currently.

Professional investors like Mr. Sprott spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned 102% and beaten the market by more than 53 percentage points since the end of August 2012 (see the details).

#5 Lake Shore Gold Corp (NYSEMKT:LSG)

Shares Owned by Sprott Asset Management (as of September 30): 10.933 million shares

Value of Holding (as of September 30): $9.097 million

After a steady 50% rise during the first half of the year, shares of Canada-based gold exploration and development company Lake Shore Gold Corp (NYSEMKT:LSG) lost 20% during the third quarter. During the same period, Sprott Asset Management reduced its stake in the company by 5% or 664,400 shares. On October 29 the company declared its third quarter results, reporting a net loss of $0.6 million on revenue of $63 million. For the same quarter last year the company had reported a profit of $7.65 million on revenue of $63.51 million. Following the earnings release, analysts at Barclays reiterated their ‘Outperform’ rating on the stock. Joel Greenblatt‘s Gotham Asset Management reduced its stake in Lake Shore Gold Corp (NYSEMKT:LSG) by 3,171 shares to 34,574 shares during the April-June period.

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

Shares Owned by Sprott Asset Management (as of September 30): 196,607 shares

Value of Holding (as of September 30): $2.462 million

Although Sprott Asset Management diluted its stake in Goldcorp Inc. (USA)(NYSE:GG) by 69% or 449,864 shares during the third quarter, it added 135,000 call options underlying shares of the company during the same time, and at the end of September held call options underlying 769,000 shares of Goldcorp Inc. (USA)(NYSE:GG) worth $9.63 million. Shares of the company saw an over 30% rise in January, but have receded continuously since then and currently trade down by 30.94% year-to-date. On October 29, shares of the company lost more than 10% in a single day after it reported its third quarter results. While analysts were expecting the company to report EPS of $0.05 on revenue of $1.10 billion, it reported a per share loss of $0.04 on revenue of $1.30 billion. Just like the fall in its stock price, the company has also cut its monthly dividend continuously in the past few months. It currently pays a monthly dividend of $0.02 per share, significantly lower than the $0.06 per share it paid not long ago. With ownership of over 38 million shares, First Eagle Investment Management was the largest shareholder of the company at the end of June among the investment firms tracked by Insider Monkey.

Three more gold stocks glitter on the next page, don’t miss them.

#3 Agnico Eagle Mines Ltd (USA) (NYSE:AEM)

Shares Owned by Sprott Asset Management (as of September 30): 465,417 shares

Value of Holding (as of September 30): $11.784 million

Moving on, Sprott Asset Management increased its stake in Agnico Eagle Mines Ltd (USA) (NYSE:AEM) by 2% or 13,362 shares during the third quarter. Though shares of Agnico Eagle Mines Ltd (USA) (NYSE:AEM) slumped heavily during the July-September period in the wake of the extreme market volatility during that timeframe, they have recovered since then and currently trade up by 11.57% on a year-to-date basis. Considering the fact that the company has consistently paid a dividend since 1983, has low levels of debt on its balance sheet, and continues to maintain healthy margins in comparison to its peers, several analysts and industry experts consider Agnico Eagle Mines to be one of the best gold stocks to own. This confidence was reinforced by the company when it declared better-than-expected third quarter results on October 28. While the consensus among analysts was for the company to report EPS of $0.06 on revenue of $481.83 million, it reported EPS of $0.18 on revenue of $508.80 million. William Harnisch‘s Peconic Partners LLC initiated a stake in Agnico Eagle Mines during the second quarter, purchasing 99,200 shares of the company.

#2 Franco-Nevada Corporation (NYSE:FNV)

Shares Owned by Sprott Asset Management (as of September 30): 269,415 shares

Value of Holding (as of September 30): $11.86 million

Shares of gold-focused royalty and stream company Franco-Nevada Corporation (NYSE:FNV) have been trading in the range of $40-to-$60 throughout 2015 and currently trade nearly flat year-to-date. During the third quarter, when the stock of Franco-Nevada Corporation (NYSE:FNV) lost 7.6%, Sprott Asset Management sold 10% or 32,849 shares of its holding in the company. On October 5, Franco-Nevada Corporation along with First Quantum Minerals Ltd. announced the finalization of the terms of a replacement precious metals stream agreement for First Quantum Minerals’ Cobre Panama project. Under the terms of the agreement Franco-Nevada (Barbados), a subsidiary of  Franco-Nevada Corporation, will be providing a $1 billion deposit against future deliveries of gold and silver from the Cobre Panama project. On October 6, analysts at RBC Capital reitearted their ‘Outperform’ rating on the stock, while upping their price target on it to $85 from $77. Cliff Asness‘ AQR Capital Management held 637,336 shares of the company as of June 30.

#1 Randgold Resources Ltd. (ADR)(NASDAQ:GOLD)

Shares Owned by Sprott Asset Management (as of September 30): 258,139 shares

Value of Holding (as of September 30): $15.253 million

Finally, after increasing its stake by 12% during the second quarter, Sprott Asset Management again added 12% or 29,239 shares of its favorite gold stock, Randgold Resources Ltd. (ADR)(NASDAQ:GOLD) to its portfolio during the third quarter. Though the stock of the company declined considerably during the third quarter, the recovery it had during October has ensured that it currently trades nearly flat for the year, with a meager year-to-date loss of 1.9%. On October 24, Randgold Resources’ CEO, Mark Bristow, announced that the company’s Tongon gold mine has paid off its shareholders’ loans of $448 million, used to partially fund its capital investment of $580 million, and hence has moved into a dividend-paying position. Randgold Resources Ltd. (ADR)(NASDAQ:GOLD) is scheduled to declare its third quarter earnings tomorrow and analysts expect it to report EPS of $0.46, $0.09 better than the $0.37 in EPS it reported for the same period last year. Billionaire Ray Dalio‘s Bridgewater Associates held 98,000 shares of the company as of June 30.

Disclosure: None