We recently analyzed latest 13F filings for over 900 hedge funds and analyzed the the 10 Best Gold Mining Stocks to Buy According to Hedge Funds. Since Kinross Gold is part of the list, the stock deserves a deeper look. But first, let’s see what’s happening in the gold industry.
Gold jumped earlier this week as investors brace for yet another inflation report. According to Reuters, Bart Melek, head of commodity strategies at TD Securities, said that while he’s “optimistic” on gold, uncertainties regarding the Fed’s moves could keep a lid on gold’s trajectory going forward.
Chris Mancini, Gabelli Gold Fund associate portfolio manager, recently talked to CNBC and said that there are signs of stagflation and if Americans begin to pile into gold to offset the effects of this new uncertainty, gold prices could continue to rally. Bob Parker, senior advisor at International Capital Markets Association, said while talking to CNBC that the massive demand for gold from Chinese retail investors has been a major factor behind the latest rally in gold prices. The analyst said there are rumors that the Chinese government may initiate a devaluation of the yuan, and the property crisis in the country is also causing investors to buy gold. The analyst, however, noted that gold prices could see a “setback” soon as inflation is expected to decline.
Gold Vs Stocks
Whether or not gold is a better investment when compared to stocks has been a topic of immense debate over the past several decades. Gold is volatile as its price depends on several factors. A report by Stonebridge Capital said that over the past 20 years, gold’s returns have surpassed those of stocks, albeit with higher risks. However, when we look at gold’s returns in a 50-year window, it underperformed large-cap stocks. The report also backed a common notion that gold can act as an inflation hedge, saying gold saw a “dramatic” rise in price during the high-inflation periods of the 1970s.
Gold’s Expected Movement if the Fed Doesn’t Cut Rates
Chris Gaffney, president of World Markets at EverBank, recently said during an interview with Marketwatch that upside to gold would be limited if the Fed decides to go with one rate cut or no rate cut this year. However, the analyst thinks gold could rise and outperform silver amid geopolitical triggers, especially if the conflict in Gaza expands.
Methodology
Since investing in gold mining stocks is one of the best ways for average investors to gain exposure to gold and commodities industry, we decided to take a look at some of the top gold mining stocks hedge funds are buying this year. For this article we first scanned Insider Monkey’s proprietary database of 919 hedge funds and picked 10 gold mining stocks with the highest number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of the 1,840 mineral claims spread out over a 274 square mile area for the Pebble Copper-Gold-Molybdenum-Silver-Rhenium project.
Kinross Gold Corp (NYSE:KGC)
Number of Hedge Fund Investors: 31
Kinross Gold Corp (NYSE:KGC) earlier this month touched 52-week highs after crushing past analyst estimates. Net earnings in the March quarter jumped to $107 million, a 16% YoY increase. Production in the quarter increased 13% on a YoY basis.
Over the past one year Kinross Gold Corp (NYSE:KGC) shares have jumped 75%. While investors cheered the stock’s new highs, some circles are voicing valuation concerns. Kinross Gold Corp (NYSE:KGC) Price/NAV ratio of 1.2X makes it overvalued when compared to industry peers. The stock is also trading near its 12-month Wall Street price target of $8.5, which shows there isn’t much upside left to Kinross Gold Corp (NYSE:KGC) shares based on current earnings estimates and catalysts.
Insider Monkey’s database of 919 hedge funds updated for the first quarter of 2024 shows that 31 hedge funds reported owning stakes in Kinross Gold Corp (NYSE:KGC).
Kinross Gold Corp (NYSE:KGC) ranks 6th in Insider Monkey’s list of the 10 Best Gold Mining Stocks to Buy Now.
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Disclosure: None. This article is originally published at Insider Monkey.