Highlighting fourth-quarter 13F filings with the Securities
and Exchange Commission, it was noted hedge fund legends David
Einhorn and George Soros
held sizable stakes in the largest gold miners
, the Market Vectors Gold Miners ETF (NYSE:
To be fair to Soros, during the fourth quarter, he pared his
stakes in GDX and the Market Vectors Junior Gold Miners ETF
) by 800,000 and 400,000 shares, but he still owned 1.5 million
shares of GDX and about two million shares of GDXJ at the end of
At the end of the first quarter, Soros held 2.66 million
shares of GDX,
according to the latest 13F
, meaning his stake in the ETF almost doubled. The filing also
shows Soros still holds 1.2 million shares of GDXJ and
initiated a new options position in that ETF
As for Einhorn's Greenlight Capital, that hedge fund still
over 6 million shares of GDX
. Either Einhorn and Soros know something about GDX and GDXJ that
most of the rest of the world does not or they are forgetting the
Average Returns Or shall we say "disma?" Ninety days ago, GDX
was a $40 ETF. It will be lucky to close above $28 this week.
Ninety days ago, GDXJ was a $17 ETF. It will be lucky to close
above $11 this week. In other words, the average return for the
in the past three months is a loss of about 33 percent.
Ominous Options Activity Earlier this month, it was reported
that options traders were stepping into the
June GDX $27 puts in a big way
. Problem is that put buying was not a one-off event. Put buyers
have again been
targeting GDX in recent days
Bad At The Top Three stocks - Goldcorp (NYSE:
), Barrick Gold (NYSE:
) and Newmont Mining (NYSE:
) - combine for over 29 percent of GDX's weight. Goldcorp is down
28.3 percent year-to-date. Barrick has plunged almost 46 percent.
Einhorn owns 1.96 million shares of Barrick, by the way. Newmont
has tumbled 33 percent.
Dividend Cuts In April, Newmont slashed its dividend by 17.6
percent. Deutsche Bank said Barrick and Kinross Gold (NYSE:
), which accounts for 4.5 percent of GDX's weight, could also be
"Further, as expectations for near-term operating cash flows
fall, we may see gold miners defer or shelve expansion projects
in order to preserve free cash flows. Dividend cuts may also be
on the horizon, as dividend payouts had been ratcheted up
aggressively as gold prices climbed,"
according to Morningstar
That does not bode well for long-term holders of GDX, which it
can be said Soros and Einhorn have already been.
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.