John Burbank of Passport Capital recently established a massive short position on Barrick Gold Corporation ( ABX , quote ). Over the same period, David Einhorn of Greenlight Capital ( GLRE , quote ) bought 1.35 million Barrick shares.
So far, John Burbank and the investors of Passport Capital are winning -- and profiting.
Barrick Gold (ABX), based in Toronto, is down more than 6% for the week, more than 4% for the month, and more than 8% for the quarter. For the year, it is off by more than 6%.
On the other hand, every number except the only one that matters, the stock price, supports Einhorn's long strategy.
ABX has a profit margin of 33%. The price-to-earnings ratio, now 11.37, is projected to fall to 8.42 over the next year. On a quarter-by-quarter basis, sales growth is higher by more than 43% and earnings growth is higher by over 46%.
Barrick Gold (ABX) even pays a modest dividend of 1.21% with a payout ratio of just 10.95% that will easily allow for it to be increased.
Now around $49.59, the mean analyst target price for Barrick Gold Corporation over the next year is $66.14 and the mean analyst rating is 1.8 -- bullish, given the fact that a "5" is the lowest and a "1" is the highest, representing a "strong buy."
In any event, the short float for Barrick Gold Corporation is infinitesimal at only 0.55%.