Billionaire George Soros isn't waiting around to see if this year's surge in gold-mining shares will last.
Soros Fund Management LLC, which took a $263.7-million stake in Barrick Gold Corp. in the first quarter, cut its holdings in the world's biggest producer of the metal by 94 per cent in the ensuing three months, a U.S. regulatory filing showed Monday. After climbing 169 percent in the year through June, its best-ever performance for the period, Barrick shares have slipped from a three-year high reached last month.
Producers got a boost after spot-gold prices had the best first half in four decades. Investors flocked to bullion and the companies that mine it as central banks around the world increased economic stimulus to support growth and the Federal Reserve kept U.S. borrowing costs low. In the first quarter, funds including Soros bought a combined 58 million shares in Barrick with a market value of $4.6-billion, according to over 4,000 filings compiled by Bloomberg.
Bullion for immediate delivery has jumped 27 per cent this year, including a 25-per-cent surge in the first half. That delivered bigger profits for mines that have been cutting costs after prices of precious metal slumped for three straight years in the worst streak since 2000. In the second-quarter, Barrick posted its highest net income since 2013 while its stock surged 56 per cent.
The Toronto-based producer exemplifies the mining industry's push to grow and diversify as commodities surged, before grappling to sell assets and cut costs as a price downturn exposed high leverage. Barrick's debt, which peaked at $15.8-billion after it bought Equinox Minerals Ltd., was back below $9 billion in the second quarter with President Kelvin Dushnisky saying the company could be debt free within a decade.
Barrick, Mr. Soros's biggest holding in the first quarter, was the investor's biggest sale in the second quarter. The holdings in Barrick slumped by 18.35 million shares to 1.07 million shares, according to a filing released Monday.
A spokesman for Barrick, Andy Lloyd, had no immediate comment when reached by phone in Toronto. Michael Vachon, a spokesman at Soros Fund, didn't comment on Monday's filing when contacted by e-mail.
As Soros cut his stake in Barrick, he bought 240,000 shares of SPDR Gold Trust, an exchange-traded fund that tracks the price of gold. In the first quarter, his firm disclosed owning call options on 1.05 million shares in the ETF.
Billionaire hedge-fund manager John Paulson maintained his holding in SPDR Gold. At the end of June, Paulson & Co. owned 4.8 million shares of the ETF, a U.S. filing showed. Jana Partners LLC sold its remaining 50,000 shares in SPDR Gold in the second quarter, a filing showed.