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Jean-Marie Eveillard Gold Plays: Gold Fields Limited, Newmont Mining Corporation, Harmony Gold Mining Company Ltd., Randgold Resources Ltd., Barrick Gold Corporation

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(GuruFocus, December 2, 2009) Gold price broke $1,200 today and investors short and long are wondering what to make of this development. Bloomberg brought out the Jean-Marie Eveillard, senior investment adviser at the First Eagle Global Fund to talks with Bloomberg Television about the outlook for the U.S. stock market, economy, and gold.

Eveillard has since retired from day-to-day management of the fund and was caught by surprise when asked about the fund’s US allocation. He mentioned they are underweighting in US equity.

Here is the interview exerpt.



To watch the longer and complete video, follow this link

Eveillard discussed the scenario of investing in gold does not make sense and that is economy turns around in a sustainable fashion, without causing high inflation. What interests me is that the heavy gold mining company in the fund, according to data provided by GuruFocus, Gold mining company account for 13.66% of the First Eagle Global Fund:

SymbolRegionMarket Cap ($M)Portfolio WeightingChange from the 2Q09 (%)% of Company
GFIAfrica11150.74.982.965.52
NEMUSA26782.62.4-35.571.22
HMYAfrica4980.31.776.84.08
GOLDAfrica7285.40.858.361.59
ABXCanada47099.90.81-17.580.23
GGCanada33596.30.810.840.3
KGCCanada15267.70.797.050.56
RGLDUSA2272.20.623.893.61
AUAfrica13187.30.547.560.51
BVNSouth America10635.50.077.380.08
GBGUSA570.40.02New3.18
Total13.66


Survey of the largest holdings:

Gold Fields Limited (GFI)

Gold Fields Limited is a South Africa-based gold producing company with a production of 3.6 million ounces per annum from eight operating mines in South Africa, Ghana, Australia and Peru. A ninth mine, Cerro Corona Gold/Copper mine in Peru, commenced production in August 2008. Gold Fields Ltd. has a market cap of $11.15 billion; its shares were traded at around $15.82 with a P/E ratio of 24.7 and P/S ratio of 3.4. The dividend yield of Gold Fields Ltd. stocks is 0.9%. Gold Fields Ltd. had an annual average earning growth of 2.8% over the past 10 years.

Newmont Mining Corporation (NEM)

Newmont Mining Corporation (NEM) is primarily a gold producer with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico. Newmont Mining Corp. has a market cap of $26.78 billion; its shares were traded at around $55.83 with a P/E ratio of 29.1 and P/S ratio of 4.4. The dividend yield of Newmont Mining Corp. stocks is 0.7%. Newmont Mining Corp. had an annual average earning growth of 4.5% over the past 10 years.

Harmony Gold Mining Company Ltd. (HMY)

Harmony Gold Mining Company Ltd. is a mining company which produces gold from its operations in South Africa. Harmony Gold Mining Co. Ltd. has a market cap of $4.98 billion; its shares were traded at around $11.69 with and P/S ratio of 3.8. The dividend yield of Harmony Gold Mining Co. Ltd. stocks is 0.6%.

Randgold Resources Ltd. (GOLD)

Randgold Resources Ltd. is engaged in gold mining, exploration and related activities. Its activities are focused on West and East Africa.. Randgold Resources Ltd. has a market cap of $7.29 billion; its shares were traded at around $88.03 with a P/E ratio of 149.2 and P/S ratio of 21.5. The dividend yield of Randgold Resources Ltd. stocks is 0.1%. Randgold Resources Ltd. had an annual average earning growth of 8.4% over the past 5 years.

Barrick Gold Corporation (ABX)

Barrick Gold Corporation is a leading international gold producer with low-cost mines in North and South America. Barrick Gold Corp. has a market cap of $47.1 billion; its shares were traded at around $47.93 with a P/E ratio of 28.4 and P/S ratio of 5.9. The dividend yield of Barrick Gold Corp. stocks is 0.8%. Barrick Gold Corp. had an annual average earning growth of 4.2% over the past 10 years.

Conclusion

It is debatable whether Gold by itself holds value and it certainly difficult for a value investor to valuate gold price. However, the situation is improved if we are treating a gold mining company. At least in these case, you have free cash flow to play with.

Perhaps that is why Eveillard’s fund holds so much gold mining companies?

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