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:
|Symbol||Region||Market Cap ($M)||Portfolio Weighting||Change from the 2Q09 (%)||% of Company|
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.
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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About the author:
My name is Ben C. and I am 2nd year MBA candidate at the Anderson School of Business at the University of California- Los Angeles. I have a BS in Economics from the Wharton School of Business at the University of Pennsylvania. Before coming to Anderson I worked as a generalist equity research analyst for Right Wall Capital, a long-short equity hedge fund located in New York City. Prior to working at Right Wall I worked as an analyst at Blue Ram Capital, another long-short equity hedge fund located in Rye Brook, NY. This past summer, I worked for West Coast Asset Management as a research analyst. West Coast, which was co-founded by Kinko’s founder Paul Orfalea, is run by well-known value investors Lance Helfert and Atticus Lowe.