Short Sellers Eye Three Gold Stocks

Short Sellers Eye Barrick Gold (ABX), Silver Wheaton (SLW), and Yamana Gold (AUY)

Short interest data for the second half of April was released earlier this week, and a number of metal and mining stocks attracted significant attention from short sellers during the two-week period. While the number of bearish bets on Barrick Gold Corporation (USA) (NYSE:ABX) and Silver Wheaton Corp. (USA) (NYSE:SLW) ramped up considerably, short interest on Yamana Gold Inc. (USA) (NYSE:AUY) declined significantly.

Barrick Gold Corporation (USA) (NYSE:ABX)

Short interest on ABX rose by 48.6% during the most recent reporting period — one of the biggest such increases among NYSE-listed stocks. However, this interest from bearish bettors is relatively new for Barrick Gold. Despite the recent uptick, short interest accounts for only 1.4% of the stock’s float.

Shorts appear to be looking for a continued slide for ABX, which is down nearly 43% year-to-date. The stock’s drastic slide has also attracted the attention of options traders, as speculators have bought to open 53 puts for every 100 calls on ABX during the past 10 days, according to data from three exchanges. This ratio ranks higher than 71% of other such readings taken during the past year, pointing to above-average levels of bearish option volume.

Barrick Gold shares are currently trading at $19.99, newly south of their 10-day moving average.

Silver Wheaton Corp. (USA) (NYSE:SLW)

The number of SLW shares sold short ballooned by 101% during the final weeks of April, but — similar to ABX — there are still relatively few bears looking for the stock to slide. Short interest accounts for only 1.1% of Silver Wheaton’s float, and it would take less than one day, at the stock’s average daily volume, for all of these pessimistic positions to be covered.

Elsewhere, analysts are resoundingly upbeat toward SLW. Among the nine brokerage firms tracking the stock, all of them consider the stock worthy of a “strong buy” or “buy” rating. However, TD Securities Monday trimmed its price target on the shares to $35 from $36 on the heels of a disappointing earnings report, and Raymond James followed suit on Tuesday.

There could be more negative notes in store for SLW, with the stock down more than 7% this week at $22.61 — extending its year-to-date decline to 37.4%.

Yamana Gold Inc. (USA) (NYSE:AUY)

Not every member of the precious metals sector is seeing increased attention from short sellers. In fact, short interest on AUY fell by 25.4% during the most recent reporting period, and now represents only 0.7% of the equity’s float. However, traders weren’t necessarily growing more bullish toward Yamana Gold. Instead, after the stock swallowed a two-day drop of 15.8% in mid-April, it’s quite possible that short sellers were taking profits on their winning bets.

Similar to SLW, though, this technical laggard is still a favorite among analysts. All 15 brokerage firms following AUY maintain a “buy” or better rating, even with the stock down nearly 34% in 2013 to trade at $11.41. AUY has been hit with a number of price-target cuts in recent weeks, though, and a continued shift to the bearish camp by brokerage firms could exacerbate the stock’s slide.