Paulson Slashes GLD Stake

ETF Trends

John Paulson’s Paulson & Co., the hedge fund that rose to prominence for being among the first to short sub-prime mortgage securities and then catch a subsequent rally in financial services, significantly reduced its stake in the SPDR Gold Shares (GLD) during the second quarter.

Paulson & Co., which as of early June was believed to control over 6% of GLD’s shares outstanding, held 10.2 million shares of the largest gold ETF at the end of the second quarter compared with 21.8 million shares at the end of the first quarter, according to a 13F filing with the Securities and Exchange Commission released Wednesday after the close of U.S. markets.

Through the first six months of the year, GLD, along with a swath of other commodities ETFs tumbled. GLD, once the second-largest ETF in the world, slid almost 26% in through the end of June. The third quarter has been more kind to GLD with fund rising 6.5% since the start of July.

GLD is now fifth among U.S.-listed ETFs. As of the end of July, investors had pulled $19.8 billion from GLD. Investors withdrew $2.6 billion from gold ETFs in July following redemptions of $4.3 billion in June, said BlackRock. [GLD Battles to Keep Among Largest ETFs]

On Monday it was reported that gold held by global exchange traded products rose 1.4 metric tons to 1,948.3 tons on August 9, the first increase this month. Gold futures have closed higher in five of the past six trading sessions. [Gold ETF Holdings Rise for First Time in Two Months]

As for Paulson, there are some important things to note. Obviously, 10.2 million shares is still a significant GLD stake. Second, 13F filings are released well after the end of the prior quarter, so it is possible Paulson has bought some GLD back or sold more. Additionally, the 13F filing showed Paulson still maintained stakes in gold miners such as Agnico-Eagle (AEM), Allied Nevada (ANV), AngloGold Ashanti (AU) and Goldfields (GFI) at the end of the second quarter.

Those four stocks combine for about 13% of Market Vectors Gold Miners ETF’s (GDX) weight. GDX has surged 14.7% since the start of the third quarter.

Market Vectors Gold Miners ETF

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ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of GLD.

 

 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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