With gold down more than 40% since its peak in 2011, it takes a strong stomach as a professional money manager to dig your heels in and hold on for the long haul. Even more courageous is the proverbial “catching a falling knife.” That is, to buy into gold with the hopes it will turnaround, knowing full well of the possibility it may instead keep sinking for the foreseeable future.
In this installment, we’ll take a look at some brave investors who have been taking just such a risk in gold as conveyed by their long positions in the SPDR Gold Shares- GLD. While there are numerous other physical Gold ETFs like the iShares Gold Trust- IAU and ETF Securities Physical Swiss Gold Shares- SGOL, we’ll focus on GLD as our proxy given it has by far the most institutional ownership.
So, who is “being greedy when others are fearful?” As has been the case for quite some time and widely noted in the media, hedge fund giant Paulson & Co remains one of the largest institutional investors in physical gold ETFs. While the firm has trimmed its holdings in recent years, it still maintains nearly 5% of its equity portfolio in GLD. Specifically, it holds 9,234,852 shares valued at nearly $1 billion dollars.
Paulson & Company- Holdings in SPDR Gold Trust (GLD)
Even more resolute in its belief in gold, however, is storied First Eagle Investment Management, a firm formerly known as Arnhold and S. Bleichroeder that’s been managing money as far back as 1864. While compared to Paulson, First Eagle has a considerably smaller 4,706,745 share position in GLD valued at $488 million, it nevertheless is making a very bold move in continuing to buy shares in GLD. In fact, the firm has reported buying in each of its last 3 quarterly SEC filings, amounting to nearly 1 million additional shares of GLD purchased throughout 2015.
First Eagle Investment Management- Holdings in SPDR Gold Trust (GLD)
Paulson and First Eagle are by no means alone in their long-view on gold. Other institutional heavyweights like D.E. Shaw have entered into GLD this year, establishing a position early in 2015 that is currently valued at nearly $210 million.
Time will tell if these investments will pay off for these investors, but there is certainly little doubt the view they’re taking is a contrarian one. As Todd Rosenbluth, Director of ETF Research for S&P Capital IQ confirms, GLD has experienced approximately $560 million in outflows year to date through October.
*Source: S&P Capital IQ most recent data available as of November 18, 2015. Much of this analysis is based on Form 13F Reports. Form 13F Reports are required to be filed within 45 days of the end of a calendar quarter by institutional investment managers with the U.S. Securities and Exchange Commission (SEC). An institutional investment manager is an entity that invests in, buys or sells securities for its own account, or a natural person or entity that exercises investment discretion over the account of any other natural person or entity. Only securities on the 13F list provided quarterly by the SEC (13F Securities) are required to be included in Form 13F Reports. Therefore, Form 13F Reports may not reflect the most current holdings of institutional investment managers because it is required that the 13F Report include only 13F Securities, is filed on a lag, and some funds may not meet the filing thresholds or other requirements. In addition, because the 13F Reports are as of the last date of the quarter, the 13F Report may not describe intra-quarter activity.