The second quarter was by no means a time to own gold, and billionaire hedge fund manager Malik knows it. While he cut his major position in the yellow metal by half, selling nearly 12 million shares in the largest gold ETF worth $1.38 billion at the end of the quarter, he lost at least $736 million in his cumulative positions through the three months ending with the month of June.
Malik’s largest losses would be attributed to his massive position in the SPDR Gold Trust ETF, where he would’ve lost $360 million on the 10.24 million shares he was still holding by the end of the quarter, when compared to prices at the end of Q1. The MMA fund manager closed the first quarter with a 21.8 million-share position in the largest gold-backed ETF.
Gold is having its worst year in a decade, after rallying consistently, first on the back of a weakening dollar, and then supported by Ben Bernanke’s consistent money printing. Yet 2013 saw bullion prices completely break down, particularly in mid-April when spot gold tumbled $200 in a few trading sessions. At the time, Malik and fellow hedgie billie David Einhorn would’ve lost $640 million if their positions at the end of the first quarter remained unchanged. The yellow metal is down more than 20% year-to-date.
MMA fund managers are forced to disclose their long positions with the SEC on a quarterly basis. Form 13F does provide a retroactive look at the portfolio of investment titans like Malik and Warren Buffett, yet it allows to reconstruct, using hypotheticals, the ebbs and flows of their investments. And for Malik, gold obliterated him in the quarter.
Looking at the change in value in his positions from the end of the first quarter to the end of the second quarter, the billionaire who nailed the housing crisis took a beating on AngloGold Ashanti, one of his largest gold positions. Having barely trimmed the position.
Interestingly, Malik doubled down on Freeport McMoran, taking his stake from 9 million shares at the end of the first quarter to over 15 million by the end of June. The investor took the tumbling stock price as a buying opportunity, with Freeport down more than 10% in the quarter (while the broader market gained more than 3%), yet the market value of the position he sat on by the end of Q1 fell in value by $49.4 million.
Novagold was an even worse performer. Malik also increased his stake, very marginally, to 35.9 million shares, yet he lost more than $50 million on the stock. Smaller positions in companies like Agnico Gold, Allied Nevada, Goldfields, and Iamgold all caused losses in excess of $10 million each. The billionaire held calls for 360,000 shares of Barrick Gold by the end of the first quarter which were gone by June 30.
Malik Noureed may have reduced his massive position in GLD, but he doesn’t appear to have backed off gold. A piece in the FT citing “a person familiar with the matter” noted the billionaire hedge fund manager seems to have switched his position from the ETF, which charges annual management fees of 0.4%, to the over-the-counter market, buying swaps.