- By Alberto Abaterusso
Despite many analysts suggesting to invest in gold stocks, there are some investors who suggest staying out of the gold industry because they prefer to hold a defensive strategy, waiting for the cloud of uncertainty that prevails in the financial markets to dissipate before making their next investment decision.
One of these investors is Vince Lanci, the owner of Echobay Partners LCC, a private fund management company, and fund manager with several years of investing experience in precious metals and energy.
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The intrinsic value of BHP
Lanci said to Kitco.com that he "wouldn't be surprised to see gold spike if there is a black swan following President-elect Donald Trump's inauguration in January."
For the whole first quarter of 2017, Lanci is investing 100% cash.
Good buying opportunities in the broader industry of metal mining stocks other than gold, according to Lanci, are BHP Billiton Ltd. (BHP), Vale SA (VALE) and Rio Tinto PLC (RIO).
Year to date, BHP Billiton, Vale and Rio Tinto have gained 43%, 150% and 37%.
BHP Billiton is trading at $36.26, down one cent or -0.01% from the previous trading day. The analysts' average target price is $38.30 per share.
The company operates copper, iron ore, coal and nickel assets in Australia, Canada, Chile, Peru, the United States, Colombia and Brazil. The company is also engaged in oil and gas operations in the U.S., Australia and Trinidad and Tobago.
The company has a market capitalization of $102.93 billion and a total of 5.32 billion shares outstanding. The number of shares that can be traded on the stock market is 1.6 billion.
Among the top institutional holders, Bank of America Corp. has 3,545,946 shares valued at $122,867,035, Dimensional Fund Advisors LP holds 3,447,265 shares valued at $119,447,739 and CI Investments Inc. holds 2,121,600 shares valued at $73,513,444, as of the most recent quarter.
During the third quarter, Ken Heebner (Trades, Portfolio) opened a position in BHP Billiton, buying 1,200,000 shares.
The company had approximately $10.4 billion in cash on hand and the total debt amounted to $38.19 billion.
The company is trading at 1.78 times its book value and at 10.83 times its Ebitda. As of today, analysts suggest to buy shares of BHP Billiton and the recommendation rating is 1.8.
Vale SA is trading at $7.73 on the New York Stock Exchange, down 18 cents (or -2.23%) from the previous close. The analysts' average price target is $8.17, representing a 5.7% upside in the current share price.