Billionaire hedge fund magnate John Paulson is leading a consortium of investors determined to reverse the lacklustre performance of gold miners, in the latest sign of growing investor frustration with the sector.
New York hedge fund Paulson & Co, which is famed for making billions betting against subprime mortgages in the financial crisis, has put together the 16-strong group calling themselves the Shareholders’ Gold Council.
The group, which also includes Egyptian telecoms billionaire Naguib Sawiris’s La Mancha Group and a host of fund managers, says it aims to promote “best practices” in the industry.
“Its ultimate aim is to promote constructive engagement between the gold mining industry and the investment community,” the group said in a statement.
The group’s formation comes following a widespread drop in shares of gold miners, which have fallen by 25 per cent this year, according to the NYSE Arca Gold Bugs index. That’s a worse performance than the gold price, which is down 9 per cent year-to-date to $1,206 a troy ounce.
Paulson is one the largest holders of gold and mining companies, with stakes in Randgold, AngloGold Ashanti, Goldcorp and NovaGold, according to the most recent filings.
At a gold conference last year Marcelo Kim, a partner at Paulson, said investors in gold miners had “rubber stamped” mergers, soaring chief executive pay packages and behaved like “sheep being led to the slaughter” over the past seven years.
This year Mr Sawiris’s La Mancha Group launched a new gold investment vehicle headed by Andrew Wray, a former executive at Acacia Mining. In August, it paid $125.7m for a 30 per cent stake in Golden Star Resources, a gold miner based in Ghana.
La Mancha already owns significant stakes in Australia-based Evolution Mining and west African producer Endeavour Mining.