Shares in gold miner Barrick (B) glowed brighter today on reports that it was the new jewel in the eye of activist investor Elliott Investment Management.
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According to an article in the Financial Times, Elliott has acquired a significant stake in the Canadian gold and copper mining company.
Division Momentum
The American activist hedge fund’s stake in the miner places it, reportedly, among Barrick’s top ten investors, implying a holding of at least C$700 million. Elliott was said to be motivated by reports that Barrick was dividing itself into two entities, separating its higher-growth North American assets from its more risky operations in Asia and Africa.
These rumors have gained momentum following Barrick’s CEO and President Mark Bristow’s decision to step down from his post in September. Indeed, it was recently reported that the board of Barrick has already discussed separating the two parts of the business, as well as the possible sale of its African and Pakistan assets.
Barrick’s share price has surged by over 130% so far this year, bolstered by the rise in the gold price. New records have been set as the price benefits from investors looking to the precious metal as a safe haven in these times of economic and political volatility.
However, as seen below, Barrick’s gains trail other mining stocks such as Kinross Gold (KGC) and Sibanye Stillwater (SBSW).
It also trails Kinross and others such as Wheaton Precious Metals (WPM) over a three and five year period.
Political Risks
Investors hope that a split will alleviate Barrick of the political risks involved in mining in Africa. Earlier this year, Barrick lost control of one of its mines in Mali over a new mining tax code. This led to a $1 billion write-off.
Elliott is no stranger to investing in companies it believes are failing to meet their potential. It recently agitated for oil giant BP (BP) to ditch its renewable energy first policy and refocus on fossil fuels, and produced a major turnaround plan for drinks giant PepsiCo (PEP).
Is B a Good Stock to Buy Now?
On TipRanks, B has a Strong Buy consensus based on 13 Buy and 3 Hold ratings. Its highest price target is $50. B stock’s consensus price target is $41.83, implying a 13.18% upside.
