Question: How would a mutual fund investor monitor a mutual funds "buying" and "selling"?

bee

I own USAGX. It's share price is at a 2.5 year low. PM Mining companies have not moved in step with actual metals for quite some time. Here's GLD charted against USAGX and TGLDX.



As I looked at the holdings of USAGX using morningstar I noticed that the manager had made a number of new purchases as well as added to existing positions. Here's the top 25 holdings with arrows highlighting new or added to positions.



This seems like a lot of activity for a fund that normally has a 24% turnover rate. My assumption is that the manager recognizes a number of opportunities. The fund is either using its cash (stated at 2%) or exchanging shares to buys these "opportunities".

My question gets to the dynamic of a fund's buying and selling activity. The most recent activity that morningstar reports for USAGX dates back to 11/30/2011...a lag of about 4 months as of the writing. A fund's prospectus might be another tool to use. I'm wondering is there a source of information that tracks the activity of fund managers who can move markets when buying or selling, especially when institutional money is involved?

BobC

Unless the fund wants to disclose these trades on a more frequent basis, and very few do this, there is no good source. There have been a few web sites that purport to offer this information, but they have pretty much been repeating what the funds have already made public. A number of funds offer regular investor conference calls, and while these are usually advertized only to the advisor and sales communities, some are also available to retail investors. U.S. Global, for example, lists all of the calls on their web site. A few others do the same. The management team often discusses their recent portfolio changes, and there is usually a Q&A time. Some funds post current holdings on their web sites, some as often as monthly. You just need to spend some time on the fund companies' sites to find out what is available. Often there is a ton of information, but you have to spend time to sift. USAA is a tough nut to crack when it comes to getting information like this.

bee

Reply to @BobC:
Thanks for the reply. Short of re-balancing when one of my funds has outsized periodic gains or losses I try to dig a little deeper to get a handle on investments that lag for long periods of time.

USAGX is one that has me scratching my head. With gold anywhere above $1100 (the cost of mining) I would think there would be incredible profits for the mining companies. There must be something at work here that I am just not getting.

Here's a price chart of GDX (Miners) vs GLD (Metal) from July 2009 to Apr 2011:


Here's the same 2 year time frame back from today. You can see the two separate in May of 2011:


Finally this one year chart shows the separation clearly. The price ratio at between the two shares at the beginning of this chart (last year) was ($146.74:$62.63) or (2.34:1) today the price ratio is ($162.94:$50.39) or (3.23:1)



I'm thinking either gold drops in price (continued weaken currencies probably won't allow this) or miners revert upwards.

Derf

Bee , how much outlay must be spent to capture that ounce of gold?
I've been looking at this fund also. What would Rono have to say for this fund?

bee

Reply to @Derf:

Hi Derf,

The bit of reading I have done is that a miner on average spends $1100 to bring 1 ounce to market. With gold at $1630 a miner stands to make a 48% profit. This sounds like a viable business model to me. To me, there are some other pressures at work here...maybe political, maybe environmental, maybe global banking. Any thoughts?

Here a 2009 link to your question...maybe there is something out there more recent:
http://www.miningweekly.com/article/what-does-it-cost-to-produce-an-ounce-of-gold-2009-03-16

catch22

Hi bee,

I recall some of this and found a link. May be of some value and you raise a very good point. I believe most of these are video interviews. You may also find some current video explanations on youtube.
More on some related thoughts.....but have to be on the road.

http://search1.bloomberg.com/search/?content_type=all&page=1&q=newmont ceo

Take care,
Catch

bee

Reply to @catch22:

Thanks Catch...this could be one reason:
http://www.bloomberg.com/news/2012-02-23/barrick-s-regent-says-gold-miners-losing-capital-to-etfs.html

Eric Sprout has his thoughts too (from an article either you or Scott linked):

"Looking back at the trading data on February 29th, the sell-off in gold and silver appears to have been an exclusively paper-market affair. We were surprised, for example, to note that between the hours of 10:30 am and 11:30 am, the volume of the COMEX front month silver futures contracts equaled the paper equivalent of 173 million ounces of physical silver. Keep in mind that the world only produces 730 million ounces of physical silver PER YEAR. The problem from a pricing standpoint is the simple fact that the parties who were on the selling side of those 173 million paper ounces couldn't possibly have had the physical silver to back-up their sell orders. And the way the futures markets are designed, they don't have to. But if that's the case, how can the silver price be smashed by sell orders that don't involve any real physical?"

Source:
http://sprott.com/markets-at-a-glance/the-[recovery]-has-no-clothes/