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Wednesday
Jul112007
Yamana Gold: Making a Recovery
Wednesday, July 11, 2007 at 12:07PM
Yamana Gold has fallen right through its 200dma on the news that they were trying to buy Meridian. We did not particularly like this deal either as Yamana was performing excellently as a gold stock before plans for the merger were announced.
This deal means that Yamana will become a very large and powerful gold company, which is great news for mutual fund managers who want big elephants to park their pension funds in, but not particularly for us. We prefer smaller companies as they tend to offer a much better percentage return on ones investment, and if this merger goes through, Yamana Gold may become too big to offer a significant return, however we shall monitor the situation closely and consider all developments before making a decision.
Perhaps this is what went through many investors minds when the news of the takeover came out. Many may have sold thinking that Yamana will be too big for them now or indeed many have wanted to get out of Yamana and into something more profitable whilst Yamana digests the takeover.
After the drop Yamana seems to be making a small recovery, although nothing too significant yet, in the last few sessions it has risen over 4%. At the moment Yamana is still a BUY in our gold portfolio. We bought this stock at $9.37 and so its shows a gain of 26.4% in our portfolio. It should do well in the coming rise in gold prices we see arriving at the end of the summer, along with other gold stocks.
Yamana Gold trades as AUY on the NYSE, as YRI on the TSX and also in London under YAU.
This deal means that Yamana will become a very large and powerful gold company, which is great news for mutual fund managers who want big elephants to park their pension funds in, but not particularly for us. We prefer smaller companies as they tend to offer a much better percentage return on ones investment, and if this merger goes through, Yamana Gold may become too big to offer a significant return, however we shall monitor the situation closely and consider all developments before making a decision.
Perhaps this is what went through many investors minds when the news of the takeover came out. Many may have sold thinking that Yamana will be too big for them now or indeed many have wanted to get out of Yamana and into something more profitable whilst Yamana digests the takeover.
After the drop Yamana seems to be making a small recovery, although nothing too significant yet, in the last few sessions it has risen over 4%. At the moment Yamana is still a BUY in our gold portfolio. We bought this stock at $9.37 and so its shows a gain of 26.4% in our portfolio. It should do well in the coming rise in gold prices we see arriving at the end of the summer, along with other gold stocks.
Yamana Gold trades as AUY on the NYSE, as YRI on the TSX and also in London under YAU.
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