GDXJ changes cause big swings

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The Market Vectors Junior Gold Miners Exchange Traded Fund ETF (GDXJ) rebalanced its holdings on Dec. 19 and the changes had a significant impact on several companies.

Several junior miners — including Asanko Gold Inc., Rubicon Minerals Corp., Premier Gold Mines Ltd., Torex Gold Corp. and Midway Gold Corp. — had their weightings reduced and their share prices declined on very heavy volume as a result.

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Canaccord Genuity analyst Joe Mazumdar left his speculative buy rating on all five stocks unchanged, telling clients that the downward pressure they’re facing is not related to the market or company-specific issues, only the rebalancing.

The fund’s 13 additions have an average market cap of US$800-million, nearly double the average of the December 2014 portfolio. Some of the producers that were added include Iamgold Corp., Alamos Gold Inc. and AuRico Gold Inc.

The additions to the GDXJ boosted its proportion of producers to about 80% of the total holdings, and also increased the weighting in silver to 18% while reducing gold to 82%.

Mr. Mazumdar also highlighted the boost in exposure to U.S.-listed companies (36% from 28%) at the expense of Canada (46% from 52%) and Australia (10% from 16%).

He noted that if the GDXJ was not rebalanced, the average market capitalization of the holdings would have been US$276-million, down 35% from their June 30, 2014 price. However, the rebalanced portfolio is 40% higher than the current value of the June 2014 portfolio.