BOSTON (TheStreet) -- John Paulson's hedge fund generated a record $5 billion profit last year thanks to timely bets on gold.Paulson is still a bullion bull, but some of his peers are moving on to other sectors. Gold stocks and exchange trased funds represent 2.2% of the average hedge fund long portfolio, down from 2.9% in the second quarter of 2010, according to Goldman Sachs' ( GS) fourth-quarter Hedge Fund Trend Monitor, which dissects 699 hedge funds with $808 billion of long stock-specific and ETF equity assets. Excluding gold-related ETFs, gold stocks accounted for 1.5% of the average single-stock long portfolio, down from 1.8% in the quarter ended June 30. Hedge funds are worried over the prospects of rising inflation and have devoted $23 billion to long positions in gold stocks and ETFs. About $8.6 billion of that exposure, or 38%, is in the form of the SPDR Gold Trust ETF, according to estimates from Goldman analysts. Newmont Mining ( NEM - Get Report) is a stock favorite.
Barrick Gold ( ABX) Company Profile: Barrick Gold is engaged in the production and sale of gold, as well as related activities such as exploration and mine development. Number of Funds With Stock as Top 10 Holding: 14 as of Dec. 31 Major Hedge Fund Investors: Barrick Gold has also been a losing pick for investors over the past two months, falling 3% so far this year. However, with the increase in gold over the past month on unrest in the Middle East, Barrick Gold shares have climbed more than 8% in February, rewarding those who didn't sell after January's 11% slide. As with Newmont Mining, institutions own most of Barrick Gold's outstanding shares, accounting for 73%. Of those institutional owners, hedge fund managers account for only 3%. And again, Aletheia Research & Management is the largest hedge fund owner with 3.4 million shares worth nearly $176 million as of Dec. 31. Mayo Investment Advisors and Touradji Capital Management each own 1.9 million shares worth roughly $98 million at the end of the fourth quarter. Among other big name hedge fund managers, Paulson & Co., Renaissance Technologies, SAC Capital, and Soros Fund Management have small stakes in Barrick Gold.
SPDR Gold Trust ( GLD - Get Report) Fund Profile: The SPDR Gold Trust seeks to achieve the performance of gold bullion, less the expenses of the fund. Number of Hedge Fund Investors: 121 as of Dec. 31 Major Hedge Fund Investors: Goldman Sachs analysts estimate the current long ownership is $8.6 billion, compared to $2.2 billion on the short side. That $8.6 billion represents 38% of hedge funds' aggregate exposure to gold, making the SPDR Gold Trust the most notable holding for hedge funds in terms of gold. Given his reported $5 billion in profit last year that came thanks to investments in gold, it's no surprise to find John Paulson's name at the top of the ownership list for the SPDR Gold Trust. Paulson & Co. owns more than 31 million shares of the fund, worth roughly $4.3 billion as of Dec. 31. Soros Fund Management has the second largest ownership of the GLD with 4.7 million shares worth $644 million.
iShares Gold Trust ( IAU - Get Report) ETF Profile: The iShares Gold Trust seeks to reflect the price of gold owned by the trust, less expenses and liabilities. Number of Hedge Fund Investors: 9 as of Dec. 31 Major Hedge Fund Investors: Goldman Sachs analysts estimate the current long ownership is $116 million, compared to $35 million on the short side. Despite the small ownership among hedge funds, the iShares Gold Trust has actually performed better than the SPDR Gold Trust and the Market Vectors ETF Gold Miners on a percentage basis in 2011, falling only 0.8% over the first two months of the year.