John Paulson just took on an activist investor position in Novagold, the gold exploration and excavation company both he and Soros bought into early this year, following investor Tom Kaplan’s investment in the company.
A 13D filing was made due to activity on August 31st, 2010 and keep in mind that a 13D signifies activist intent.
But interestingly, Paulson’s position size is the same it was on June 30th. He didn’t add to his 20,181,818 shares, which have remained the same since the first quarter. However those shares were recently determined to be a 9.1% ownership stake in NovaGold Resources.
Soros has not filed a 13D.
The value of the shares in a gold exploration company like Novagold are expected to increase alongside the price of gold. In theory, the company should continue raising money until the point of gold excavation, which could take years and costs billions.
And of course there’s no 100% guarantee that any commercially viable gold exists to be excavated.
So it seems like a risky investment once the excavation process moves further along.
But as Marketfolly points out, this move shows that Paulson continues to be bullish on gold via his gold fund.
Read our interview with NovaGold’s CEO, Bill Natbony >>