Extending the 5% dip they suffered in October, shares of Barrick Gold (NYSE:GOLD) sank 13% lower in November, according to data from S&P Global Market Intelligence. While the stock's fall is unsurprising considering the drop in the price of gold, it certainly wasn't the only reason motivating investors to leave their positions. The revelation that Berkshire Hathaway chose to pare its position in the gold mining company signaled to investors that perhaps they, too, should look for other investment opportunities.
With Election Day in the rearview mirror and the belief that Joe Biden will bring a less volatile administration to Washington, investors turned away from gold, sending the yellow metal down more than 6% in November. But it wasn't only politics affecting the market's appetite for gold; investors eschewed positions in gold after hearing from drugmakers that they were making considerable progress in their COVID-19 vaccine trials. And since the movements of gold mining stocks and the price of gold are closely correlated, it's unsurprising that shares of Barrick Gold dipped last month.
One of the most closely followed investors, Warren Buffett, a longtime skeptic of gold investments, surprised many people over the summer when Berkshire Hathaway revealed in an SEC filing that it had opened a position -- about 21 million shares valued at about $564 million -- in Barrick Gold during the second quarter. But the investment didn't last long. In mid-November, investors learned that Berkshire Hathaway trimmed its position, selling about 9 million shares of Barrick. Evidently, investors decided to follow suit. Berkshire Hathaway's SEC filing became public on Nov. 16, and shares of Barrick Gold closed lower on each subsequent day through the remainder of the month.
The dip in the price of gold and news of Berkshire Hathaway's smaller position in Barrick Gold represented two factors spurring many investors to sell their shares last month, but it's not as if gold-oriented investors should completely forsake the company. In fact, Barrick started off the month on a positive note, reporting strong Q3 2020 earnings. How strong? Barrick generated a company record $1.3 billion in quarterly free cash flow, and it strengthened its balance sheet, reducing its net debt 71% quarter over quarter to $417 million. Moreover, management demonstrated its commitment to rewarding shareholders, raising its quarterly dividend 12.5% -- the third time the company has raised its distribution this year.