We recently published a list of 10 Best Stocks to Buy According to Howard Marks’ Oaktree Capital Management. In this article, we are going to take a look at where AngloGold Ashanti plc (NYSE:AU) stands against other best stocks to buy according to Howard Marks’ Oaktree Capital Management.

Howard Marks is an American billionaire and the co-chairman and founder of Oaktree Capital, a hedge fund located in Los Angeles, California, USA. Marks is one of the world’s richest individuals, thanks to his hedge fund, which manages approximately $200 billion. The renowned investor, who graduated from the University of Pennsylvania and obtained an MBA from the University of Chicago, has a personal wealth estimated to be worth about $2.2 billion.

In a January memo titled “On Bubble Watch,” the famed investor pondered on one of his most prophetic calls: a 25-year-old article warning against the irrational behavior in dot-com companies. In his memo, Marks cited cautionary signs in today’s markets, including above-average stock valuations, an overwhelming acceptance around AI, the dominance of the Magnificent 7, and the possibility that “automated” buying of large-cap stocks has kicked in “without regard for their intrinsic value.”

Furthermore, the Oaktree CEO identified a critical aspect of stock market bubbles: the tendency of investors to rush in and buy stocks at excessively high prices. This phenomenon was evident during the dot-com boom when internet companies were frequently launched with inflated valuations and rose even higher on their first trading day. Currently, this trend is not happening. He also pointed out that innovations can leave investors without historical benchmarks to inform their growth expectations, making it easier for stock prices to soar under the belief that “this time is different.”

Moreover, in an interview with the Economic Times, the billionaire investor gave his thoughts on equity markets, stating that returns from credit seem to be more dependable.

“From the S&P, you’re not going to get the historic return of 10% a year for the next decade. You will get something less and if that’s true, then the returns described from credit are quite competitive and dependable.”

He pointed out that, while the current Fed funds rate is 4.5%, the historical average over the last 70 years has been roughly 4.9%. Marks contends that the protracted low-interest environment from 2009 to 2021 rendered credit investments unappealing. However, when interest rates rise, fixed-income assets provide enticing returns. Marks also cited Goldman Sachs’ recent projection that the S&P 500 will return only 3% annually over the next decade, as well as data from JP Morgan, which shows that when the S&P 500 is purchased at a P/E ratio similar to what it is now, historical returns over the following decade have ranged between 2% and -2% annually.

Our Methodology

For our list of the 12 best stocks to buy according to Howard Marks, we looked through the billionaire’s Q4 2024 stock portfolio and ranked the following equities based on his hedge fund’s stake value in each holding. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

An aerial view of Asanko Gold Mine in Ghana, West Africa.

AngloGold Ashanti plc (NYSE:AU)

Oaktree Capital Management’s Q4 Stake: $128.26 million

Number of Hedge Fund Holders: 31

AngloGold Ashanti plc (NYSE:AU) is a global gold mining company with operations in Africa, Australia, and the Americas. It owns and runs multiple high-quality assets, including its flagship Geita mine in Tanzania. In addition to gold, AngloGold generates silver and sulfuric acid as byproducts, which contribute to a diverse revenue stream.

AngloGold Ashanti plc (NYSE:AU) recently agreed to a majority share in Matsa Resources’ Lake Carey gold mine in Western Australia. The $70.4 million transaction adds about 949,000 ounces of gold resources and 104,000 ounces of reserves to AngloGold’s portfolio, strengthening its position in a high-potential gold area.

AngloGold Ashanti plc (NYSE:AU) announced fourth-quarter earnings and revenues that were below analyst projections. The company reported an EPS of $0.89, below the consensus forecast of $0.99, while revenues came in at $1.72 billion, a little lower than expected. Despite this, AngloGold Ashanti’s free cash flow increased significantly, reaching $942 million from $109 million the previous year. Adjusted EBITDA also rose 93% to $2.75 billion. This growth was credited the rise to operational and efficiency gains, as well as a favorable gold price.

Overall, AU ranks 7th on our list of best stocks to buy according to Howard Marks’ Oaktree Capital Management. While we acknowledge the potential of AU as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AU but  trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.