We've decided to increase the size of the Investor Intelligentsia portfolio. Given that not much has changed, and given that the portfolio is still relatively new, our thinking basically boils down to providing you with more opportunities to watch the development of a model portfolio over time. On balance, there are many opportunities in the market today and we'd like to take advantage of these while showing you avenues for profitable investing. At the open, we will add US$800,000 and change the basis of the portfolio to $1,000,000.
Sell Carpathian Gold & Comments On Jr. Precious Metals Mining In General
At the open we will liquidate the Carpathian Gold position. Management decided to invest in a property in Brazil in a diversification effort away from Romania. In our view, it would have been better to just cut back on operations in Romania, if at all necessary. A dark cloud still hangs over junior mining companies seeking to develop properties in Romania. Carpathian will likely be successful in the long-run, but we take the view that this diversification effort may unfortunately act as a distraction. At some point in the future we may revisit the stock. Today, we say goodbye.
Junior precious metals shares have failed to show much of a bounce this year. Normally, one would expect to see the sector move higher during the first quarter, following tax loss season blood letting. This year has seen gold move to new all time highs in nominal terms, and silver getting over $17 per ounce on an intra-day basis last week. But still, junior share performance has been dreadful. The valuation of juniors with identified ore bodies and producing mid-sized and major precious metals companies is about as extreme as has been seen in the last three years. At some point this year, the sector is going to make a massive turnaround. The catalysts will likely include one or more of the following:
- gold going over $1000 per ounce, which we expect to happen before the summer is out
- majors like Newmont or Barrick launching takeover bids for Juniors
- major new money entering the sector from sovereign wealth funds or similar investment groups
Portfolio Additions
In our view, China's stock market hit a bottom last week. We will explain in more detail in an upcoming post. The pullback in the mainland's shares and the decline in Hong Hong has been sharp and painful. On the open, we will add to some of our existing holdings to maintain sufficient portfolio weighting while adding new positions as well:
- PetroChina (PTR:NYSE): Add 200 shares at the open
- China Mobile (CHL:NYSE): Add an additional 200 shares at the open
- E-House (China) Holdings Limited: Add an additonal 1000 shares at the open
- Hanfeng Evergreens: Add an additional 1000 shares at the open
- WUXI Pharmatech: Add 300 shares at the open
- SunPower Corporation (SPWR:NASDAQ): Buy 300 shares at the open
- Tyhee Development Corp. (TDCv: Toronto Venture Exchange): Buy 10,000 shares at the open
- Transocean Inc. (RIG:NYSE): Add an additional 200 shares at the open
- AGCO Corp. (AG:NYSE): Add an additional 500 shares at the open
- Agrium Inc. (AGU:NYSE): Add an additional 400 shares at the open
- San Gold Corp. (SGRv: Toronto Venture Exchange): Add an additional 3,000 shares at the open
- EXMIN (EXMv: Toronto Venture Exchange): Add an additional 20,000 shares at the open
Once all these trades have taken place the portfolio will still have over $600,000 in cash to work with. Subsequent additions will be made at a more leisurely pace in order to better demonstrate investment ideas and strategies. We will return this week with further analysis.
Click image for the closing values for Feb 2nd, 2008
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