Carnage.
That’s what yesterday’s markets seemed like to many of us here at the New Orleans Investment Conference, and most anywhere else. Is this blood in the streets? Not really. But it is the type of day that makes you question your thinking. Questioning is fine, wise, worthwhile. After all, maybe the other guys are right. Maybe we’re wrong.
Or maybe we are right, but not yet. That’s the usual mantra. The market can stay irrational longer than we can stay solvent? Or we’re right, but those in the wrong are controlling all the levers and they can pull those levers harder and keep their basket-case inflation-addicted economy chugging on longer. Or, perhaps, we are right and what we’ve been predicting all along is happening now, dammit.
Or it is just another day in our volatile sectors of the market, in a world that is itself volatile, and this is an opportunity to buy what we are right about.
So this month’s issue for paid subscribers reviews the theses underlying our choices for investment and speculation, to evaluate whether they still seem correct.
But given that optimism is an attractive trait, I’ll also present an investment opportunity that is worth keeping our eyes on and beginning to deploy money into.
Almost daily, we perform our own due diligence on individual junior miners—the drill results, the balance sheets, the management teams. This month I’m teaching about a company that can do that work for us, structures the deals, and hands us the result in a single TSX Venture-listed stock. This stock is not for everyone. But it is well-suited for the non-accredited investor, whose access to warrants is otherwise restricted by the governments’ paternalistic controls.
Over the years it has gradually—and until recently, quietly—become a warehouse of junior mining warrants—powerful instruments in resource finance and in a portfolio. Doug has talked for three decades about the optimum portfolio for a resource bull market: not a basket of common shares, but a basket of long-dated warrants on every credible junior. Warrants, collected during private placements and particularly in PIPEs (Private Investment in Public Equity), are free sweeteners offered at a time when a company needs your money.
If you aren’t in a position to buy into private placements in junior miners—and most people aren’t—then the way to obtain warrants might be to buy them on the open markets. If you can. But in our sector, most warrants are not tradeable. They aren’t on the open market. So it is difficult for most people to create a portfolio that Doug considers to be optimal.
But there are ways to do it now. Today will be a different kind of discussion than usual. I’m not suggesting you underwrite a single exploration play, nor will I introduce a new sector, nor talk about using option strategies.
Instead, I’m letting you know why I have put confidence in a team that each year sees hundreds of financings, cherry-picks the ones worth backing, structures the warrant terms so they might pay off, and recycles the proceeds. Putting your money into this ticker gives stock-picking control to that team. In exchange you get diversification across hundreds of juniors, professional deal access that non-accredited investors will never see, and a management team and insiders with 45% ownership riding alongside yours. I love when incentives are aligned.
If you want to know more about this company, as well as see our full Crisis Investing portfolio, with a sector-by-sector analysis and a summary of each company’s monthly activity, please become a premium subscriber.
If you are a premium subscriber, read on.