WHAT ARE WE LOOKING FOR?
What the pros are buying.
You can get a peek at the top holdings of stock mutual funds at the end of the month or quarter - depending on the firm. It's worth a look to get ideas, or as part of your due diligence before investing in a fund. Today, we'll look at Sprott Gold and Precious Minerals.
MORE ABOUT THE FUND
The $324-million specialty fund has been co-managed by Charles Oliver and Jamie Horvat since January, 2008, after the pair jumped ship from AGF Funds Inc. to Sprott Asset Management Inc.
While the fund lost 50 per cent last year as the managers overhauled it from a smaller-company to all-cap fund during a market meltdown, it has been rebounding nicely. It's the best performer in its peer group so far this year with 26-per-cent gain until Monday - helped by a bounce back in beaten-up small-cap stocks.
SO WHAT DID WE TURN UP?
The top weighting is not a stock but rather silver bullion at over 7 per cent of the fund. The combination of that metal along with gold bullion, however, is now less than 10 per cent of the fund compared with 20 per cent last November, said co-manager Charles Oliver. "Holding bullion was basically a defensive measure ... while liquidity was tough."
He is sticking with his prediction that he expects the price of gold to surge over $1,000 (U.S.) per ounce this year as the U.S. government prints more money and devalues its currency. Within three years, he sees the yellow metal reaching $2,000 per ounce, and silver hitting $40. (Gold and silver, respectively, now trade roughly at near $900 and $13 per ounce.)
Except for Silver Wheaton, Wesdome Gold Mines and Orvana Minerals, the rest are new names in the top 10 holdings since the new team took over. Orvana, which has a gold mine in Bolivia, trades at about "two thirds of its cash value right now today," Mr. Oliver said. "I believe there will be a huge re-rating at some point in the future. It has no debt. It's like seeing a dollar bill, and paying 50 cents for it."
He is also "very excited" about Osisko Mining, which is building a gold mine in Quebec. "They are going to be coming into production around mid-2010," he said. "This could be a half-a-million ounce producer. We'll see how long it takes to get a huge re-rating for their multiple from that of a developer to a major producer."
|Top holdings of Sprott Gold and Precious Minerals Fund - as of Mar. 31, 2009|
|$ Price||52-wk||52-wk||YTD %||P/E||%||% of net assets|
|Company name||Symbol||April 13||high $||low $||price chg||ratio||Yield||(Mar. 31)|
|Bullion - silver bar||7.43%|
|Wesdome Gold Mines Ltd.||WDO-T||1.51||1.61||0.40||31.3||16.8||0.0||4.72%|
|Yamana Gold Inc.||YRI-T||10.07||17.22||4.29||6.6||13.6||0.5||2.94%|
|SOURCE: GLOBE INVESTOR, SPROTT|
In the table accompanying the April 14 Number Cruncher column, a column of data labelled "After-Tax to Redemption" appeared in error, and should be disregarded. The table should also have the footnote "Some yields to redemption on perpetuals may be academic if unable to refinance for financial advantage," rather than the incorrect footnotes that appeared with the table. A corrected version of the table can be found at globeandmail.com/blogs/numbercruncher
© 2007 The Globe and Mail. All rights reserved.
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