To define the over- and underweights of individual securities we apply a broad-based investment process. We find and target the stocks with the most attractive return potential and avoid stocks with unattractive return/risk parameters. The funds managed by ourselves have an above average exposure to the most attractive value chains of the mining industry. To analyse these small and mid caps we have worked in close collaboration with top geologists for many years. Their network also opens up good access to attractive financing opportunities in Canada and Australia.
The investment process is based on our analyses, based on four factors. All portfolio holdings and all major gold equities are analysed and ranked according to these factors.
Fundamental analysis: We assess the quality of the balance sheet, the dynamics of the cash flow and profits, as well as company specific developments and growth prospects. Within the precious metal equities, economic robustness analysis, the quality of the management team and the geopolitical risk are important to our analyses. We personally meet about 100 companies per year and work very closely with our top geologists, who conduct analyses for us and regularly visit mines and management teams. In addition, we work with the leading brokerage houses within the mining industry and do our own in-house research. Within fundamental analysis, the valuation analysis is instrumental. This is performed using a project based discounted cash flow model, taking into account the geopolitical risk (country) as well as the valuation relative to the company growth potential (production, profits, free cash flow and resources).
Technical analysis: The main priority of technical analysis is the relative performance of the individual equity. This analysis assesses the performance of the stock relative to the index.
Quantitative analysis: To perform this type of analysis we have collaborated for many years with a very successful investment boutique in the US. This company assesses the relative attractiveness of about 5,000 shares globally.
Behavioural Finance analysis: The aim of this analysis is to use our industry contacts to evaluate the potential buying or selling interest in individual companies. Stocks, which are admired and over-owned (market darlings) have empirically an above average disappointment potential, while individual stocks that exhibit a high short selling ratio and low participation from professional investors (under-owned) do tend to have an above average return potential.