Franco-Nevada Corp. (FNV.TO)

If you are going to be in the gold business, why not start with the best. This is the best. Owner/operated company. Have run the company on and off for 3 decades. High quality people. Their basic business is even better than people think it is. Precious metals assets in a streaming format, are valued at 15%X EBITDA. Those same assets in a base metals company are valued at 5 or 6 times EBITDA. Dividend yield of 1.78%.

As a value investor, gold is always hard to wrap his head around. Always has a small position of about 3%-5%. He looks for the companies with the best balance sheets, with a production profile going forward of projects of rising production, efficient producers and low cost producers. Feels the multiples on this company are a little bit rich.

The best of the best. Owner-operated company. Great competitive advantages. He sees great deals coming. They have a great pipeline of projects.

It is a beautifully run company. Great balance sheet and they make lots of money. They have been buying into companies and taking their royalty streams. Many companies did not prepare for the difficult times.

(A Top Pick March 4/14. Up 14.81%.) It had been very difficult to find defensive stocks in gold and this seemed to be about the only game in town. It has been a great place to hide.

This is a “streamer”, which is why it has outperformed the gold stocks. A good solid company. He would rotate some money out of this and put it in the producers, because when we get the cycle of gold prices moving higher, you are going to get a greater leverage out of producers.

There is a bit of a stealth market in gold in the last 2 months. It has been steadily doing a bit better. Has been doing even better in the non-US$ denominated currencies. He likes this company. It is a royalty company and performs very well when the gold sector goes down. It is hard to know how far gold is going to go, but it certainly looks higher from here. If you own, stick with it but trail a Stop behind it.

Besides gold this has copper which has really helped it, but copper isn’t that exciting either. On gold, that particular era will only re-establish itself when we begin to see some inflation. Inflation seems to be pretty well dead and buried. When energy comes back in, he thinks inflation is going to be even lower.

(Top Pick Nov 19/13, Up 29.87%) It is a distressed lender to the gold industry.

A Royalty company, a great business model. They are opportunity rich right now in this environment. They have executed very well and have a good management team.

Can take its free cash flow and redeploy. As we go into spring, you should be reducing your weighting to normal. He will be selling because he is overweight.

Nice up trend, broke resistance. Buy more on weakness. Benefits quite nicely this time of year until beginning of May.

Diversified asset base. It’s more like owning more of a financial company but in the gold sector. The asset class is down. High quality company that benefits from this low cost environment.

If you had to own a gold stock, this is probably the one. Even the best have had some difficulty in the last little while. You want to wait for the period of seasonal weakness, around mid-November, before buying. Right now, the trend is on the downside. It is trading below its 20 day moving average and is currently underperforming the TSX. Yield of 1.76%. (See Comment under Gold.)

One of the only ones that is up this year amongst the gold companies. He is recommending this for people who cannot take volatility. He feels there is very little risk in the gold companies that he owns as they are not going to go bankrupt. This is a streamer and doesn’t get its hands dirty.