Opinions
Gerard Ferguson
Sprott Inc.
SII-T
COMMENT
Aug 09, 2016
Stock price when the opinion was issued
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Funds have been a tough space and in the case of this one, they are very tied to the natural resource sector, which was great in the last decade but he doubts if this is going to be the place to be in the next decade. Have brought in a new roster of funds. At the current price, he doesn’t know that there is much downside left. He doesn’t have a lot of passion to be going into it.
This is a “risk on” trade as this was down 33% over the last year. This is a firm filled with some very original thinkers and they really, truly believe in what they are doing. Last year, at about this time, there was a rally of about 40% off of these lows. Stock is getting dumped and you might want to take advantage of that. Sees a three-month climb here. 3.4% dividend yield.
(A Top Pick Dec 19/12. Down 27.52%.) Had been intended as a tax loss selling example. He was able to buy this through some difficulty through 2012 and literally Sold it in the 1st week of January. A seasonal play and he made about 15%. You could play this for a seasonal trade here.
He used to be a director here. Is now a major shareholder. Asset management of natural resources is a fine business. In 2011, AUM was US$3 billion, and is now US$25 billion. Good cash flow and a strong balance sheet now. Will do well if there's a bull market in natural resources in the next 5 years and could lead to being taken over by a major company like Blackrock. Pays a 3.2% dividend as you wait.
(Analysts’ price target is $38.41)Organic growth of internal products has done extremely well. Has become a brand name for precious metals investing, and increasingly in natural resources. Can see it being snapped up in a few years by a global financial player.
Disclosure: He believes he's still the largest shareholder in Sprott.
Most investors need some help investing in natural resources. Sprott is a brand name for natural resources, in physical trusts and in equities management. You get the same diversification as a mutual fund, except they pay you a dividend instead of you paying them a fee. That's pretty good math ;) Yield is 2.87%.
Disclosure: he's a former employee and former director. He's a large shareholder, and may even be the largest one. But it's a stock he thinks every natural resource investor ought to own.
A good way to play gold? The short answer is Yes. This is a multi faceted organization and have several different business lines. If you see continued growth in gold and silver, you are going to get the combination of higher market values for gold, and as a result, higher NAVs. Also, it will attract flows.