Tahoe Resources (THO.TO)

Thinks it is time to exit this. Results just have not been coming in. He can live with soft results, especially in a cyclical name, but this has been worse than most. Investors have pretty much exited the position, and rightly so.

The chart shows the stock is going lower. He is not impressed.

(Top Pick Dec 9/16, Down 8.8%) He bought more today. He bought them to benefit from the increase in commodity prices. He still likes it. It still pays a dividend. They are still reducing costs. 2.8% dividend.

One of the places he absolutely wants to be positioned in right now is gold. Under Trump you could get 2% inflation and 3% growth or 3% inflation and 2% growth and we don’t know which it will be yet. So he would still like to have 5-7% in gold. He still likes royalty companies. He is watching this company very closely. It is a bit expensive, but they are working their way to being a TSX mid-cap company that will be on everyone’s comp sheets.

Fundamentally this is pretty good. ROC for 3 years is 13%, then 11%, and in the trailing 3 quarters was 9%, which is pretty good for a materials company. They’ve put a lot of capital to work. This looks undervalued. Looking at Q3 numbers, he would say this is worth about $18.

This is *almost* like catching a falling knife. Their silver and gold production costs are very low. Silver prices won’t fall much below where they are now. The risk / reward ratio is quite enticing. (Analysts’ Target: $21.79).

He likes to buy things when there is a lot of fear. 6 months ago everybody liked gold and silver, and now everybody hates it. Gold and silver made new lows, but the stocks didn’t. He thinks there is a cycle low being put in. These companies now are implementing technology, and are becoming much more efficient, so their operating leverage is much higher. Dividend yield of 2.37%. (Analysts’ price target is $23.45.)

A good management team in place and an absolutely world-class mine in Guatemala. They got to sort of a premium market capitalization earlier in the year. The fact that it has come off is making this attractive. You have to consider the political risks. There is domestic political assertion that the deposit was obtained in ways that contravened Canadian and Guatemalan law. He personally does not believe that to be the case.

One of those unique names in gold and silver that has a decent dividend. A premier management team. His exposure currently is through Lake Shore Gold that they acquired to get their Timmins Camp reduction, which will be a nice way to derive some gold production. Guatemala is a little bit of geopolitical risk. There is good dividend growth potential as they continue to expand and generate free cash flow. A very well-run company and a nice diversified asset base.

An extraordinarily high quality silver deposit. This was called away from him, but it had given him everything that he had wanted, and more. If the silver price goes higher, then this stock can go higher. It all depends on your outlook on silver prices.

A very well-run company, and he likes the valuation. Also, likes the mix between silver and gold.

This can become a great Canadian mid-cap producer in 2-3 years’ time, and then you get the valuation bump as well. However, with what they actually have today, the stock is expensive. The other problem is that they have had a run. Gold has had the run, and the Cdn$ has had the run at the Cdn$ gold price. Because of that, he is cautious at this time.

Started off as a silver producer in Guatemala, probably one of the best silver assets globally. It changed and remade itself through a number of acquisitions, and now has as much gold as silver. Trading at 1.5X NAV, which is in line with where seniors are trading, but generates a lot more free cash flow, about 4%-6%, where he gets 3%-4% with the seniors. Now that they have acquired Lakeshore, they can now start to talk about how they can surface value from some of the assets that no one gave them credit for.

Thinks the worst is over for gold. It has a seasonal period that starts and ends in July, followed by another one later in the fall. This looks really good, except it is pretty volatile. Expects this to move much higher and he has a $26 target on it.

There is torque on the basis of whatever metals they are associated with. The management have great history. He would continue to hold it. He thinks there is more lift coming in gold.