Agnico-Eagle Mines (AEM-T)

Likes gold, and this is a good way to play. Excellent management, prudent and disciplined use of capital. Good assets. 12 varied mines in low-political-risk jurisdictions. Low cost. Increases to dividend were paused, but should resume. Close to debt-free. Sleep at night.

Bought it yesterday heading into earnings. They disappointed a bit because of rising expenses, but you can definitely buy in dips. Is still up 20% this year. They will continue to pay off debt as they buy back shares like crazy. Pays a nice dividend.

Gold is taking a big hit today, with spot gold down $36/oz. AEM Q4 EPS of $1.26 beat estimates of $1.16; revenue of $2.22B marginally missed estimates. EBITDA of $1.33B matched estimates. Margins were a record on good cost control. 847,000 ounces were produced in Q4 with all-in costs at $1,316. Mines performed well. Production guidance was steady, but this is likely the company being conservative. Net debt is now very low and the company is in excellent financial shape going forward. Shares slipped a bit but are up 127% in a year and we would be comfortable with the quarter and outlook.
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One of his go-to names in the sector. Trades at a premium because it has perhaps the lowest geopolitical risk of any producer. Valuation is too rich.

Largest holding in portfolio. Share price has doubled the past year. Expecting gold prices to keep rising with geopolitical tensions. Large amounts of gold being held by central banks instead of US dollar. 

He prefers the senior gold names. Now is similar to 2010-2012 when gold producers paid more dividends. Is watching which of the smaller companies will pay dividends, which he welcomes. However, AEM has stopped increasing its dividend and has been taken off the dividend aristocrat list.

A bit extended. Broke out yesterday to new highs, so he wouldn't be surprised to see some near-term consolidation and weakness over the next couple of days. Chart's working. Yield is 1.6%.

Big run is well deserved. Margins have really increased with the price of gold. Fantastic development pipeline. Very well run.

The new top senior. Great acquisition, cashflow is growing, more reasonable valuation than in past. He's been lightening up on gold. With a strong USD, and interest rates possibly being higher, gold may take a few steps back. So he's waiting to see how things shake out.

He doesn't own any gold stocks. If you want to enter, focus on large-cap, senior gold stocks. They offer more conservative growth, there's a lot behind them (more than just 1 mine or project), and they're in friendlier jurisdictions. AEM is a great producer with lower costs, this would be his #1 choice.

They pay a good dividend and have a good growth portfolio and capital allocation, better than, say, Barrick.