Managing Partner at Red Sky Capital Management
Member since: Mar '13 · 185 Opinions
Gold. Constructive on gold at this time. A very volatile commodity creating very volatile stocks. He is seeing some interesting technical levels being supported as well as some of the macroeconomic factors. In Europe there are more troubled signs of the recovery that will create more easing for money, more printing of money. This is good for gold as a currency. He is a bit more constructive on China as an economy. Looking at the economic growth forecasts that are projected by the Chinese government, there would have to be a pretty healthy pick up in the second half for them to meet their goals. China is the largest consumer of gold.
He is favourable on this from an M&A perspective. Felt there was a significant amount of value to be had in the event they were able to sell their bakery business, which has been done. Have a bunch of cash on their balance sheet. He is a little confused because he thinks the market is giving them too much credit on their ability to turn around the protein business. That is yet to be seen. Easy money has been made, but on the upside you are looking at $21-$22.
Continues to be very bullish on this. Raised a little money in the last while, and this was followed by the tech sector getting hit because of a general pullback. Fundamentals have not changed, but in fact they have improved. Have signed additional contracts. They have extremely sticky customers. The shoring up of the balance sheet gives them additional ability to bid for more business with their existing customer base, as well as new business. Trading at an extremely cheap multiple.
Copper. He is constructive on China for the back half of the year, which would be good for copper. This has been supported at around the $3 level recently. Given the supply/demand situation, it either consolidates or runs a little higher. Capstone Mining (CS-T) and Lundin Mining (LUN-T) are 2 names he would recommend.
A unique little Canadian company that has a very, very unique value proposition. They have 2 businesses. Ladies under apparel business, which recently got contracts with Target (TGT-N) and VF Corp (VFC-N). He expects this division to have high double-digit growth over the next few years. The other business is a chemicals licensing division, which has deals with technical companies that are looking for something special.
In the phase of constructing as well as raising money to construct a diamond operation in Canada. Raising money is going to take time. He is favourable on diamonds in the back half of the year. Somewhat of a China trade. Because this company is in the building phase, you are going to have to be patient.
Economy. There is inflation in a number of different places that is causing trouble for the consumer to spend on discretionary items. Because of this, there is a fairly lacklustre performance on the discretionary side of things. Inflation is coming mainly from commodities such as food, metals, rents, etc, places where people have to spend. If people have to spend more in these areas, there is going to be less money spent elsewhere. He is now taking a conservative approach by transitioning over to some of the metals, particularly gold.