HF&G - ISSUE 11- DECEMBER 2020 - 17 OUT OF 22
Huat.co started in February, since then we have given 22 picks. 17 of them are up (many of them big time) and our losses are small. December's pick is another junior gold&copper gem.
2020 is almost over and we are happy to kick this disaster year out the door!
PORTFOLIO REVIEW
Let’s start with a complete overview of our picks and pans:
The biggest winners were:
1) Tesoro Resources +900%: a gold mine in Chile that seems to have found a large deposit at its El Zorro project. The company completed a 22M AUD capital raise in December which capped the share price but with more rigs on site in 2021, the re-rating could have much further to go. We also took profits in Bellevue Gold after an almost 200% run. Our other gold holding remains Red5 and this month we are adding another copper/gold gem (more on that below)
2) Paladin Energy +165%: a uranium player in Namibia with a project that could restart soon if the uranium price continues to improve. The election of Joe Biden put a fire under all uranium share prices as the expectation is that nuclear will be a key part of achieving the so-called “Paris climate goals”. Please watch the below video on how the “climate crisis” has changed since the 70s. Sometimes people need to be scared we will all freeze and now we are all being scared we will fry. HF&G stance: neither is likely to happen. Climate change in any direction is here to stay. In any event, nuclear could become part of the ESG craze. It is not too late to enter a basket of uranium names.
3) Bitcoin +146%: since we added the Crypto Tulips to our selection Bitcoin has gone parabolic. Large asset managers such as Fidelity and JP Morgan (see below) are now taking the asset seriously. Bitcoin is fundamentally worthless and the chance it’s the biggest institutionalized Ponzi scheme ever concocted is real. Still, HF&G thinks you need to own some as a Bitcoin could be worth 28,000 USD or 280,000 USD. Once animal spirits take over there’s no stopping this madness. If Tesla is worth 600 billion USD, who knows what Bitcoin can do. Warning: please keep your crypto exposure limited and spread it out over a few different ones (Chainlink and Ethereum are the other two in our selection).
2021 OUTLOOK + DECEMBER PICK
2021 still looks bleak in 1H21 as the entire (mostly Western) World continues to go nuts over Covid. The end result: stumbling from lockdown to lockdown. The vaccine rat race is now on and multiple vaccines have been launched globally. It is hard to see how travel recovers before May/June 2021. Even then it is likely to remain very unpleasant and with all sorts of sensical and mostly non-sensical rules. HF&G has seen many cyclists with masks on but no helmet. Or lonely drivers in their enclosed car wearing a mask. Homer Simpson says it best: DOH!
While the world goes mad over a virus that is unlikely to kill 99.99% of the global population governments are firing up the printing press for everyone to socially distance, and stay home and pray for the best.
HF&G continues to believe US markets are very expensive (source: The Leuthold group)
and prefers to invest in small&mid cap ideas in Asia. HF&G also strongly believes that commodities will do well in the coming years. HF&G has added oil (Rex), gold (Tesoro, Red 5), uranium (Paladin, Deep Yellow, Boss, Peninsula Energy) and copper (Taruga Minerals). Despite what you might read in the mainstream media many other sources of energy are also not going anywhere. Coal is a good example.
China might publicly say they are closing coal plants but that is not before an acceleration in coal capacity between 2020-2030.
If India and China are not “playing ball” with the West in cutting coal emissions all efforts in Europe and the USA are fruitless. Nevertheless, the ESG-” Great Reset” narrative is likely to continue unabated. This means golden times are ahead for copper producers. Five times as much copper is needed to produce the same energy density in renewable energies via conventional resources.
This month we are adding another copper/gold gem that started trading on the ASX recently: Rincon Resources (ticker: RCR).
The stock has almost doubled in 10 trading days since its IPO on 21st of December at 0.20 AUD. RCR finished the year at 0.385 AUD for a market cap of just under 15M AUD.
The company is still to be discovered and has a good chance of finding substantial gold and/or copper at its Australian assets. Its most interesting asset is its Telfer tenement which is right adjacent to a massive Newcrest producing mine.
Also of interest to investors should be the performance of Greatland Gold (listed in London). YTD Greatland Gold’s share price went up almost 1,900% as its Havieron project contains 3.4 million oz of gold. Havieron is now valued at 2 billion AUD. Compare this to the tiny market cap of Rincon Resources. There is no guarantee that Rincon will find a major gold project in its South Telfer project but the similarities to Havieron are remarkable.
Most importantly, HF&G likes Rincon as it is run by the same management team behind as Tesoro Resources. Investing in junior miners is all about betting on the right jockeys, rather than just the horse.
That’s it for this month. See you all in the New Year. As always you can still find us on Twitter @GreedyHuat.