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John Feneck – 2 Sides Of Takeover Mergers And Portfolio Management In The Resource Stocks

John Feneck, Portfolio Manager, Consultant, and publisher of the Feneck Commodities Report, joins us to share his macro outlook on the Fed rate hiking cycle in response to high inflation, and provide some insights on how he is approaching investing in resource stocks in this environment.  We start off with his reaction to some of the recent merger & acquisition deals announced where the all shares deals have continued to punish both company being acquired and the acquiring company as the transactions became liquidity events.  We discussed that Alexco Resources (AXU) is being acquired by Hecla Mining (HL), Gold Standard Ventures (GSV) is being acquired by Orla Mining(ORLA),  and Nomad Royalty (NSR) is being acquired by Sandstorm Gold (SAND) (SSL), and in all cases both companies pulled back down in tandem, due to the all shares deals which disappointed longer-term shareholders.   On the more positive side of M&A, we did just see a nice premium paid for Great Bear Royalties Corp. (GBRR.V) (GBRBF) by Royal Gold (RGLD), as well as the solid premium takeover of Orca Gold (ORG) (CANWF) by Perseus Mining (PRU) (PMNXF).*

 

John provides his strategy around buying or adding into market weakness, and selling or trimming into market strength, as a more active portfolio manager, but at present is in more of a holding pattern in most resource stocks, waiting to see where the bottom will come in before deploying much more capital.  We also take a look at how he holds hubs like Silver or GDXJ in his hub and spoke approach, and but that the larger returns and opportunities will come from the junior mining spokes of individual companies.   We talk about how high inflation costs are eating into the developers projects, and he provides some questions he asks management around when a PFS is slated to be released, and that he prefers that development stage companies already have some sunk costs and infrastructure in place to reduce the inflation risk, preferring companies like Braveheart Resources (BHT) (RIINF) or Gold Terra Resource (YGT) (YGTFF) in that category. *

 

Next we pivoted over to the stocks that will move first when the PM sector bottoms, and John agreed that sector leaders like Agnico Eagle (AEM) or Newmont (NEM) will get the funds flows out of the gate and he is positioned in AEM for that eventuality.   Despite being 60% in cash with regards to the energy fund that John manages, he is still is liking the setup in some companies and mentioned Jericho Energy (JEV) (JROOF) as one straddling the hydrogen and oil sectors.  Also with regards to a company with energy metals exposure, he still likes the diversified commodity mix that Forum Energy Metals (FMC) (FDCFF) has in their 3 projects. *

 

*Guests featured herein may have been compensated for their services in working with some of the companies mentioned. John holds positions in many of the Companies and ETFs mentioned.

 

If people want to contact John with regards to his services please email him at john.feneck@yahoo.com.

 

https://www.feneckconsulting.com/about

Discussion
8 Comments
    Jul 12, 2022 12:15 PM

    Inflation data ‘already out of date:’ White House downplays CPI expectations

    Ben Werschkul · Senior Producer and Writer – Tue, July 12, 2022

    https://finance.yahoo.com/news/inflation-data-already-out-of-date-white-house-downplays-cpi-expectations-173945635.html

    Jul 12, 2022 12:21 PM

    EPG Weekly Oil & Gas Market Update

    Energy Prospectus Group – July 9, 2022

    https://youtu.be/m9LxawmwtbU

    Jul 12, 2022 12:30 PM

    Anybody follow Bob Hoye? I think readers of these pages will enjoy his thoughts:
    tps://marketsanity.com/bob-hoye-the-greatest-financial-bubble-of-2022/

      Jul 12, 2022 12:03 PM

      Thanks for sharing that post Silverdollar.

    Jul 12, 2022 12:40 PM

    Technically, it appears west Texas crude oil prices have peaked. Biden will be happy to hear this since the price at the pump should be lower come the midterm elections. That’s the good news; the bad news will be a recession which everyone will know by then. Lower energy costs will be good for the PMs and the dollar’s run should just about be over.

      Jul 12, 2022 12:02 PM

      +1 Agreed on all points Doc.

    Jul 12, 2022 12:42 PM

    Agree when stocks go up with move you need to trim.
    Look at Jordan Roy-Byrne his portfolio didn’t take profits prior to the march 2020 crash, he watch as miners went down and finally sold out at break even, so his portfolio he held since 2016 he gave all those gains back, he did same now, as miners went down last 2 years his portfolio gave back all gains since March 2020.
    Buy his newsletter and check the archives and you will see for yourself. So his portfolio and money he had invested 2016 to date has no real gains, that’s insane.
    Oh he says it’s long term hold. Who invests that kind money for over 5 years and has nothing to show for it. Glad I closed my subscription.

    Jul 12, 2022 12:02 PM

    John Feneck – Now is Not the Time to Give Up on Gold

    The Jay Martin Show – July 9, 2022

    “Founder and President of Feneck Consulting, John Feneck makes his case for why gold and gold equities have a bright future ahead for those willing to be patient, despite bearish sentiment from the investment community. John argues that in an era of massive inflation, loose monetary policy, and a potential recession, now is not the time to give up on gold.”

    00:00 Is it Time to Buy Gold Equities?
    02:16 Why Isn’t Capital Flowing Into Miners?
    04:19 Central Banks Accumulating Gold
    07:41 Criteria for Investing in Miners
    10:56 Copper VS Gold
    12:44 Jurisdictional Risk
    15:44 Mid-Tier Names
    19:04 Wild Speculations
    21:25 Portfolio Construction
    23:55 Building Relationships With Management
    25:34 This Isn’t the Time to Give Up

    https://youtu.be/EUP4MeOxyW0