Our 2022 Picks: How did we get on in March?

Quite a lot going on in the portfolio over the course of March. Obviously the big story was the ongoing war in Ukraine, with Russia initially making big gains, but then seeing its war machine grind to a halt. Sanctions on Russia have led to spikes in energy prices, higher inflation (which was already a factor going into the year) and increased volatility in the markets.

Our gold hedge has notably moved into positive territory, although that was what it was there for. A x2 leveraged version of that ETF would be up over 10% now. Harvia and Turkish Airlines continued to be star performers for us, although we are moving to cautious territory on airlines as we study the impact of the Russian war and oil prices on a sector which was just emerging from Covid.

Torq Resources

We attended the Swiss Mining Institute’s spring conference, hosted by Bally Capital Advisors, which was a great opportunity to meet with CEOs of mining companies. Torq Resources caught our eye here, a copper explorer that has a trio of very interesting sites to focus on in Chile this year. What impressed us about Torq is the pedigree of the management team, but also the quality of the local team on the ground in Chile. Getting access to good land packages in Chile requires solid local relationships coupled with an excellent grasp of the geology there. There are some intriguing sites here that have not really been properly explored.

Interfor

Interfor is one of a clutch of very high quality Canadian forestry products companies. It is also one of a small number of producers which seem to compose the bulk of the North American timber space. It recently bought 100% of EACOM Timber to boost its production. Interfor accounts for 4.9bn of board feet of timber per year and ships outside North America. It draws on reliable, sustainable supplies of Canadian timber. Overall the timber sector looks to be in rude health at the moment, and just does not seem to be getting the attention it deserves.

Seplat Energy

We continue to add high quality oil plays to the portfolio. Going into 2022 we anticipated that energy prices and geopolitical risk would remain a big story for investors. We like to buy oil companies which have considerable possible upside however. Seplat Energy is listed in both Nigeria and London. While some investors might consider West African oil firms to be a riskier proposition, this is a company with no Russia exposure, unlike many oil majors in pension funds. Seplat recently announced it will be acquiring Exxon’s Mobil Producing Nigeria Unlimited, although this is still awaiting regulatory approval.

CleanTech Lithium

Lithium is going to be an incredibly important story for mining investors over the next five years. The demand for lithium from the EV sector is starting to scale up, and larger miners are going to start to focus on potential lithium opportunities around the world. Outside China and Australia there are simply not many. CleanTech Lithium is one such, located in Chile, and still at a relatively early stage, it has two interesting brine projects. The team here is also very credible, with experience on the ground in the Chile clean energy space. This means that CleanTech Lithium could well meet the tough environmental standards expected by European battery companies.

Canadian Overseas Petroleum

Finally we also added Canadian Overseas Petroleum to our venture list. COPL has already generated plenty of interest among investors with its conventional light oil discovery in Wyoming, a site it acquired in January 2021. It has two oil production units there which are just at the beginning of a 40+ year lifespan. It is already producing over 2000 barrels of oil per day from existing wells. COPL has grabbed investors’ attention by stating that the long term product potential at Wyoming is on a scale many multiples greater than its initial expectations. Light oil discoveries on this level of magnitude have been very rare in North America.

Sold from the portfolio in March: Bellway, ProStar Holdings, Zoglo’s Incredible Food Corp

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 31st March 2022

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 31st March 2022

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 31st March 2022