Relatively “Easy” Alpha: Seasonality Plays

One strategy I think one could pretty much beat the index with every year is to pick up sleepers in the form of cashed up juniors who explore in the parts of the world where snow makes it impossible to work for almost half of the year.

I have mentioned Tectonic Metals as an obvious sleeper given it has an Enterprise Value of around US$2.9 M.

Prosper Gold is another one that will be quiet for a while and it stayed cheap even though the company released some outstanding Gold in till samples.

Few things discount as much as boredome and few things gives such a premium as excitement…

The opportunity for alpha lies in buying the discount and waiting for the premium.

Even knowing this it is bloody hard to do because it’s simply BORING and we are all humans after all.

I really don’t think you need to be a great geologist or mining engineer to be a good mining investor…

Just beating others on the psychology department brings more alpha than anything else.

There are other examples such as:

Lion One having to purchase new drill rigs that can drill deep. Nothing about the project has changed but the price has come down substantially due to BOREDOM.

White Rock Minerals has two projects that are in the peak boring period since they are located in Alaska. Recently the company became so obscenely cheap that I contemplated putting 40% of my portfolio in it. Since then it has revalued a bit after Bob’s article and I am for the time being content with my already large position… But am keeping an eye on that one.

Then we have all the assays for a lot of companies being slow due to COVID and bottlenecks at the assay labs. The time it takes to announce results does not change the projects but it makes investors BORED.

Closing Thoughts

After a 3-4 month correction in the miners there are some obvious bargains out there. Some of the biggest bargains might be found in the seasonality plays which have not only gone down with the sector but are peak boring right now. Then add some tax loss selling and one can figure out why the pendulum is probably as low as it is going to get. Sure, some might become a bit cheaper since there are a few days left of tax loss selling season but my oh my are there many cheap juniors relative to where the metals are trading.

Note: This is not investing advice.