The Calandra Report: The four-card trick

Thom Calandra
6 Comments|May 19, 2014

Here's a card trick for die-hard resource investors. Create a four-company portfolio.
 
The market-cap cap for all four has to be less than $150 million USD. Or CAD. Heck, even Australian dollars. That's total. And yes, totally arbitrary and low enough to ensure the four are mostly beneath the mutual funds' radar.
 
Make one company a dirt-cheap prospector. Metals, energy, potash -- you name it. 
 
Choose one dirt-cheap producer. So, an actual miner or oil-gas producer.
 
One you can make a technology-linked metals company, or a services company (also dirt cheap).
 
Finally, one can be a former resources company that waved the white flag, retreated from the gold fields or oil fields and now is in a new line of business.
 
Preferably a line of biz that is not part of the dot-bong hype of late.
 
All of the companies have to be operating companies with cash on their books -- enough cash to operate for at least another 12 months.
 
Chart the portfolio for the next six months, starting now. This covers what is looking like a dreary summer (northern hemisphere) spell for natural resource equities.
 
I think you'll find, almost regardless of which four you pick, that this portfolio of pulverized resource companies -- even the one that switched its line of business -- will beat any stock-market measure or index during that span. Remember: total market cap for the four adds up to $150 million or less.
 
The micro-portfolio of four will beat any index of small-caps, any index of mid-caps, any index of large caps during that span. Regardless of industry segment or jurisdiction.
 
​This is a cheap-card trick. It's a reminder that when an entire global class of securities -- junior resource equities -- has been plowed into the earth for 39 months running, and, approaching its 40th month, is experiencing some of the most shallow share turnover in the history of the universe, and is parched on the financing front, and even the scum-sucking executive headhunters have shifted into dot-bong businesses, well, all you have to do is pick' em and hold' em to win this card game.
 
I believe that. My four-play is this:
 
-- The prospector is Gold Standard Ventures (TSX:V.GSV, Stock Forum) -- market cap of about $65 million. Jurisdiction is Nevada and objects are gold and silver. I own it and have seen the properties there.
 
-- The producer is Elgin Mining (TSX:V.ELG, Stock Forum) -- market cap of about $24 million. Jurisdiction is Sweden and object is gold. I own it and have seen the mine there.
 
-- The technology-linked prospector, or services company -- well you can have your pick: Apollo Minerals in Australia (AON) has a hook-up with High Power Exploration for its geophysical prowess. Jurisdiction is Australia and objects are iron-ore, copper and gold. It's about $10 million Australian. (A second choice is Synodon (TSX:V.SYD, Stock Forum) -- detecting pipeline leaks.) I own neither but know the principals of both.
 
-- The retreating resources company is Vaporin (OBB:VGLD, Stock Forum) -- once known as Valor Gold. It's a $12 million market cap. Jurisdiction is New York City, mostly, and its goal is selling electronic cigarettes. I own it, grew up in NYC and do not smoke or vaporize.
 
​There it is.​ If I am wrong, I will eat a cartridge's worth of those e-cigs. No nicotine for me, please.
 
Coming for our subscribers -- the latest on that computer services company as it blends big data, cyber-security, cloud comouting and traditional systems integration. 
 
THE CALANDRA REPORT: Subscribe*
*$110 yearly: Does Not Recur
 

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Comments

outonthetiles
"The technology-linked prospector".... should be GMA (Geomega) which is on the verge of re-shaping the entire REE industry outside of China with their commercial separation technology which is 100% environmentally friendly!! Along with Being one of the, if not the largest rare earth deposits in North America. Do yourself a big favour and read up on the company !! Cheers, Tiles
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May 19, 2014
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techiy
Yes I have special request. Is that possible to get an interview of Synodon Inc.'s CEO? Thanks you very much in advance
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May 23, 2014
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techiy
Synodon is a good choise. They are promising and secured big (million dollar) contrats lately. Their proven technology is getting accepted by market. They forcast to make 3M dollar revenue this year, which is four times(700k) than last year's.
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May 21, 2014
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fortun8
oh goodie....another sage advice from this so called news letter writer that gave us the famous Gran Colombia and other colombian "investment advice".....i wouldn't read the report if it came with money attached to it....its useless....this is all my own opinion and i urge you all to do your own due diligence as i have been wrong on many occasions and i could easily be wrong this time as well
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May 19, 2014
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GUNSS
I hope to publish an interview of Gold Standard Ventures' CEO next week. Calandra has given me a few good topics to pursue. Anyone have a specific question for Jonathan Awde?
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May 16, 2014
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tcalandra
GUNSS, with the carlin style geology, one has to be so patient and methodical. One good question for Jonathan Awde and his team might be: How can the collapsed breccia dynamic of the new property, Pinon, supplement what GSV is doing at Railroad? Best, Thom Calandra
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May 17, 2014
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