Interested to hear views about the big miners/resource Co's

I’m adopting a new investment strategy/system that is more structured and rigorous. I’ve got numerous mining and oil/resources companies in my current portfolio and may potentially rationalise the holdings.

I’d be interested in any views about the long term growth potential of any companies relative to their peers (not just mining but at the moment I’m specifically thinking about mining).

I’ve created a fairly complex spreadsheet that has a lot of parameters for each company that include values for risk, growth potential, rating (in terms of my view and analyst views), etc. I’m not trying to avoid my own research but I’d be interested in any views of the long term potential of companies (within a sector - eg mining) - ie top 5 ordered as top choice…

Obvious mining companies: AAL, BHP, CEY, GLEN, JSE, RIO, SCCO, S32
Others: AMR, ARCH, GSM

Obviously also long list of oil/gas companies.

and there’s companies that often aren’t classed as mining companies such as BREE

I’ve just interested in any views as a general chat thread.

Lets say these are all ‘Global Resources’ type companies.

https://www.msci.com/documents/10199/5836f428-12d1-43a9-a857-5ed2b8f62585

Personally I think global resources is a rather cyclic sector, and from the above only 5 of the last 14 years has it beaten a general global market index, and the performance since 2008 has returned roughly 20%, whereas a global index fund would have returned you +140%.

I would diversify away from global resources imo. Have you looked at some investment trusts - they’re at a decent discount right now to the underlying value in most instances and could be a good way to diversify if you’re happy to hold long term.

@Dougal1984 I agree that they can underperform compared to some sectors but I think they do offer relatively safe trading opportunities and they pay good dividends. I don’t tend to be that concerned by the dividends themselves (the price drops on exD day anyway) but I find it increases the trading opportunities. Also there are some resource companies that do outperform and there are generally some that are undervalued that can outperform thus it isn’t a sector that I ignore

Are you looking at any in particular, at the moment?

@Dougal1984 as you say some trusts are at good discounts and I have been building small holdings in some by trading but some of them have already gained a reasonable amount (10% in the last month).

I find it difficult researching funds/Inv Trusts because they don’t always do well and at the end of the day there’s fairly limited info because you’ve just got the historical performance, top holdings, mkt cap and nav.

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I find the same. What I generally look at is long term performance / management / consistency.

It’s not quite arbitrage, but if something consistently performs well long term and/or pays a good dividend and has a fairly static long term management structure then time normally wins out.

The discount / premium to market value is more long term sentiment than current value. It depends what indicators you use to invest.

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I find there is a circular problem with funds. I would use them to invest in speculative areas where I don’t feel able to do the research on companies to invest myself - ie some emerging techs where it is hard to know which companies will succeed or have the world beating tech… The assumption should be that the fund managers have the information and expertise (and investment funds) to successfully identify the winners and invest. However, the reality is that specialist funds often have pretty disappointing returns and it would be better just to stay away

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I agree some venture capital funds almost appear to simply go “I must spend these monies” so are more speculative than anything else. The key is finding the good ones, but VC funds I tend to avoid.

One I do like is Chrysalis IT. It was in the times I think in 2021 as one to watch, the market price got into the high 200’s and is now trading at a 50% discount to NAV around the 65p mark. Rising interest rates have hit growth companies a lot, and some I think are oversold.

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I hold BRWM for mining exposure – mostly due to the greater opportunity cost of researching and monitoring individual companies.

However, I wouldn’t buy it today because I like to wait for sentiment to change so I can pick some up at a decent discount and fairer prices.

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