Goldmining equities are issued by companies engaged primarily in the extraction, processsing and marketing of gold. Goldmining equities are much more volatile as gold and offer a higher beta to the gold price. Most of these companies are listed on the Canadian stock exchange.
November 26th, 2020
Sprott-Falcon Gold Equity UCITS Fund
The manager invests worldwide mainly in stocks issued by companies engaged primarily in the extraction, processsing and marketing of gold. In companies engaged in extracting, processing or marketing other precious metals respectively precious stones or non-ferrous metals, the fund may invest up to 25% of its assets. The net earnings of the investment fund are distributed in February of each year.
The managers’ investment philosophy is contrarian and value oriented with a bottom-up approach. However, due to the specialized nature of the Gold Equity strategy, the investment team is aware of macroeconomic trends in order to monitor the investment case for gold.
The major source of value added stems from the investment team’s research capabilities and deep fundamental knowledge of the precious metals sector. The team focuses on a range of companies from their very early stages of evolution to full maturity but tends to invest in smaller to mid-cap companies that are beneath the “radar screens” of other investment managers. Smaller companies tend to be more attractive to the team as they represent a greater scale of upside return should these companies uncover meaningful resources. In addition, the breadth and depth of the investment team’s understanding of geology allows them to seek unique opportunities that may otherwise be unnoticed by the market. The group’s primary efforts are focused on identifying potential value that the market may not recognize or which the market excessively discounts because of a lack of available information.
The investable universe is comprised of gold and precious metals mining shares and bullion. The investment team typically invests in common stocks with initial holdings of 1% or less. Mature holdings ideally range between 2% and 6%. Position weights are not targeted on a mechanistic basis and position size is a result of the evolution of the specific company, fundamental developments, and analyst’s research findings. The approach taken to building or reducing position size is generally gradual.
The manager has a bottom-up approach to conducting research. Company specific opinions are based on fundamental research and regular dialogue with company management. Traditionally, the best investment ideas have initiated from internal research, which is formed through the analysis of company reports, management meetings, on-site visits, and internal discussion.
Securities may be sold if position limits are exceeded, points of over valuation are consistently exceeded, or as a result of fundamental disappointment.
Sprott-Falcon Gold Equity UCITS Fund
The investment advisers of the Sprott-Falcon Gold Equity UCITS Fund are award winning Fund Managers. For instance, John Hathaway has received three gold Sauren medals (2016) for outstanding fund management in the category Equity Goldmines.
John Hathaway joined Sprott Asset Management in January 2020. Mr. Hathaway is a Portfolio Manager of Sprott Hathaway Special Situations Strategy and Co-Portfolio Manager of the Sprott Gold Equity Fund. Previously, Mr. Hathaway joined Tocqueville Asset Management L.P. in 1997 where he was a Co-Portfolio Manager of the Tocqueville Gold Fund as well as other investment vehicles in the Tocqueville Gold Equity Strategy. He was also the Portfolio Manager of private funds. Prior to joining Tocqueville, Mr. Hathaway co-founded and managed Hudson Capital Advisors followed by seven years with Oak Hall Advisors as the Chief Investment Officer in 1986. In 1976, he joined the investment advisory firm David J. Greene and Company, where he became a Partner. Mr. Hathaway began his career in 1970 as an Equity Analyst with Spencer Trask & Co. Mr. Hathaway earned a B.A. from Harvard College and an MBA from the University of Virginia. Mr. Hathaway was also the Chairman of Tocqueville Management Corporation, the General Partner of Tocqueville. He also holds the CFA® Designation.
Douglas Groh joined Sprott Asset Management in January 2020. He serves as a Co-Portfolio Manager of the Sprott Gold Equity Fund as well as other investment vehicles in the Sprott Gold Equity Strategy. Previously, Mr. Groh was a Portfolio Manager at Tocqueville Asset Management L.P. Prior to joining Tocqueville, he was Director of Investment Research at Grove Capital from 2001-2003. From 1990-2001, he held investment research and banking positions at J.P. Morgan, Merrill Lynch, and ING Bank. During the late 1980s, Mr. Groh served as a portfolio manager of gold mining equity funds for U.S. Global Investors and IDS Financial Services, after beginning his career as a mining and precious metals analyst in 1985 at U.S. Global Investors. Mr. Groh earned a B.S. in Geology/Geophysics from the University of Wisconsin – Madison and an M.A. from the University of Texas at Austin, where he focused on mineral economics.
About Sprott Asset Management
Sprott Asset Management is a wholly-owned subsidiary of Sprott Inc. (“Sprott”). Sprott is an alternative asset manager and a global leader in precious metal and real asset investments. Through its subsidiaries in Canada, the US and Asia, Sprott is dedicated to providing investors with specialized investment strategies that include Exchange Listed Products, Lending, Managed Equities and Brokerage. Sprott’s common shares are listed on the Toronto Stock Exchange under the symbol (TSX:SII). For more information, please visit www.sprott.com.