Investment Ideas – Economic Moats

Another post in the series of Investment Ideas. Be sure to check out earlier posts on Family Owned Businesses & Great Capital Allocators as a method of screening and finding good investment opportunities.

Most investors have heard Warren Buffett talk about economic moats of businesses. To jog some memory, here’s a quote from Berkshire’s 2000 annual meeting:

“So we think in terms of that moat and the ability to keep its width and its impossibility of being crossed as the primary criterion of a great business. And we tell our managers we want the moat widened every year. That doesn’t necessarily mean the profit will be more this year than it was last year because it won’t be sometimes. However, if the moat is widened every year, the business will do very well. When we see a moat that’s tenuous in any way — it’s just too risky. We don’t know how to evaluate that. And, therefore, we leave it alone. We think that all of our businesses — or virtually all of our businesses — have pretty darned good moats.”

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2019 Top Investment Picks – Q2 Update

At the beginning of the year, I put together a list of Top Investment Picks for 2019 from the investment community and track them on this website. This is just meant to be a fun exercise to see how the picks do. As part of the process, I intend do provide quarterly updates on the picks to see how they are doing. This is the update after Q2.

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Achievement: 5-bagger

On the coattails of a gold rally in June, I reached a 5x return on my largest holding: Kirkland Lake Gold (KL.TO). As with other investors in the space, this company has been a home run. I’d be lying if I said that it was all skill and no luck on this investment call. I was lucky and took a risk that paid off handsomely.

The following annotation shows all my purchases and one sale in KL.

As mentioned, I was lucky enough to come across this company early and followed Eric Sprott into this investment by first purchasing Newmarket Mining in October 2016. It was announced that Newmarket would merge with Kirkland Lake Gold to form a new mid-tier gold producer. Of course, at the time there were plenty of risks and uncertainties.

Further details of the transactions including all the ‘Recent Buy’ posts are linked below:

With all the purchases listed, my average share price was $10.97. I was able to achieve a CAGR of 84.3%!

Kirkland Lake continues to be a great performer and perhaps the best run company in the mining space. It continues to execute flawlessly de-risking projects and allocating capital appropriately (buybacks, dividends etc). My conviction in KL still remains high and the only reason for selling earlier this year was to reduce the weightage & concentration of one stock in my portfolio. I intend to let this holding free-ride and look forward to continued gains over the coming years.

Hopefully someday this will be a 10-bagger for me 🙂

Investment Ideas – Great Capital Allocators

A follow-up in the Investment Ideas series of posts. Be sure to check out my earlier post on Family Owned Businesses as a method of screening and finding good investment opportunities in this series.

Good capital allocation is the most important trait for a company. Generally speaking, a company has a handful of options:

  • Reinvest in the business
  • Pay down debt
  • Pay dividend
  • Buyback stock
  • M&A to grow the business
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2019 Top Investment Picks – Q1 Update

At the beginning of the year, I put together a list of Top Investment Picks for 2019 from the investment community and track them on this website. This is just meant to be a fun exercise to see how the picks do. As part of the process, I intend do provide quarterly updates on the picks to see how they are doing. This is the update after Q1.

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