President and CEO Mitchell Krebs of Coeur Mining Inc (NYSE:CDE) says that as a result of lower silver and gold prices, his company is now focused on getting more value out of the five operations in which a big capital investment has already been made.
Our company built several new mines in that [2008 to 2010] period of time. Since then, we have seen the prices for both silver and gold decline quite a bit. The peak for silver and gold prices took place in the first half of 2011 when silver was nearly $50 an ounce and gold was more than $1,800 an ounce. As we sit here today, the price of gold is about $1,075, and silver is about $14 an ounce. So we have seen the prices for both silver and gold come down a lot over the last few years.
As a result, the current phase of our company’s progression is focused on getting more value out of our mines that were built between 2008 and 2010. So unlike a lot companies right now that have recently been building new mines, we’re in the fortunate position of having a diverse portfolio of five operations for which that big capital investment has already been made.
What we’re trying to do now is make some incremental capital investments in underground development to access higher-grade material. We’re also spending incremental money on exploration around our existing mines because we have historically had a much higher success rate. It takes much less to do this kind of exploration drilling, and it can have a more immediate impact on our cash flow because the sites are close to existing processing infrastructure.
So what we’re going through now is a very heavy investment phase, with a very execution-driven focus on extracting just as much value as we can around these existing mines that were built during the 2008 to 2010 time frame. We are offsetting the erosion in silver and gold prices, and getting ourselves in a position to generate positive cash flow in the current price environment.
Marc Saint John Webb discusses Quaero Capital SA. Mr. Webb focuses on smaller companies in Europe with a value bias. By investing in smaller companies, Mr. Webb is able to find opportunities in a less efficient market. He uses a bottom-up stock-picking approach and performs fundamental research by visiting companies and meeting management. Through these visits, Mr. Webb is able to identify situations where there is a disparity between what the stock market is saying about a company and what he uncovers through his research.
Full interview available here.
Scott M. Kimball discusses Taplin, Canida & Habacht and the BMO TCH Intermediate Income Fund. The goal of the fund is to provide attractive total returns and high income with less sensitivity to interest rates than typical core bond funds. The portfolio is comprised of mortgage-backed securities, investment-grade corporate bonds and short-term instruments. When it comes to the mortgage-backed securities, Mr. Kimball sticks to government-sponsored entities so that the securities offer income and safety, and don’t introduce volatility to the portfolio. Overall, Mr. Kimball maintains between 100 and 150 holdings, and his investment decisions are made based on a relative value discipline.
Full interview available here.
Thomas Vandeventer discusses Tocqueville Asset Management L.P. and the Tocqueville Opportunity Fund. The Tocqueville Opportunity Fund is a small-cap and midcap growth-oriented mutual fund. Mr. Vandeventer aims to invest in leading companies in expanding industries. He looks for companies that are positioned to gain strong market share, and those with differentiated and disruptive technologies, products or services. Mr. Vandeventer also believes it is important to invest in companies with visionary management teams. By focusing on these characteristics, Mr. Vandeventer can find stocks that he can hold for a minimum of three to five years. The overall makeup of the fund is diversified while also being relatively concentrated in its leading names.
Full interview available here.
Rob Chang covers precise metals as well as uranium. With uranium, Mr. Chang is looking on the demand side at what China and Japan are doing. For precious metas, that segment, especially gold, is fickle at the moment in that one can use any rationale to argue it up or down. Mr. Chang pays attention to the global sentiment toward gold as he believes that plays a big part. On a short-term basis, he says gold and silver are well-positioned while uranium is his pick for the longer term.
Full interview available here.
The Ultimate Software Group, Inc.
Portfolio Manager Thomas Vandeventer of Tocqueville Asset Management says in the five to six years his firm has owned The Ultimate Software Group, Inc. (NASDAQ:ULTI), the company has grown very well, with a five-year sales CAGR of approximately 22% and EBITDA growing at 26%.
Ultimate is a Florida-based software company. It was founded in 1996, and has strong leadership and a very strong and loyal culture in terms of its employees. Ultimate Software is a SaaS-based provider of software. Its major competitors include Automatic Data Processing (NASDAQ:ADP) and Paychex (NASDAQ:PAYX), and two younger companies named Paylocity (NASDAQ:PCTY) and Paycom (NYSE:PAYC).
Ultimate is in the business of what we call HCM, or human capital management, and provides software for payroll and other employee-related records management and data management. Ultimate, as the company says, manages the employee work life cycle from recruiting through retirement. The company’s main app is called UltiPro. UltiPro has HR functions, payroll functions and talent management functions.
He adds:
Last year, under the Affordable Care Act, there was a requirement for all companies to file forms on each one of its employees, which provided confirmation within ACA requirements. So that module is actually provided by Ultimate. And this year, there’s a new rule that will require mandatory overtime compensation for salaried workers who are basically making at or under $47,000, irrespective of whether they are entitled to bonuses and other forms of compensation. So for a large company, being able to track these kinds of employee information is very important.
Chris Thompson covers gold and silver precious metals . Mr. Thompson says at the beginning of the year it was a bear market for precious metals driven by the strong dollar and an uncertain outlook for equity markets. He now sees an environment fraught with risk and uncertainty, which is supportive for precious metals. He says a near-term risk for silver and gold is a move by the Fed to increase interest rates.
Full interview available here.
Jorge Beristain discuses his outlook on precious metals. Mr. Beristain says the first half of the year was a good backdrop for precious metals due to the rally in gold prices, while at the same time companies delivered on cost cutting, so margins widened up. He says the strong U.S. dollar and potential for rising rates have been short-term macro headwinds for gold, and that globally based companies have done the best year to date.
Full interview available here.
Portfolio Manager Thomas Vandeventer of Tocqueville Asset Management says TESARO Inc (NASDAQ:TSRO) has been a very successful name this year, largely due to the company’s PARP inhibitor drug.
It really woke up in April this year, even after the big correction in health care stocks in the first quarter, when the Janssen pharma division of Johnson & Johnson (NYSE:JNJ) inked a deal with TESARO in which they invested $35 million in the company’s PARP platform. Janssen also agreed to an additional $415 million in milestone payments. And they bought $50 million of stock when the agreement was announced at $44.50.
Now today, TESARO just issued an additional 1.75 million shares in the public market at $135 a share. So just on the initial investment that Johnson & Johnson made, they’ve actually tripled their money at today’s secondary offering price.
Vandeventer adds:
PARP inhibitors are the newest best thing in the chain of innovation in oncology. PARP is a family of proteins, which perform very important functions in the cell, and probably the most important is what we call DNA repair. The PARP protein plays an important role in what is called single-strand repair. PARPs show activity in monotherapy versus tumors with existing DNA repair defects.
You may have heard of BRCA1 and BRCA2 mutations. PARP proteins enable a mutation, a mutated cell or gene, to repair itself to continue to generate more mutations, thus tumor growth is enabled. So PARP inhibition is a very interesting area that’s being studied in solid tumors.
Kyle Joseph says it’s difficult to have an outlook on BDCs in 2017 given some uncertainty and recent political changes. He says from a purely operational perspective the third quarter deal flow picked up a little bit, but at the same time with the positive market backdrop, spreads compressed, and yields on new transactions are continuing to grind tighter. Mr. Joseph says the outlook for deal flow is positive and will remain so if the favorable economic environment continues.
Full interview available here.
