Portfolio Update: Reshuffling the Deck (April 13, 2017)

by FI Fighter on April 13, 2017

in Precious Metals Updates

I kind of telegraphed what I was going to do yesterday, but today I finally did it, so now it’s time to write about it. I continued to reshuffle the mining stock deck and made a few more transactions this morning, which are summarized below.

Here’s what transpired.

  • Sold 1,000 shares of Fortuna Silver (FSM) @ $5.40/share
  • Sold 42,000 shares of Defiance Silver (DEF.V) @ C$0.2929/share
  • Bought 15,680 shares of Teranga Gold (TGZ.TO) @ C$0.77/share
  • Bought 5,000 shares of Klondex Mines (KLDX) @ $3.78/share

Fortuna Silver

I sold just a small parcel of Fortuna Silver (FSM) last week for a quick/small gain. As readers know, I have a strategy of sometimes trying to “over-allocate” into certain positions on the dips, so that I can trim a few shares later on to reduce the cost basis slightly. In the case of FSM, any gains made here were very minimal, and I really only sold some shares to free up more capital for other purchases/opportunities I like better at this time, which I’ll discuss below…

I still own 6,000 shares of FSM, so I’ve still got skin in the game. I’ll probably look to sell some more shares, but next time around, hopefully at a much higher share price.

Defiance Silver

I’ve made it no secret that I’ve been trying to exit out of my Defiance Silver (DEF.V) position. Unfortunately, I was only able to sell a small fraction of my shares last time around, as I only got a partial fill on my limit sell order. At the end of February, I was able to offload shares at ~C$0.38/share

Today’s sale was at C$0.2929/share, so I missed out on some big time gains right there

Nevertheless, I felt compelled to do so at this time since I’ve now owned the stock for over 1 full year (long-term capital gains), and I’ve been eyeing some other ideas that I like far more than DEF.V. With Defiance Silver, the lack of news flow really did it for me and pushed me towards the exits… I really have no clue at all what management has planned this year (in terms of drilling), and I had lost all patience/confidence in this company for awhile now… Sure, the Defiance story is probably still very prospective and it’s most definitely early days here, but the lack of communication to shareholders from management greatly influenced my decision to NOT wait it out any longer… Why bother when there are so many other quality alternatives out there?

In short, if the spot price of silver does well, I’m sure DEF.V will deliver solid returns to investors… But I’m moving on…

I liquidated all my remaining shares in DEF.V. I made over $4,000 in realized gains on this trade, and ~56% return in just over one full year.

Teranga Gold

Yesterday, I let readers know that I would be on the bid to pick up some Teranga Gold (TGZ.TO) shares today. Teranga is a mid-tier gold producer that I like a lot, and right now I feel like it’s one of the better value opportunities available in the marketplace… The spot price of gold has been going up, but TGZ.TO has been stuck in a pretty significant downtrend… Shares of TGZ.TO were trading above C$1.00/share not too long ago, and now we are below C$0.80/share.

That’s a ~25% return, if shares can just get back to ~C$1.00/share range.

I used the DEF.V proceeds to purchase TGZ.TO @ C$0.77/share.

I now own 58,680 shares of Teranga Gold (TGZ.TO).

Klondex Mines

I’ve been adding back shares of Klondex Mines (KLDX) over the last two weeks. Klondex (along with Teranga), has always been a mid-tier gold producer that I’ve liked, but I had no qualms selling out of my position entirely back in February @ $5.60/share. At $5.60/share, KLDX looked overcooked, given that the spot price of gold continued to remain below $1,300/oz, hence why I was so eager to sell.

But at ~$3.80/share range (and below), KLDX looks a lot more attractive to me, so I didn’t mind jumping back in for another round…

Similar to what happened for me with FSM, I kind of overdid it here (bought more than I can chew), and ended up with 5,000 shares of KLDX.

Over the course of the next week or two, I’ll look to sell back a tranche or two of KLDX shares, especially if volatility is generous to the upside, which would provide a good exit opportunity to make a quick buck (and help me pay next month’s rent).

Summary

The spot price of gold has been going up, but certain stocks have been showing a lot of weakness, despite that. So, I used today as an opportunity to reshuffle the deck a bit…

I made a very small gain on FSM, but more importantly freed up some capital to purchase more shares of KLDX and TGZ.TO (two stocks that I like that have been getting pummeled recently).

Here’s a 3 month chart showing that KLDX and TGZ.TO are both down over -20%.

Further, I exited out of a speculative stock, DEF.V, that I was no longer so bullish on.

Mining stocks are risky, no doubt about it, but to a degree I feel like I was able to reduce my risk exposure just slightly, after the conclusion of today’s transactions.

 

And I think I picked up some good value plays in the process…

 

All in a day’s work!

 

Happy Hunting!

{ 4 comments… read them below or add one }

1 JanNo Gravatar April 14, 2017 at 9:55 am

Thanks.
Any thoughts on Comstock (LODE)? I admit that the only reason it caught my eye is because of how far it has fallen!!

Reply

2 FI FighterNo Gravatar April 15, 2017 at 2:58 pm

Jan,

That’s a name I know nothing about, so will refrain from commenting at this time. There are so many juniors out there, it’s tough to keep track of them all.

If you have any insights, I would be happy to learn more.

Cheers!

Reply

3 (another) JayNo Gravatar April 15, 2017 at 1:41 pm

For a guy who’s “not a day trader” you sure do love to shuffle the deck! No judgement here, I was a little late on KDLX at $3.78 USD, which from a “long term rental” perspective I’m happy, and I trade more often than I probably should. Also stoked on Orca and Hummingbird.

Love your perspective, thanks for your contribution to the FI/FIRE community!

How are you feeling about your lithium holdings though?!

Reply

4 FI FighterNo Gravatar April 15, 2017 at 3:01 pm

Jay,

Yeah, this mining game is tough and I’ll never pretend like I have a good grasp on it… Volatility is the name of the game, and as is often the case, these stocks get bid up and then crash back down… Last time around, I sold out of KLDX at $5.60/share… Now it’s at $3.76/share… So, sometimes, I’m glad I “day trade” and get in and out of positions…

Will I get it wrong more times than not? Probably… Which is why I maintain a core position that is for longer term “buy and hold rentals”. Say, 3-5 years, or until I get the gains that I’m after… but definitely none of these mining stocks are “buy and hold forever”. No way. They are all “ticking time bombs” as far as I’m concerned, and this is something most critics out there can never grasp… They mistakenly try to peg these investments/speculations into a hole that will never fit. “Buy and hold forever” is a wonderful model, but there are other ways to make money too!

In cases like Defiance Silver, I held for more than 1 year, was happy with the gains, but the investment thesis/fundamentals changed… So, I was happy to cash out.

In regards to lithium, I’m very bullish, but think the next leg up won’t start until late Q2 this year, or possibly in 2018… It’s still very early days here, and I’m glad the spike that occurred last year happened when it did… It gave me an alert to start doing research and start getting positioned into companies before the boom really arrives. I’m speculating of course, but I don’t think we’ve seen anything yet in regards to lithium stocks and the best days in the sector are to come soon.

All the best!

Reply

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