Portfolio Update: Adding to My Best Ideas (September 08, 2016)

Birimian

These days, I’m not much more than a “one trick pony”. As I have mentioned on numerous occasions, when it comes to investing ideas, there really aren’t that many things out there that I like right now… In the world of mining stocks, I feel like one of the best deals remaining is junior explorer, Birimian Limited (BGS.AX/EEYMF), which is primarily a lithium company (but they’ve also got some gold assets under their belt as well!).

Gold and lithium… Probably my two most favorite assets to own right now (the other being silver).

Even though my position in Birimian Limited was already rather “large” by my own portfolio standards, I haven’t been able to resist adding shares of a company that I feel is being grossly undervalued by the markets right now.

As such, most recently, I decided to load up on more shares of Birimian Limited even more aggressively; I closed out my entire position in Tahoe Resources (TAHO), and proceeded to move about $42,000 into adding more shares of EEYMF. I booked about $24,000 in profits with TAHO (I first acquired shares of TAHO after Tahoe Resources bought out my Lake Shore Gold shares due to the merger earlier this year).

Just prior to liquidation.

Current as of mid-day September 07, 2016.

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I ended up purchasing an additional 172,000 shares of EEYMF for A$0.32/share ($0.247/share).

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Yup, that 172,000 volume of shares traded was all me… again!

I now own 438,000 shares of BGS.AX/EEYMF in total.

Please Note: I elected to add shares of EEYMF instead of BGS.AX (the more liquid native listing which trades on the ASX) because this swap was done inside a 401k retirement account, which does not permit me to trade foreign stocks directly, but I am able to buy via the OTC route.

Also, the share price of EEYMF is an unreliable indicator because the OTC market is currently extremely illiquid (thinly traded on a day-to-day basis). To make things less confusing for everyone, when I list my portfolio holdings, I lump both my EEYMF and BGS.AX shares into a single listing, BGS.AX. But don’t worry, the cost basis and transaction fees are all accounted for at the time of purchase, so the “bottom line” picture won’t get lost in the mix.

In case anyone is wondering, these OTC shares are IDENTICAL to the ASX listed shares (EEYMF = BGS.AX)… If you ever need liquidity, you can easily buy/sell your OTC shares directly on the ASX during normal business hours (under the native symbol BGS.AX). Your US broker (by phone) can help you setup a limit order good for the day that will transact/convert EEYMF shares into BGS.AX shares and vice versa, as necessary, to get your order filled.

What’s the catch? Well, the “extra service” will come at a price. Using my broker, it costs me an additional $50 USD to place a trade using the block desk, as opposed to trading online.

For the type of gains that I foresee coming for these mining stocks in the future, I will GLADLY fork over some extra fees/commissions to get the shares of the companies that I want!

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I still think TAHO is a solid holding, but in all honesty, I have trouble envisioning a scenario in which shares of such a large cap miner (currently trading at ~$4 billion market cap) can double in share price anytime soon… With Birimian Limited, I strongly feel that this stock has the potential to go 5x from where we are now (currently trading at ~A$50 million market cap) rather easily…

Of course, Birimian Limited is an early-stage exploration stock, so I’m very much taking on much, much more risks with this trade. However, if I didn’t feel like the upside potential was so immense, I never would have made this deal…

What can I say? Mining stocks are freekin’ tough!

I will never claim to have anything all figured out and I will definitely make many mistakes along the way… All I’m doing is sharing my thoughts/actions with readers… That’s all…

 

Please don’t ever misinterpret these updates as any kind of investment recommendation or advice for your own portfolio! ALWAYS do your own due diligence and research before making any kind of investment decision!

 

But as readers know, I have no problem sticking to my best conviction ideas. When it comes down to it, I have no issues taking on lofty positions in just a few holdings… I don’t need “diversification” and I don’t need to own 50+ stocks to feel “safe and secure”!

Nope.

Frankly, the less holdings, the better for me… I just want to focus and concentrate on a few companies… I don’t need that many gold/silver/lithium stocks in my portfolio… As I’ve mentioned before in the past, I’m currently at 21 holdings and I think that’s too much…

Over the next few months, I’ll probably be looking to consolidate out of my “second and third tier” ideas… Again, I don’t have any interest in trying to keep tabs on so many positions… It’s too much work.

Anyway, even for me, this was a pretty bold move… Birimian Limited is now by far my largest holding in both total contributions made in dollars and current market value…

 

But I slept on it for a few days and my consensus line of thinking always remained one and the same — Let’s make the trade.

 

Hoping for the best!

 

Fight On!

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My Top Picks for 2017Precious Metals – It’s Been a Rough Ride to Say the Least (December 17, 2016)Mining Stocks – Plenty of Good Deals Floating Around (November 09, 2016)Conviction Ideas – Critical Elements (CRE.V/CRECF)Mining Stocks – Portfolio Performance (Non-GAAP Accounting) Recent comment authors
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JC
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JC

Hi Jay,

You inspire me to be more bold with investing as I have been very/too conservative. I wanted to add on btg and ivpaf. How do you feel in regards to those companies at this point in the game? Appreciate your thoughts.

Rudy SMT
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Well Jay,

What can I tell you?

The numbers never lie, you’re rocking your trades.

Mike
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Mike

Thanks for continuing with these updates! Hope all is going well in Japan. Saw someone recommending the ramen museum in the previous post…looks pretty cool 🙂

Rudy SMT
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Jay,

I have got a question for you.

You embrace macro instead of micro, and I’m a believer in this myself but also I’m a believer to make investing “easy”.

I come across to your old post: https://www.fifighter.com/precious-metals/2015/09/deep-value-investing-turning-to-gold-and-silver-september-20-2015/

where you mention “The Market Vectors Junior Gold Miners ETF (GDXJ” which hold some of your current holdings as well.

The return of the index from the beginning of the year is about 117% and your current portfolio has done the same at 113%.

What is the point to invest on the micro when you can just buy the index (macro) and enjoy the ride?

One operation, 20$ cost and it’s done.

Am I missing out something?

I understand your Canadian’s mining approach where you make a killing on currency conversion and diversification risks, which is super smart.

Most of your readers are “tunnel visioning” only on the stock return. They didn’t notice your currency diversification position which might well double your profit once you bring back your investment to the US in few years when the dollar will be devalued against Canadian and Australian dollar. US$ in today term.

Would be worth write about it, what do you think?

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