End of Year Portfolio Review

Would I buy the stocks in our portfolio again and why?

Yes. This was supposed to be a no-brainer and I stand by my choice, though it’s only been a few weeks.

As for all the others – all juniors, I should say – I wouldn’t buy them when I did (near 52-week high and in spring!)

CML.V – Crowflight Minerals
Yes. They are a near-term low-cost producer and even at $8-10/lb nickel should be making a nice profit. Trading at about 50% of my average cost right now. At present, I’d feel safe holding this for a couple of years.

SAU.V – Simberi Mining
Yes. It’s an interesting gamble. I’ve had several opportunities to get out with a minor gain (under 10%) but I feel there may be more to it. Recent good news reinforced this belief. DRC government recognized Simberi as the rightful owner of property they’ve been working on since 1997. There’s only about a dozen companies who have been recognized so this is great.

BN.V – Blue Note Mining
Yes. This was my favorite pick for the year, though they now have about 400mln outstanding shares and it’s freaking me out somewhat. I traded this one a couple of times in spring and then decided to just buy-and-hold and hopefully double ot triple my investment 😉 Looks like I may have to wait for a year for that to happen but that’s okay. Blue Note is a relatively low cost producer thanks in part to their metal smelter being nearby and easy access to shipping by boats. They’re slated to move from TSX-Venture to the TSX “big board” in early 2008. This should give them more credibility and better exposure. Institutions hold 80% of BN which is typically great, though makes the stock prone to manipulation.

PBX.V – PBX International
Yes. I can’t really decide what to make of this one. PBX seems to have a great property, they announce good drill results after good drill results. They have 13.5 cents of cash per share in the bank. Sprott bought a lot of their stock this year, and by the way, my average cost is just a penny above Sprott’s placement. The problem may be that they have more than one good prospect and it’s hard to pick where to focus first: molybdenum or gold. Hopefully this one will be spun off into 2 different companies.

FCO.TO – Formation Capital
Yes. This is another one that I traded at the very beginning. I’m not a true day trader by any means, and I set no stop losses. With that in mind, when I was starting out with these mining stocks, I figured if I trade just the ones I really like and I’m not able to get out in time, and forced to stick it out for a few months or a couple of years, they better be solid companies. I really like this one. I think once the final permitting is done it’s going to be really big.

VNG.UN.TO – Vault Energy Trust
Not sure. I like the trust itself but due to it being 69% in natural gas, they have suffered in the past couple of years. They have now been offered a pretty bad buyout deal by PennWest Trust: 0.14 PWT units for each VNG unit. The price has recently been beaten up further and even with the really high distribution I’ve been receiving for 6 or 7 months now, my loss is pretty big in percentage terms. I’m just glad I only have 200 units (initial investment was about $1,100). Should the PWT deal go through I’ll end up with 28 PWT units. PWT pays a much lower distribution, not to mention the fact that this sale would have to be reported as a sale for tax purposes. I don’t know what to do yet. The perfect world scenario would be if another bidder (trust) came with a better offer, or if PWT at least offered 1-to-5 ratio.

BRU.V – Bolero Resources, formerly United Bolero
No. This is just about the only one I really regret at this point. I sold 50% of my shares a couple of weeks ago and will hold the rest for now. Very happy I didn’t invest much here either.

Lessons I learned this year

  • Don’t buy stocks near their 52-week high, unless it’s for a day trade
  • Don’t buy juniors in spring, unless it’s for a day trade
  • Buy stocks after private placements as the price goes down then
  • Buy stocks in December during the tax loss “sale” season
  • Buy companies that have cash in the bank
  • For the future, I will prefer near-term and current producers over explorers
  • Practice smart asset allocation: no matter how wonderful I believe a stock to be, there are more wrenches to be thrown than I can ever imagine