News & Lessons
Contributed Opinion

Important Disclosures:

1. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Orogen Royalties Inc., Triple Flag Precious Metals Corp., Lara Exploration Ltd., Franco-Nevada Corp., and Agnico Eagle Mines Ltd.
2. Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: All. I determined which companies would be included in this article based on my research and understanding of the sector.
3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 
4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Adrian Day Disclosures

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2023. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

Nestle SA (NESN:VX; NSRGY:OTC) has agreed to sell its vitamins, minerals, and supplements business for US$1 billion, with the transaction expected to close in the first half of next year. The business includes well-known brands like Nature's Bounty and Easter-C, and sold predominantly in the U.S. market.

The company's CEO, Philipp Navratil, said the sale was part of an ongoing strategic transformation of the portfolio, with Nestlé focusing on areas where it has a strong competitive advantage.

It is keeping its "science-led" vitamin and supplement business, which includes brands like Solgar, and is performing well. The sale is not unexpected, and the price is reasonable, though not great.

Separately, Nestlé is to invest Chf 310 million into the nutrition and health business in Brazil, including a new factory for infant formula and upgrading facilities for adult and medical products.

We are holding, while we carefully evaluate the progress in the strategic transformation and restrengthening of the balance sheet.

Orogen Stakes High-Potential Properties

Orogen Royalties Inc. (OGN:TSXV; OGNNF:OTCQX) continues its stream of news with the acquisition by staking of two gold projects in southwestern Utah.

The staking was undertaken as part of its alliance with Triple Flag Precious Metals Corp. (TFPM:TSX; TFPM:NYSE). The projects are low-sulphidation epithermal targets in caldera complexes and have never been drilled.

Orogen sees geological similarities with Nevada's Silicon deposit (now called Arthur), found by geologists at a company which Orogen acquired in 2020. Though obviously at a very early stage, this is exactly the type of project we expect Orogen to generate through its alliances, with high potential and very low cost.

These two new projects will be featured on Orogen's virtual Project Generator Day, Wednesday, 16th at 1 pm (EST). Click here to register.

Orogen is a very strong hold, but we are looking for pullbacks to buy.

TOP BUYS this week include Kingsmen Creatives Ltd. (5MZ:SGX) and Lara Exploration Ltd. (LRA:TSX.V). We are holding off on adding to gold positions given the high possibility of a continuation of the pullback over the coming week.

Lessons From 40 Years in the Markets #2

In the last Bulletin, I discussed the foundation of success in the markets, namely, the importance of knowing yourself, and in particular, your risk tolerance. We also looked at the confusion between risk and volatility.

Know and Understand Your Investments

Equally important as knowing yourself is to know and understand your investments. This may seem pretty obvious, that you should know what you are investing in. But I can't tell you how often someone will ask me about this or that stock that they own — often some junior exploration company — and the person does not know the most basic thing about the company — are they in production or an explorer… is it gold or some other resource … in which country are they located, etc.

One of the reasons for this, I find, is that too many investors have altogether far too many holdings, such that, unless they are full-time investors, they cannot possibly follow all their companies adequately. Rick Rule, talking specifically about junior resource companies, suggests one should only hold so many that one can devote one hour a week to each stock.

If You Know an Investment, You Know How To React When Things Go Wrong

The most important reason to know and understand the stocks you buy is that you are more likely to know how to react, whether to sharp stock declines or indeed to sharp rallies. If a stock declines sharply, you should always know why.

Otherwise, you are flying blind, and you are like the sucker in the poker game. Knowing the company, you know immediately whether the price decline was justified or overdone. You know immediately whether it may just be the harbinger of further bad news. In other words, do you cut bait immediately or double up?

When Franco Lost Cobre Panama, Was It a Sell or a Buy?

Thus, for example, when Cobre Panama was shut down in November 2023, and Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) lost its largest source of revenue (almost 20% of the prior year's total), the stock slid to lose 25% of its value.

Not knowing the company well, one might have just panicked and sold. Many did, with millions of shares sold. But knowing the company, one immediately recognized that the stock decline exaggerated the revenue loss, and further that a total irredeemable loss was unlikely.

One would also know what other projects were in the near-term pipeline, so how quickly (or otherwise) the loss of Cobre Panama could be replaced. Franco appeared to be a good opportunity to buy, and so it proved, with the stock up nearly 50% in six months.

There are many such examples. When there was a rock wall movement at Agnico Eagle Mines Ltd.'s (AEM:TSX; AEM:NYSE) Barnat pit, with the pit being closed, in early July, the stock fell over 7% in two days and continued to slide.

Knowing the company, one immediately knew that the ounces lost did not justify the stock price decline. One knew that the rest of the flagship Malartic operation was unaffected.

Further, knowing the company, its management, and its ethics well one knew one could accept the company's announcements that there was no risk to the rest of Malartic and that the underground development could continue. Had one not known the company well, one would have been right to ask whether this rock movement was a reflection of more widespread instability at the mine, and whether this was just the first cockroach with more to come. Again, the reaction appeared overdone, and the stock appeared a good buy, as has been demonstrated.

It's More Than Facts, It's Understanding

Knowing a company well means far more than just having all the facts at your fingertips. It means knowing the composition of the share registry (insiders, institutional, retail) and understanding how the stock tends to react to bad news (and good). This gives you an edge in knowing how to react to unexpectedly good or bad news and sudden moves up and down in the stock price.

I mention Franco and Agnico as two of the very best companies in the gold space. If you are holding for the long term, you can afford much volatility in the stock price with companies of such quality. It is all the more important to know and understand small and more speculative companies, since they may not bounce back as rapidly from bad news.

One other thing on knowledge: again, this sounds obvious, but you should aim, get ready, and fire in that order. Do you research before you buy, not after!

Different Investments Act Differently

Knowledge also involves understanding the characteristics of different investments and sectors. How much volatility is normal, to what factors (interest rates, dollar) do they typically react, what are typical cycles, and so on.

Gold markets always have a significant mid-cycle correction (45% in 1974), so that helps put any pullback–such as nearly 30% from the January peak–into context. Bonds have historically moved in generational cycles, so don't be too quick to call the bottom (unless you are a trader). Some markets, such as the U.K. and Hong Kong, have historically offered higher yields than other markets, such as Switzerland and Germany. A 4% yield in Hong Kong may indicate the market is overpriced, but a 4% yield in Switzerland the opposite. And so on.

Lastly, let me say that there is nothing amiss with outsourcing your investments, whether to a manager of an advisory letter. I don't fix my own car, nor, pace Bob Mortimer, do my own dentistry, and there is no reason why everyone should undertake their own investments. But outsourcing investments, as with outsourcing any specialized work, means doing due diligence first and also following the success or otherwise of the advice.

Know yourself and know your investments: these are the two most important rules in investing.