Toronto-based Trimark Resources Fund portfolio manager Norman MacDonald participated in an online Q&A with the Globe and Mail earlier today.
The portfolio manager, who oversees more than $154 million in natural resources-based investments, expects more volatility in the resources sector in the near term.
Mr. MacDonald considers the recent oil and gas correction as one of the best buying opportunities of his career.
In the mining space, Mr. MacDonald likes Continental Gold Ltd (TO:CNL), Torex Gold Resources Inc. (TO:TXG) and Turquoise Hill Resources Ltd. (TO:TRQ), among other names. He does not think the gold-mining sector has a very robust project pipeline.
Mr. Macdonald’s Q&A with the Globe is required reading for resource investors. Here are a few of the key comments:
“Over the past 3-4 months we have really increased the weighting in the oil and gas sector due to the selloff….we have been adding to core positions like Canadian Natural Resources Limited (TO:CNQ), Crew Energy Inc. (TO:CR), and Range Resources (NYSE:RRC) to name a few…. The other area of value that surfaced the last few months was the mid cap gold developers. Due to the waning interest in gold and the gold equities we have increased our weighting in names like Torex and Continental Gold.”
“I don’t think the sentiment on gold and gold equities could get any lower the past few months. I am not a gold bug so I tend to focus on the marginal cost of new production and with gold hovering around $1,200 (U.S.) an ounce not too many companies are earning a return in the space……”
“The other important feature to think about as well through this sell off in gold is that the senior producers have really stepped back from exploration the last few years. As a result some of these majors do not have a robust project profile going forward and that is why we have focused on good quality deposits and good management teams in the mid cap space like Torex and Continental…..”
“At this time I would say just some of the opportunities in oil and gas are really shining bright. I have been managing money in the space for almost 20 years and the opportunity we had to increase the weightings in our core energy holdings that we saw the past couple of months do not come along every day. It was truly a great buying opportunity.”
“Crew, Turquoise Hill and Trilogy. The common theme with the three ideas are world class assets coupled with good management teams that are trading at very attractive multiples right now.”