U.S. Global Investors (GROW) trades inexpensively relative to the assets the company holds. This mutual fund firm, managed entrepreneurialy by CEO Frank Holmes, specializes in gold, natural resources and emerging market investing, and it is currently investing in smaller-cap companies where much of the appreciation should take place in the next decade, says Paul Sutherland, President of Financial & Investment Management Group.
“[GROW] basically has around $30 million of cash and investments on the balance sheet, and the whole market cap of the company is $58 million. They also own a piece of real estate. So the company is bargain priced, plus you’re getting $1.6 billion of assets under management — maybe it’s little bit less than that as gold stocks have had a rough go in 2013. It’s almost like the market’s saying that this company’s going to lose a half or two-thirds of its assets, and so it’s a very bargain-price asset,” Sutherland said.
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Sutherland says the dividend decrease inordinately affected GROW‘s stock price, leading to a market depreciation which did not take into account the true fundamental value of the company.
“Another reason the stocks got cheap lately is they cut their dividend and decided to buy back shares instead of paying a significant dividend. So I think a lot of investors that owned this because they got a nice dividend sold it because they weren’t getting the dividend, and probably didn’t look under the covers to see whether there was a rational reason for that. I’ve met Frank Holmes, I’ve met his team. They’re good guys, they’re craftsmen, they love managing money,” Sutherland said.