A focus on gold companies with capital-deployment and equity-issuance discipline, while moving away from companies with a poor track record, leads Greg Orrell, Portfolio Manager at Orrell Capital Management, Inc., to choose Goldcorp (GG) and Gold Fields Ltd. (GFI) as his favorite gold mining companies.
“Our top holding in the fund is Goldcorp. The company has shown an ability to expand. Its production profile with lower-cost, higher-grade mines in jurisdictions that are politically safer for the most part; and the management, though they’re in a capital-intensive phase at the moment, their management still understands that shareholders need to participate in cash flow,” Orrell said.
Orrell says Gold Fields can grow off from the current perception of low value in their assets relative to their peers. Orrell likes GFI, and he says the negative valuation of the South African assets provides the company with a good opportunity to revalue going forward.
“Number two, Gold Fields in South Africa, listed on the New York Stock Exchange, is a company that has just announced the split up of the company with two of their South African operations being spun off into a separate company while their non-South African assets except for one operation will stay in Gold Fields,” Orrell said.