Gold Mining Stocks Shine for These Two Top Perfoming Portfolio Managers

December 2, 2019


Caesar M.P. Bryan joined Gabelli Funds, Inc. in 1994 as the Portfolio Manager of the Gabelli Gold Fund. He has also managed the GAMCO International Growth Fund since its inception in June 1995. Prior to joining Gabelli Funds, Mr. Bryan was a portfolio manager at Lexington Management. At Lexington, he was responsible for managing the Lexington Gold Fund and international equity portfolios. Mr. Bryan started his career at Samuel Montagu, a London-based Merchant Bank in 1979.

Chris Mancini, CFA, is a Research Analyst at Gabelli Funds, Inc. specializing in precious metals mining companies. He has over 18 years of investment management experience and has worked directly on the gold equity portfolios at Gabelli for the past eight years.

In this 2,606 word interview, exclusive to the Wall Street Transcript, these widely reknown portfolio managers reveal the background to their current top portfolio holdings.

“We are global investors. This is an all-cap strategy.

There are very few large-cap stocks; there are many mid- and small-cap stocks. So we invest across the capitalization spectrum. We like to pay close attention to the quality of a company’s operations, mines and other assets.

Valuation is an important part of our investment methodology. We do apply a variety of different valuation metrics in our stock-selection process.

Since it’s a mid- to small-cap sector with a few exceptions, and it’s a difficult and hard industry, we do maintain close contact with managements of the current fund investments and also with potential investments. So we visit with management teams on a very regular basis.

Just to summarize, we are long-term investors…In terms of geographic breakdown, about 74% in North America, South Africa is about 2.7%, U.K. 5.4% and Australia 17.8%.”

One aspect of their mining investments is their social standing with the local workforce:

“Also, relative to its physical location, we want to see how close the population source is and what the company’s relationship is with the population source and whether that could be an issue at some point in the future and whether it could be a benefit or a disadvantage.

That means if it’s a mine that’s near a mining town, an established mining town like Val-d’Or, Quebec, or Elko, Nevada, that’s obviously a positive thing.

If it’s in a new place, like in the Democratic Republic of the Congo, and the company had to move artisanal miners from the mine site, that might be a source of friction for the company. We have to understand what the company’s social license is in that context.

The other thing we look for relative to the actual operation is its safety culture.”

One example of a successful company in the portfolio is detailed by the two asset managers:

“One of our strongest conviction names is Newmont (NYSE:NEM), which we think is really a turnaround story. Newmont acquired Goldcorp.

The deal was consummated in April of this year. Goldcorp’s assets were underperforming because we think that they were undermanaged and undercapitalized.

Newmont has a very good, proven management team, which employed a program called “Full Potential” at all of its mines from 2013 to even now; it’s ongoing.

During this time, the company brought down its all-in sustaining costs from around $1,200 an ounce to around $900 an ounce. They did this through maximizing…”

Get the full story on all the top portfolio picks from this 2,606 word interview, exclusive to the Wall Street Transcript.