Cipher Research: Value Investing by Investors for Investors

- July 6th, 2015

To learn more about Cipher’s work, the Investing News Network spoke with Rod Husband, a partner at the company.

Vancouver-based Cipher Research is a new research company with a unique perspective on the mining and metals sector. It’s been making a name for itself by developing comprehensive valuation models using the disciplines of economics, geology, statistics and finance.
To learn more about Cipher’s work, the Investing News Network spoke with Rod Husband, a partner at the company. He explained that part of what makes Cipher different from other research firms is its focus on investors.
“First and foremost, we’re independent research,” he said. “We go by the motto ‘by investors for investors,’ and a lot of other newsletter writers or analysts — they provide paid-for research.” He added, “we’re investors ourselves, and we want to share our knowledge with other investors like us.”
Husband also noted that Cipher is all about value investing, meaning that its strategy is not to tell investors what price to buy stocks at. “We give you a fundamental value for the company, and if the company is trading below that, then essentially it’s a buy. And each individual investor can then determine the risk that they want to take in terms of potential return,” he said.
Explaining how Cipher determines the fundamental value of a company, Husband said that “statistical analysis of historical transactions” is the key. Cipher is also very technical, and Husband cited his experience as a geologist as important to the company’s work.
In closing Husband gave an overview of Cipher’s portfolio and the company’s strategy for rebalancing it. “We focused on advanced gold exploration and development companies to start with, and we evaluated 250 companies that had a resource and an engineered resource … then we developed a model to determine if that project had the economics to succeed.”
That model involves running a company through five tests. Companies able to pass the top four tests are added to the list of companies Cipher likes.
“Of those 250 companies that had an engineered resource, only 44 met our criteria,” said Husband, also stating, “and of those 44 … 18 got taken over. So that in itself was evidence that we had a pretty good model.” Cipher’s portfolio currently contains 23 companies.
Watch the video below for more insight about Cipher from Husband. Click here to visit Cipher’s website and click here to view the free reports Cipher has released.


 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Related reading: 
Mining Investor Guide: The Newmarket-Crocodile Gold Merger
Mining Investor Guide: The Alamos-AuRico Merger, Part 1
Mining Investor Guide: The Alamos-AuRico Merger, Part 2
Mining Investor Guide: The Alamos-AuRico Merger, Part 3

Get the latest Gold Investing stock information

Leave a Reply