Investor and commentator Cory Fleck of the Korelin Economics Report says investors need to appreciate that there’s more to investing than just mining and resources.
Speaking with the Investing News Network (INN) at the International Mining Investment Conference in Vancouver, investor and commentator Cory Fleck of the Korelin Economics Report said investors need to appreciate that there is more to investing than just mining and resources.
“[In my presentation,] I was just trying to drive home to everybody [not to] be too focused on resources,” said Fleck about his talk at the event.
“Have some positions that you feel comfortable with, but realize there’s other stuff going on out in the world. Don’t always be in that bubble and understand that when other markets are moving, there isn’t a whole lot of need for other investors to come into our market. So we are better off [with a] slow and steady strategy rather than [chasing] anything that seems flashy or shiny.”
Fleck said that breakouts in other sectors are contributing to “slowness” in the resource space in 2018. He noted that the Korelin Economics Report is watching base metals, which “continue to be interesting,” and energy resources, which are “very interesting to us.”
He also cautioned investors about smaller battery metals, saying that while there is indeed huge demand, “there are some … energy metals that have more just ridden that wave up.” Some could well be removed from the battery mix through substitution as the sector explores electric vehicle technology.
Watch the video above for more insight from Fleck, or read the full transcript of the interview below.
INN: We’re here at day one the International Mining Investment Conference. How are you finding the event so far?
CF: It’s a little quiet. I think we can all agree on that, but that’s more … the function of the market. It’s coming up to summer, so usually a typically slower time. And the interest, it’s been kind of boring for the last year and a half. But we see some companies out here, we see some investors. It’s more of a function of the market of how slow everything has been.
INN: Today you gave a presentation about what market breakouts investors should watch this year when investing. Can you talk briefly about that?
CF: Sure. So essentially throughout 2018 we have already seen three major markets have significant breakouts. And this contributes to the slowness of the resource sector. So we saw interest rates, even today as we’re recording this, they’re above 3.06 percent, which is, I believe a four-plus-year high. The US dollar has broken down two times in the last year. And we’re also having oil break out to new highs that we haven’t seen since 2011.
So a lot of other markets are moving right now, which I was just trying to drive home to everybody [not to] be too focused on resources. Have some positions that you feel comfortable with, but realize there’s other stuff going on out in the world. Don’t always be in that bubble and understand that when other markets are moving, there isn’t a whole lot of need for other investors to come into our market. So we are better off [with a] slow and steady strategy rather than [chasing] anything that seems flashy or shiny.
INN: Alright. What commodities are you interested in this year?
CF: We always like to follow the precious metals even though they are boring. We’re not expecting any sort of a breakout even this year. The base metals do continue to be interesting, but they’re still staying at elevated levels, the higher part of the range but not doing much. Energy is very interesting to us. As I’ve said, oil has moved. A lot of the oil stocks haven’t moved to the same extent, so we are focused there. But we do keep a focus on the precious metals because we do see a longer-term driver for them. Again, [I] just try not to tell people to come in immediately. Take your time, pick your spots, that’s the strategy.
INN: As an experienced investor, what would be your best piece of advice for someone new to the resource market?
CF: To essentially take your time. This is the best time that you can meet with people and that you can more or less just do your research. Talk to whoever you want, because even here it’s empty. This is the perfect conference for investors because they can actually talk to whoever they want. Some of the best newsletter writers in the industry are walking around. Brent Cook’s walking around with a few people to talk to, but at the same time usually he’s bombarded. This is a good time to just build comfort with stocks. All of these companies here are looking for investors, more so than ever. So if you’re an interested investor, go ask them some questions, just hang out a little bit and see what they have to say and then decide when you feel comfortable getting in.
INN: Are there any particular commodities you are avoiding this year or that you’re not following?
CF: In general — we’re not avoiding, but we are staying a little bit away from some of the smaller battery metals. I host a panel later on at the end of this conference actually on energy metals. There are some energy metals that have gone up in price reasonably, but there are some other energy metals that have more just ridden that wave up. And when you actually dive down into them, understand how they’re mined, understand how they’re used, that’s the most important aspect because there’s a whole lot of substitution factors when metals get too expensive.
So some of these metals that have doubled, tripled over the last year or two. You then need to see is somebody going to replace it with something? Because that’s going to essentially burn that whole market. So again, it’s a slow and methodical approach, but the energy metals have already had a nice run. There’s a little bit of cooling off time for them now. And then we’ll kind of see which ones more or less rise from the rest of the crop, because not all of them are going to keep going up.
INN: When you’re choosing a stock, what is your criteria for picking a company?
CF: I always talk to management and I always look into management. I’m an accountant, so I go through financials and I go through information circulars. So management information, circulars, look at how much management holds in terms of shares. Look at how many options they have, look at how much they get paid and ask them what the story is.
There are a number of companies here that are well cashed up, have a good strategy for this year and they’re not getting the … attention that they should be. While some of these other companies don’t really have much of a strategy and a few more people are focused on them. So I like to get at least a one-year game plan, make sure that they have the money to go through most, if not, all of that one year. Think about it more from a strategy standpoint. Does this make sense? Will they come out of this year with a better product, or is it stuff that they’re doing that isn’t going to be that marketable or even that interesting after a year? Because that’s what it comes down to. There are very few investors and a lot of companies, so you really do need to be the best of the best.
INN: Do you have any top stock picks for this year that you can share with our audience today?
CF: I like a number of stocks, and most of these stocks we cover on our website. Some of them I hold shares of, some I don’t. There are a few, again, that are story stocks. I don’t think that anybody should be rushing into these stocks. But from a base metals perspective, I like Osisko Metals (TSXV:OM), they have 100,000 meters of drilling going on, fully funded. They’re interesting. There’s Skeena Resources (TSXV:SKE), they’re doing very much exploration work. Let’s see how that goes, but at least they’re out there and exploring in a well-known jurisdiction.
Revival Gold (TSXV:RVG), we’re all just waiting on a PEA to come out. When that comes out that could be a nice driver to the stock. There’s a few other buy-out candidates, but actually for the person who has just come into the sector, just look at the majors, that’s going to be your easiest play. The bank stocks, Barrick Gold (TSX:ABX,NYSE:ABX), Agnico Eagle Mines (NYSE:AEM), Newmont Mining (NYSE:NEM) and Goldcorp (TSX:G), they’re so undervalued compared to the rest of the sector, and they’ve actually been doing good stuff. So if you want to keep it as simple as possible, go with the big guys. Otherwise dabble in some of the interesting story stocks, but don’t expect anything to move in the next six months at least.
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Securities Disclosure: I, Scott Tibballs 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 contributed article. 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.