You can find the full report archived here with explanations of each category and my top positions. I continue to benefit from buying early on distressed Ethereum, uranium and one particular copper company. The portfolio is mostly in harvest and maintenance mode. My goal remains to take profits and whittle the number of positions down.
Special Situations Arbitrage
Not much going on here. All of my current special situations are part of commodity baskets referenced below, with the exception of pharmaceutical takeover. I’m holding the target company as a straight long to acquire the CVR. The CVR will not be tradable, but it pays out on three different achievable milestones. The all-stock deal is expected to close in December with a return ex-CVR of approximately 9%.
Portfolio weighting: 2%
General Equity Portfolio
Exited natural gas and steel to raise cash and cut the number of stocks I own. The entire execution of my Stelco investment was botched: I bought too early and probably sold too early after holding through the worst of trade wars and Covid. The remaining commodity baskets are coal, copper, oil, uranium and gold.
Changes to the gold basket removed overvalued stocks and positioned the portfolio to benefit from organic growth in production. The coal basket is unchanged but I continue to cut the number of uranium names so I’m eventually left with just 1-2 positions.
I’m still building out my copper and oil baskets with a focus on distressed assets and turnaround plays. Picking up the shattered pieces of SRHI Inc. after Sprott vacated the premises has played out better than I could have expected – even with the recent pullback it is my second-largest position on its own. The risks from high debt and Chilean politics are real, but overblown, compared to $5 copper and a massive land package. Something as simple as renaming the company Three Valley Copper and getting analyst coverage ahead of an equity raise should provide another rerating for the stock. SRHI is sitting on 5 billion pounds of copper and eventually is sold for $5 to $10 a share.
I consider Ether a commodity, but it could also fall under venture capital depending on your point of view. I continue to believe that Ether has a separate and more compelling value proposition compared to Bitcoin, even though they currently trade in tandem. Ether provides financial exposure to the most valuable app platform of the next 5-10 years assuming Ethereum 2.0 succeeds and network adoption continues. Despite the recent price drawdown, my Ethereum-related basket is still profitable and my largest position.
Outside of commodities, I’d encourage anyone with an expertise in e-commerce to consider David’s Tea. Creditors approved a plan of arrangement this week that establishes DTEA as a cash generating company that doesn’t need to dilute shareholders.
Portfolio weighting: 70%
Cash and cash equivalents
I’m flush after recent sales.
Portfolio weighting: 25%
Real Estate
Limited partner in a private real estate deal in Vancouver. The property is not stabilized which provides the opportunity, but no expectation of near-term cash flow.
Portfolio weighting: 3%
