Some good news to end a bleak weekBearish Sprott has great nose for value
By MARTIN BRAUN
Report on Business
The Globe and Mail
Saturday, October 30, 2004, Page B2
Most Canadians with a keen interest in the stock market have heard of Eric Sprott, chairman and CEO of the eponymous firm Sprott Asset Management (SAM). If they haven't, they should because, since the early 1980s, Mr. Sprott's investment returns have been compounding at a 25-per-cent annual clip. And a rising asset base has not slowed him down: Over the past three years, Sprott Canadian Equity Fund has returned almost 34 per cent per annum......
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Some highlights:
The first question I had was obvious: How have you managed to generate such great returns? His answer was instructive: "We've been bearish." I say instructive because his gains have largely come, not from short selling, but rather from identifying powerful investment themes, and combining that with phenomenal stock picking.
Case in point: Mr. Sprott believs the US government has been madly printing dollars to cover a multitude of sins, such as balancing deficits and a potential derivatives fiasco. So his long-held view has been that the US dollar would swoon, and gold-being inversely related- would rise. It has, and SAM's substantial gold holdings have been big winners.
*(This was highlightd in the September edition of Canadian Business Magazine- Foreign investment in the US in 1990 was 30% now a shocking 73%- yahoo another Russia bankruptcy on the way).
Likewise, Mr. Sprott is a believer in the SCARCITY of certain commodities in the face of EXPLODING demand and inadequate investment in new supply. Notable in this category are oil, gas, coal and URANIUM, so SAM has LOADED up with producers that have "DELTA." DELTA, in Mr. Sprott's parlance, is oomph- meaning HUGE upside for any positive changes at the margin.
Harv
PS Keep an eye on CVV- TSX Venture