Daniel Cluff
Daniel Cluff, 51 Occupation: Engineering physicist Portfolio: Great Western Minerals Group Ltd., Canasia Industries Corp.
Newcomer to the game
When he got involved in stock investing recently, Daniel Cluff says, "it occurred to me that I know a bit about mining, so I decided to start looking at the lay of the land and see what I could figure out." He began by looking at established producers like Sherritt International Corp. and Quadra Mining Ltd., but now focuses on exploration plays.
How he picks stocks
It starts with the avalanche of new releases he receives through TD Waterhouse that contain any of the key words he's chosen, from gold and diamonds to exploration, drilling, and pre-feasibility. On a recent day, this netted him 368 announcements. Of those, about a quarter were relevant to his research, which ultimately was winnowed down to nine stocks to follow.
What he looks for
If he's interested in a mining stock, Mr. Cluff will investigate the location, historical deposits and activity, prior drilling results, amount of resource, the company's management, and the expectation of future positive drill results if they target properly.
As for the releases, he's looking for news that will move a stock, from an announcement of a joint venture with a more established player, to an upward revision of measured and indicated resources. While he hopes to be fast enough to ride the initial spike, he says there is still often room to make a profit over the following days. "Often the stock will shoot up way more than what it's worth, and then come back down to a reasonable level," he says. "There is volatility in this sector which I take advantage of regularly, especially once I have monitored the behaviour of a given stock."
The silver lining
Mr. Cluff thinks silver mining companies may actually offer better returns than gold miners on a percentage basis, mostly because silver is cheaper. One of his favourites is Vancouver-based Wildcat Silver Corp. , which has a project in Arizona, and which he began buying at 45 cents.
Best move
Beyond a big profit with Shore Gold Inc. , Mr. Cluff's big winner to date has been his sole non-resources stock, . The Tennessee-based company makes high-precision bearings, as well as injection-moulded components for the automotive, instrumentation, fibre optic and consumer hardware markets. A number of signs pointed to a positive future for the company, including extra vehicle production brought on by the U.S. cash-for-clunkers program. "The stock had also been solid at a higher price for a long, long time, and I expected that was where it belonged." Mr. Cluff paid $2.30 (U.S.) a share this past summer, and it last closed at $4.00.
Worst move
"My worst moves are the stocks that I bought when they were too high, and when they fell, I got panic-stricken and sold." A good example is Toronto-based uranium miner Denison Mines Corp. . He paid around $1.60 (Canadian) a share in the summer, and sold at $1.45. "I ran out of patience," he says. But with Denison now trading at around $1.51, he says, "When I was selling was probably a good time to buy, but you have to learn those things."
Advice
"If investors want to implement this strategy without the expertise I have, then at the very minimum I recommend they start by reading the announcements and watch the market reaction to gain some understanding of the correlation between a news release and a stock's behaviour."
Special to The Globe and Mail
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