Bob Perry, 58
Occupation: Retired Canada Post financial analyst
Portfolio: Silver Wheaton Corp., Minefinders Corp., Gold Wheaton Gold Corp., Franco-Nevada Corp., European Goldfields Ltd., Nevsun Resources Ltd., Silvercorp Metals Inc., Northgate Minerals Corp., Active Control Technology Inc.
His strategy When Bob Perry began investing in individual stocks on his own five years ago, he focused on oil and gas, partly because he is a believer in Peak Oil theory and the economic consequences. But Mr. Perry, who lives in Quispamsis, N.B., some 20 kilometres outside of Saint John, soon found himself seeing far more potential in the gold and silver sector. It also helped that he had invested in a highly speculative stock, Calgary-based Birch Mountain Resources, and rode it from 70 cents to over $7. (The company, which operated a limestone quarry in the Athabasca oil sands region, went into receivership in late 2008.) While acknowledging that his timing was very good, he says the experience still "gave me the confidence to go into more on the metals side."
How his approach has changed Mr. Perry used to focus on the more speculative small-capitalization stocks, and was rewarded with some good profits. However, the sting of last year's market collapse made him "change his ways" and shifted him more toward larger-cap stocks.
His favourite stock Silver Wheaton Corp. , has been a real winner for him, and was another big reason for Mr. Perry focusing on metals. What appealed to him was the company's business model. "What they do is put X number of dollars into a mine and buy a percentage of the silver that comes out of the venture at a fixed price." This leaves the company without exposure to rising fuel, labour and other production costs, he says. It also means the company's stock is highly leveraged to the price of silver. He first purchased the stock in 2006 for between $10 and $12. Silver Wheaton last closed at $13.31.
Why he likes precious metals "The U.S. is printing money at an unprecedented rate. That's bound to create inflation, and gold and silver do well during inflationary times."
How h e picks stocks A business analyst and a Certified Management Accountant, Mr. Perry digs into the numbers. For example, he says, Nevsun Resources "has an IRR [internal rate of return]of 51 per cent, and a payback period of two years," he notes. "That says to me that the likelihood they'll be profitable when the mine comes on stream next year is very high."
Where h e gets his information Mr. Perry watches BNN (Business News Network) regularly, and will often turn to the Internet for research. He uses the regulatory site, sedar.com, to look up company filings such as prefeasibility studies. He also thinks it's more than worthwhile subscribing to two leading gold stock newsletters, the Hard Rock Analyst, put out by David and Eric Coffin, and John Doody's Gold Stock Analyst.
Best move In late August, Mr. Perry bought warrants on Franco-Nevada Corp., and within two weeks was up 45 per cent. He likes warrants because of the leverage, but warns that can amplify losses as well. "The timing was just luck."
Worst move One big disappointment has been Gold Wheaton Gold Corp., which applies the Silver Wheaton strategy to gold producers. He bought into the company when it went public in the summer of 2008 at the issue price of 50 cents, and the shares last closed at 25 cents. "It was just bad timing. They bought at the wrong time, and then tried to raise financing when everything went flat."
Advice "Do your homework and don't be lazy," Mr. Perry says. "I think a lot of people may get caught up in hype, but if they look at the financial statements to see if the profitability is there, that might tell a different story."
Want to share your strategies? E-mail email@example.com