Analyst John Manfreda has been investing since 2002, mainly in resource stocks.
John Manfreda
Occupation
Analyst
The portfolio
Includes Franco-Nevada Corp., Sandstorm Gold Ltd., Silver Wheaton Corp., Cameco Corp. and Freehold Royalties Ltd.
The investor
John Manfreda has been investing since 2002, mainly in resource stocks. He currently believes the equity and bond markets are overvalued but certain sectors offer "great opportunities," particularly energy and precious-metal companies.
How he invests
Mr. Manfreda describes his investment style as contrarian. "I am someone who likes to purchase good businesses during tough markets. When the cycle turns, their shares will recover. And when they start trading at a premium to real value, that is when you want to sell."
The resource sector is "very cyclical" and has declined over the past four years. Some stocks are down 80 per cent. Oil is trading below its cost of production for many producers. "This is the time you want to buy good oil or mining companies with strong balance sheets – because this sector will turn."
"I believe that the uranium sector is really undervalued. … New reactors coming on line in Russia, India and China will propel uranium back to $80 to $90 (U.S.) a pound or higher. [It currently trades near $40] The catalyst will be re-starts of reactors in Japan [which shut down its reactors after the accident at the Fukushima nuclear power plant in 2012 following the earthquake]."
"I think Cameco is a great way to invest in the uranium sector. It's the Exxon Mobile of uranium mining, accounting for roughly 16 per cent of world production," Mr. Manfreda says. As for the company's tax dispute with the Canadian government, he believes it is largely baked into the stock price. Plus, he doesn't think the government will come down too hard on Cameco for fear of discouraging investing in the Canadian resource sector.
Best move
It was investing in resource stocks during upswings on the U.S. and Canadian exchanges. His winners include: Suncor Energy Inc. (bought at $7 in 2003 and sold at $54); Yanzhou Coal Mining Co. (bought at $7 in 2009 and sold at $34); First Majestic Silver Corp. (bought at $4 in 2010 and sold near $25).
Worst move
"My worst move was investing in Colossus Minerals. It had great assets, a good jurisdiction in Brazil and financing. But water flowed into the mine. With debt due in December, 2013, and no financing in place, they defaulted."
Advice
"Losing money and making mistakes is all part of investing. Don't get discouraged. Learn from it. That is how you become better … I learned to let my winners ride, the importance of using stop-loss orders … and selling into strength."
"Bear markets are for buying and bull markets are for selling."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.