Time for some fun.
I recently watched the sequel to The Girl With The Dragon Tattoo, Daniel Alfredson’s movie adaptation of the popular Stieg Larsson novels that are set in Sweden. Imagine my surprise at discovering that one of the main characters, troubled hacking genius Lisbeth Salander, has a taste for junior mining stocks!About three-quarters of the way through The Girl Who Played With Fire, crusading investigative journalist Mikael Blomkvist is reading Salander’s mail, including a portfolio statement from “Palm Bay Bank” on Cayman Island. The portfolio is the proceeds of crime – Salander hacked into the secret bank account of a corrupt billionaire industrialist and stole a quarter of a billion dollars. The list of stocks is briefly visible.
While the bank is fictitious, as far as I can tell, the stocks listed are very real – a grab bag of junior mining and technology companies.
I was curious whether Lisbeth Salander is as good at investing as she is at hacking, intimidating and defending herself against various male predators. I used as a starting date the first week of September 2009, which is when the movie came out. The S&P/TSX Composite has returned about 15% since then, and the Venture has dropped about 39%.
Baja Mining (BAJ): The company name sounds a bit like the start of a guffaw and the stock has turned into a bad joke. Baja is a minority partner on the Boleo polymetallic project in Mexico. Baja’s shares have plunged from 55 cents in Sept. 2009 to 3 cents in the face of cost overruns, a cash crunch, allegations of nepotism, and a proxy battle between management and a U.S. hedge fund. Oh, Baja’s share of Boleo has also dropped to 10%. Ouch.
Katanga Mining (KAT): Katanga operates a large copper-cobalt mine in the Democratic Republic of Congo. The stock has been in a holding pattern and trades at roughly the same level as Sept. 2009. Katanga is based in Zug, Switzerland, and Glencore International owns about 75% of outstanding shares.
OceanaGold (OGC): OceanaGold operates gold mines in the Philippines and New Zealand. Including today’s 10% increase, shares have risen about 70% since Sept. 2009, far outpacing the TSX. Well played, Lisbeth!
There is also FairWest Energy Corp., a Calgary-based oil and gas company that seems to have gone bust, and Quest Capital Corp., which became Sprott Resource Lending. Quest’s former chairman and managing director was Murray Sinclair, a power player who was also formerly on the board of Katanga Mining.
Overall, a mixed bag during a fairly horrendous time period for mining stocks, particularly juniors. Could also have been a lot worse. But following Peter Lynch’s investment principle of “Invest in what you know,” it seems that Lisbeth Salander should be sticking to a world she knows intimately – the web world of computers and cyber-security. Let’s turn our attention to the tech/biotech stocks in the Lisbeth Salander portfolio.
Absolute Software (ABT): Shares of the Vancouver-based anti-theft and computer security company have gained more than 20% since Sept. 2009 – hat tip, Lisbeth! You have to think Absolute management is glad she’s a shareholder as well, given what Salander and her pal Plague are capable of.
Aastra Technologies (AAH): Shares of the communications infrastructure company that took over some of Nortel’s businesses have been flat since Sept. 2009. But at least Salander can console herself with a fairly juicy – especially for a tech company – 4% dividend yield.
Neo Material Technologies: Neo Material – which developed and processed rare-earth products – was taken out for $1.3 billion last year by rare earth producer Molycorp.
Webtech Wireless (WEW): Fleet-tracking GPS systems. The stock has slid from $1.05 to 37 cents since Sept. 2009. Had the company pitched in and helped track Ronald Niedermann, the third movie would have been unnecessary.
YM Biosciences: This venture-stage oncology developer was purchased in December for $510 million by Gilead Sciences, the world’s largest maker of AIDS drugs, to strengthen its oncology pipeline.