My strategy has changed a lot of the years and nowadays I am mainly into “HODL” cases with long runways. In other words cases with probable growth as well as large potential growth. If one can find companies that are probably able to grow significantly over multiple years then all that really remains is to just watch paint dry. There is no way to get every news release “right” in the sense that one knows a) what the lets say assay results will be or b) what the market’s reaction will be. BUT, I think it is a lot easier to be right in terms of what the balance of probabilities is that company A will have created meaningful value over say 10-20 news releases (with assay results) over say 1-2 years.

As a result I am doing less trading than ever before on the whole. Sure I have some smaller accounts where I still trade a bit but >90% of my portfolio has pretty much been untouched over the last 12 months. Another positive thing about inaction and long runways is that I am less inclined to sell outperformers too early. The best example would be Eskay Mining which I put in a sizable portion of my portfolio into in 2020. That position, with warrants, became a >10 bagger. That position alone double the value of my entire portfolio. That would not be possible if I did what I used to do which was to take big positions and typically rotate out of them after 50%-100% returns. I am very good at buying (piling in) low when prices are cheap (like right now). I have been quite bad at selling however. Meaning I typically start selling way too soon. The problem with this is that good projects tend to get better and better. We have seen this with New Found Gold and Great Bear Resources. Early results which were way above average hinted at very robust systems with lots of good results to come given enough time. Great Bear became a >>20 bagger for anyone who got into it AFTER the discovery. New Found Gold produced a 800% return during its recent peak for anyone who got into it after it IPO’d (this was also AFTER the discovery hole). The price was being able to just hold the stocks for months and years through the many ups and downs.

If you can see a positive, probability based, base case for a junior explorer over a 12-24 month period then that is a very good sign because the market will almost certainly not be pricing it in. Lets say your base case is for 200% internal growth via the drill bit in 24 months. If you sit on your hands for 24 months you might have been right or wrong (either in a good or bad way). Lets say the range is -50% to +400% in terms of share price and the base case is 200% in line with the base case for intrinsic value add… That is a very good case. Find 20 such stories and you will be diversified and can go live in the woods until it’s time to re-visit the cases in 24 months and re-examine the cases based on a rolling12-24 basis.

Nobody, I repeat nobody, is discounting 12-24 months in the market. Therein lies a big edge.

Note that;

  • Grassroot explorers have no Probable growth
  • Mature developers and producers tend to not have long runways

One thought on “The Benefits of Long Runways

  1. Jasper says:

    Good to read you also changed your strategy over the years. Patience is a virtue, but is also extremely difficult when the market is so volatile. Selling too early (or selling too late) is always in hindsight. Why didn’t we buy Apple for $4 in 2007 when the first Iphone was presented?

    It’s hard to hold on to a stock when an respectable author writes a negative story about it. I sold NFG (far too early) because of such a story…

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