After kicking around the commodity sector for almost twenty years it still makes me laugh when I meet some guy running a small hedge fund (usually a fresh face kid out of New York or Connecticut) telling me he is a “value investor” looking at the mining space. The only thing I can tell you for sure is that these guys are an odds-on favorite to get smoked out!
No one really ever owns a mining stock, THEY RENT THEM
The same goes for many of the folks on forums like MINTWIT, CEO.CA and Hotcopper.com.au. These sites are littered with angry investors who lost money in part because they didn’t understand what they were buying and how they should assess risk.
Recall Warren Buffett who said “risk comes from not knowing what you are doing.” Not appreciating what you are buying or using the wrong framework when thinking about your investment is setting yourself up for disappointment.
Earlier in my career I was the head of origination at one of the largest mining funds in the world. It afforded me the opportunity to look at countless deals.
For the rest of this article: https://theoregongroup.com/greed-guts-glory/the-art-of-betting-on-maybe-junior-miners-as-an-options-trade/