"Investing is the intersection of economics and psychology," according to Guru Seth Klarman , legendary value investor of The Baupost Group, and there is no more exciting theater for both than that of a possible gold rush, well-known in Alaskan history. Klarman is investing in companies that own and know Alaska's Donlin Creek area, one of the largest known undeveloped gold deposits in the world. Novagold Resources ( NG ) and its spinoff NovaCopper ( NCQ ) are on his buy list.
North to Alaska and Beyond
Here's a look at Klarman's precious metals and mining action from his fourth quarter portfolio ending Dec. 31, 2012.
Novagold Resources. Inc. is a precious metals company engaged in the exploration and development of mineral properties in Alaska and British Columbia. As of quarter ending Dec. 31, 2012, Guru Seth Klarman owns 21,688,300 shares of NG, valued as $98 million, and accounts for 3.2% of his equity portfolio. Klarman added his positions in the Sep. 30, 2012 quarter by 31.25%, again in the Dec. 31, 2012 quarter by 3.28%.
Incorporated in 1984 under the Companies Act (Nova Scotia), Novagold Resources Inc. has a market cap of $935.94 million; its shares are traded at around $4 with a P/E ratio of 136.8 and P/S ratio of 3022.9. Novagold Resources Inc. had an annual average earnings growth of 22.5% over the past 10 years.
Novagold Resources is focused primarily on gold properties, along with significant copper and silver resources. The company's properties include among others a 50% stake in Donlin Creek. As one of the largest known undeveloped gold deposits in the world, the Donlin property is said to have 31.7 million ounces of gold and additional inferred resources of 4.2 million ounces of gold. The company also has stakes in additional gold and copper reserves in Alaska and British Columbia. Significant competition exists for the acquisition of properties producing or capable of producing gold or other metals.
His holding history:
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NovaCopper Inc. ( NCQ )
A spinoff of Novagold Resources, NovaCopper Inc. ( NCQ ), explores the Ambler District, a high-grade copper-zinc-lead-gold-silver property in Northwest Alaska. A base metals exploration company incorporated in 2011, NovaCopper Inc. has a market cap of $84.9 million; its shares are traded around $1.85.
As of quarter ending Dec. 31, 2012, Seth Klarman owns 5,005,298 shares of NCQ, valued as $9 million, and accounts for 0.29% of his equity portfolio. Klarman added his positions in the Sept. 30, 2012 quarter by 46.02%, again in the Dec. 31, 2012 quarter by 8.81%.
His holding history:
The prospect of discovering gold plays on human emotion more than any other quest. But Klarman once said in a Charlie Rose interview: "If you can remember that stocks aren't pieces of paper that gyrate all the time -- they are fractional interests in businesses -- it all makes sense." Still, it's "North to Alaska." Time will tell not so much if there is "Gold in Them Thar Hills," but how much.
Here's an explanation of Seth Klarman's recent trades.About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .