The Four-Company Card Trick

Thom Calandra  |

LOS ANGELES -- ​This card trick works equally well with four companies, eight, 12 or 16.

First, ​create a four-company portfolio.

The market-cap cap for all four has to be less than $150 million USD. Or CAD. Heck, even Australian dollars. That's total. And yes, totally arbitrary and low enough to ensure the four are mostly beneath the mutual funds' radar.

Make one company a dirt-cheap prospector. Metals, energy, potash -- you name it. 

Choose one dirt-cheap producer. So, an actual miner or oil-gas producer.

One you can make a technology-linked metals company, or a services company (also dirt cheap).

Finally, one can be a former resources company that waved the white flag, retreated from the gold fields or oil fields and now is in a new line of business.

Preferably a line of biz that is not part of the dot-bong hype of late.

All of the companies have to be operating companies with cash on their books -- enough cash to operate for at least another 12 months.

Chart the portfolio for the next six months, starting now. This covers what is looking like a dreary summer (northern hemisphere) spell for natural resource equities.

I think you'll find, almost regardless of which four you pick, that this portfolio of pulverized resource companies -- even the one that switched its line of business -- will beat any stock-market measure or index during that span. Remember: total market cap for the four adds uo to $150 million or less.

The micro-portfolio of four will beat any index of small-caps, any index of mid-caps, any index of large caps during that span. Regardless of industry segment or jurisdiction.

​This is a cheap-card trick​. It's a reminder that when an entire global class of securities -- junior resource equities -- has been plowed into the earth for 39 months running, and, approaching its 40th month, is experiencing some of the most shallow share turnover in the history of the universe, and is parched on the financing front, and even the scum-sucking executive headhunters have shifted into dot-bong businesses, well, all you have to do is pick' em and hold' em to win this card game.

I believe that.

My four-play is this:

-- The prospector is Gold Standard Ventures ($GSV) -- market cap of about $65 million. Jurisdiction is Nevada and objects are gold and silver. I own it and have seen the properties there.

-- The producer is Elgin Mining ($ELG:CA) -- market cap of about $24 million. Jurisdiction is Sweden and object is gold. I own it and have seen the mine there.

-- The technology-linked prospector, or services company -- well you can have your pick: Apollo Minerals (AON) in Australia has a hook-up with High Power Exploration for its geophysical prowess. Jurisdiction is Australia and objects are iron-ore, copper and gold. It's about $10 million Australian. (A second choice is Synodon [$SYD:CA] -- detecting pipeline leaks.) I own neither but know the principals of both.

-- The retreating resources company is Vaporin ($VAPO) -- once known as Valor Gold. It's a $12 million market cap. Jurisdiction is New York City, mostly, and its goal is selling electronic cigarettes. I own it, grew up in NYC and do not smoke or vaporize.

​There it is.​ If I am wrong, I will eat a cartridge's worth of those e-cigs. No nicotine for me, please.

Coming for our ​TCR ​subscribers -- a southern California mathematics aficionado is getting ready to unleash an algorithmic small-cap portfolio ​on the investing world; also, the latest on that computer services company as it blends big data, cyber-security, cloud comouting and traditional systems integration. 

By Thom Calandra


*$110 yearly: Does Not Recur



**$110: Will Recur Yearly

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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