In this video, Mining Journal talks with Grosskopf about its New York dual listing, junior mining investing, the all-important strategy and the firm's precious metals product range. Highlights include:
Sprott Inc
"We see ourselves as almost a royalty company-like profit earner in the sector. We pay a strong dividend and we have good margins. … The adoption curve of having gold become a mainstream portfolio holding and insurance is still in its early days so we see ourselves being a lot bigger doing what we are doing."
New York dual listing
"We have a lot of retail investors in the US and believe it or not, in this modern age, a lot of them are still prevented from buying a Canadian stock ... because their back offices and compliance departments still have impediments for foreign stocks."
Product portfolio
"We came at it from the background of being a stock-picking firm. The bullion trusts and the lending fund and the private equity style funds we've added in the business have all been a function of just getting broader within the sector. … It is a function of coming at the sector from almost every viable perspective and having funds that cater to investors that appreciate particular strategies."
Capital allocation
"We are fortunate enough to have more capital being offered to us than opportunities in a lot of the funds. … We tend to keep [competition for investment opportunities] to a minimum. Each fund has a specific profile."
Junior stock-picking
"It might look as though we're throwing darts because we're making a lot of investments but in fact that is what its required to sort out the right opportunities and to plant the seeds that we need to test out a property to see if its worth a bigger capitalisation and a bigger investment. … We have calculated strategies for making that number of bets and we're looking for very high returns and alpha compared to the risks that we're taking."
Juniors red flags
"The first thing we look at is management. Are management credible? Do they have the right people in the right positions? Are they overly promotional? Do they have a sensible plan? Are they aligned with us as investors? … We look to avoid certain groups in the business that have a bad reputation for being over-promotional."
Exit strategy
"Generally speaking we are looking for a catalyst. We have a game plan, we are looking to exit when certain valuation metrics are achieved and we have to start thinking about that exit well in advance because we are a long-term investor and don't like to be disruptive with our trading."
Shares in Sprott are trading at C$42.94, valuing the company at $1.1 billion.
