Selling Several Positions to Increase Investment in a Core Holding

By Travis Johnson, Stock Gumshoe, March 5, 2015

More on this tomorrow as I get into more detail in the Friday File, but I thought I should let the Irregulars know that I made a few transactions in my personal account today.

Even taken all together this does not amount to a major transaction — but it does away with or decreases a few small positions and adds to one of my largest holdings… call it a little “natural resources sector consolidation” within my portfolio. Here’s what I did:

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Sold East West Petroleum (EW.V), as I mentioned I was planning to do back when I did the annual review of my holdings.

Sold Arcos Dorados (ARCO), the news from Brazil continues to be bad for Arcos/McDonalds, and it has now added up too much — I have held this for the better part of a year because they are good operators who are being taken down, for the most part, by things beyond their control… but I see no sign of improvement in their operations in Brazil (and if Brazil does recover sharply it will be because of commodity prices… something I’m already adequately exposed to on the upside elsewhere) or in Argentina or Venezuela, and there’s little point in me holding onto this small position and spending a lot more time on it.

Sold a quarter of my Sandstorm Gold (SAND) holdings.

Sold MFC Industrial (MIL) — not because it’s necessarily a great sell here (they still have some real natural gas value that might be unleashed) but because it is largely influenced by the same factors as Altius, and I’m much more confident in the long-term prospects for Altius.

And though I’m using some of that to bolster my cash position for future opportunistic purchases (I hope), I used most of that capital to invest more into Altius Minerals (ALS.TO, ATUSF) following their announcement this morning that they’ll be acquiring Callinan Royalties (presentation here).

Altius is, I think, a stronger company following the deal… it further diversifies the royalty portfolio across more commodities (adding gold and copper, particularly), the deal is generally nicely accretive and the royalty revenue per share will go up immediately, and, perhaps most importantly, this acquisition actually speeds up their balance sheet recovery from last year’s huge Sherritt royalties purchase, because Callinan’s large cash position helps Altius to continue reducing their debt (this is ...

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