Buenaventura

Today I published my first article on Seeking Alpha, seen here

Seeking Alpha is an outlet where I can publish stock ideas I find intriguing, but that don’t hit all the requirements to be a recommendation of the Sawtooth Letter. Compania de Minas Buenaventura (BVN), for example, hits my requirements on valuation, institutional ownership, some themes, sector, etc. However the technicals haven’t yet proven themselves, relative strength and momentum are poor, and fundamentals haven’t yet turned the corner. I will be entering BVN, most likely through call options, at some point soon. But for a stock to make it as a Sawtooth pick, it needs to line up on technicals, sector, valuation, relative strength, momentum, institutional ownership, macro themes, and the overall subjective gut feeling that I’ve developed over the decades.

Reversion to the Mean

Emerging Markets, Gold and Precious Metals, Inflation, and Interest Rates have all gotten a bit out of whack lately. Yes, I realize that interest rates have already begun to turn, but that’s been coming for years. Inflation has been low for years, along with rates, but that can’t continue forever. This year EM has gotten clobbered along with metals.

I’ve got my eye on a few stocks at the intersection of these moves, and believe there is a good trade to be had at the confluence of these markets when the reversion happens! In particular, I’m researching a Latin American mining company that’s been taken to the woodshed….and left there. But if/when the economy keeps growing, interest rates slowly rise, inflation begins to be suspected of existing again, then gold will develop some life, and all of this along with the inevitable rebound in EM could combine for a healthy return. Stay tuned.