Window On Junior Resource Companies

Jul 22nd, 2009 – Comment

  HI Lou I have noticed that Pinetree Capital has been on a bit of a tear lately after having been hit badly like most other small-cap stocks.Is this a good time to buy this company, which purchases micro cap stocks in hot sectors? Is it a good way to play uranium, energy and metals […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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pinetree

HI Lou
I have noticed that Pinetree Capital has been on a bit of a tear lately after having been hit badly like most other small-cap stocks.Is this a good time to buy this company, which purchases micro cap stocks in hot sectors? Is it a good way to play uranium, energy and metals sectors at this time?

Regards,

Dave

 

Hi Dave,

Pinetree Capital ( PNP TSX) is a company that is focused on discovery investing. They identify sectors that their research indicates will outperform. The next steps involve finding small cap companies in those areas and then  building a  sizable position in those companies over time. The last step is managing the exit from their investments.

Right now the company has allocated its capital with a focus on resources with 88% of capital in four key areas. Precious Metals 43%, Uranium25%, Base Metals 14% and Oil & Gas 6%.

To answer your question about using Pinetree to manage your exposure to junior resource companies the answer would be if you are satisfied with their selections and performance. You would have to look at the entire portfolio that they manage and see if you like the companies that they have focused on in each sector.

pnp

The three year chart shows that the stock broke the long decline that started in 2007 in December of 2008 and is now pulling back from the recent advance.

 

 

 

 

 

pnp2

The three month chart shows a push in late April  from the $1.40 range  to a peak in June to $2.80 but that advance gave way to a retreat to support on the 200 day moving average in July back to $1.30.

There is resistance in the range of $1.80 and $2.00 that PNP has to break above to get back onto a major uptrend. The MACD is turning up which suggests that the current bounce could have some momentum.

Another thing to consider when you look at an investment company like Pinetree is that with a diversified portfolio you know that they have to be carrying losers with their winners. It might be worth cherry picking the winners as individual single stock plays.

 

Happy Capitalism!

 

 

 

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