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- Major Hedge Fund Takes Massive Stake In Fast-Growing Gold Company
Major Hedge Fund Takes Massive Stake In Fast-Growing Gold Company
Shareholder Intel
August 23, 2023
Opens $1 billion+ to acquire 67% of this unique gold company
Forbes called him “Wall Street’s Most Feared Activist Investor.”
The New Yorker has described him as “aggressive, tenacious and litigious to a fault.”
Bloomberg said he “did battle with the government of Argentina — and won.”
Paul Singer is a Wall Street legend.
And his firm has taken a big (and growing!) position in gold.
But it’s not in a gold bullion or a regular mining stock or even a gold exploration company.
Instead they’re betting big on a gold company that has offered growth when precious metals prices are flat and explosive growth in gold bull markets.
Let’s start with the basics.
Big Hedge Fund Buying Up Rising Gold Company
Singer is the founder of Elliott Management.
Elliott is a major hedge fund. It has a reported $55 billion in assets under management.
And Singer has turned into a legit billionaire with more than $5 billion to his name.
Singer, now Elliott Management's president and co-CEO, is charging into a gold stock.
The company is Triple Flag Precious Metals (TFPM).
According to public filings Elliott owned just over 129 million shares of TFPM last quarter.
And it continued in the most recent quarter upping its stake to more than 134 million shares.
At current market prices of just over $13 per share, this is a $1.7 billion position.
But TFPM isn’t a huge company.
So this stake means Elliott currently owns 67% of TFPM, a huge stake by any measure.
Once we looked at TFPM, we suspected why one of the world’s leading hedge funds has taken a major stake.
The Royal-ty Treatment:
Best Of Breed Gold Stocks
TFPM is a different kind of gold company.
As mentioned above, it’s not a mining company in the traditional sense of mining ore, processing, and selling it.
Instead, it’s a financial company that finances mines and creates a leveraged financial vehicle towards precious metals prices.
It’s called a “royalty” and/or “streaming” company.
The company officially defines itself as:
“Triple Flag is a pure play, gold‐focused, emerging senior streaming and royalty company. We offer bespoke financing solutions to the metals and mining industry with exposure primarily to gold and silver in the Americas and Australia, with a total of 229 assets, including 15 streams and 214 royalties. These investments are tied to mining assets at various stages of the mine life cycle, including 29 producing mines and 200 development and exploration stage projects.”
On top of that, TFPM is largely focused on precious metals.
It’s royalty and streaming portfolio is 74% gold assets and 20% silver asset.
The company has laid out an aggressive growth trajectory.
*It has combined all revenue to “gold equivalent ounces” just to make things easier and more comparable
It started in 2018 with 34,000 gold equivalent ounces of production.
This has climbed to more than 84,000 in 2022.
It’s targeting another big bump up to 100,000 to 115,000 in 2023.
The company plans to continue to grow through 2028 with an average over those years of 140,000 ounces or more per year.
We’ll go over an example of these right now so you can see how a royalty or, in this case, a metal stream pays off.
How TFPM Leverages Precious Metals Prices
Northparkes is a gold and copper mine in Australia.
The mine is owned by CMOC (formerly known as China Moly), a major Chinese diversified mining company with about $20 billion in annual revenues and one of the 50 largest mining companies in the world.
World of Mining Professionals estimates Northparkes is capable of producing 60,000 mt of copper and 50,000 oz of gold.
In July 2020 Triple Flag invested $550 million into Northparkes.
In exchang,e Triple Flag is aple to purchase 54% of the mine’s gold and 80% of the silver from the mine.
The catch is that Triple Flag will pay just 10% of the market price.
Once 630,000 ounces of gold and 9 million ounces of gold have been paid out, Triple Flag’s quota gets cut in half from 27% of gold and 40% of silver.
This results in a unique structure where Triple Flag gets all the upside in the gold price (technically 90% of the upside) in exchange for a cash payment.
This will explode in value if gold prices go higher.
And if they do, Triple Flag will likely join an elite group of mining stocks that historically outpace metals 5X over.
Full Stream Ahead:
Benefits Of Royalties And Streaming
Triple Flas is on a proven path to long-term success.
Because the most successful mining stocks of the last two decades have been royalty and streaming companies.
The reason?
They don’t have to deal with increased costs, operational risks, engineering headaches, labor problems, and everything else that global mining companies deal with every day.
They are financial companies who invest and process payments.
For example, Royal Gold (RGLD) has become one of the largest gold royalty companies in the world.
It was $3 in 2001 at the height of the dot-com bubble.
It recently traded for $116 and had an $8 billion market cap which would put it in the top 100 mining companies in the world.
The company, however, has only 27 employees.
These are financial companies designed to leverage the powerful economics of mining finance.
But the key is results. Royal gold delivered 3867% gains over the last 20 years while gold prices increased $260 to $1930 recently, good for 742%.
That’s nearly 5X the returns.
But it’s just one example of the growth power of metals royalty and streaming companies.
Wheaton Precious Metals (WPM) is another.
This company started off as a silver streaming company.
It was inking deals across the world for gold and copper miners to buy their extra silver byproduct for $3 an ounce.
The company went public in the U.S. in 2005 at $3 per share.
Today it’s $42 a share this year.
Silver went from $7 when Wheaton Precious Metals went public to $23 per ounce today.
That means when the stock was having a 1300% run, silver prices just a little more than tripled by increasing 229%.
Relatively, that’s more than 5X better returns.
There’s still more.
Franco-Nevada (FNV) is another royalty and streaming company focused mainly on gold.
This was a royalty company that was spun out from Newmont (NEM), the world’s largest gold mining company, in 2007.
It was at $15 per share with a valuation of around $1 billion and has soared from there.
Over that time gold went from $700 to a recent price of $1930.
That’s a 176% gain.
Franco-Nevada, has increased 833%, from $15 per share in 2007 to recent price of $140.
That too is nearly 5X better returns.
Conclusion
Royalty and streaming companies are probably the best way to invest in precious metals.
They offer so many advantages.
These are not mining companies dealing with cost increases, operational risks, engineering headaches, labor problems, or any of the long list of problems mining companies face every day.
Royalty and streaming companies largely collect cash.
Over time, with the right early investments, there’s a lot of cash too.
Previous royalty and streaming companies have outpaced the price of precious metals by 5X.
Even in tough times for metals, these companies have such low costs, they tend to lead mining stocks too.
They’ve got so much going for them.
And now, Triple Flag, could be the next big one.
That's probably why one of the world’s oldest and most successful hedge funds has…
Acquired 67% of the company…
Worth well over $1.5 billion…
And making Triple Flag the fund’s #1 stock position.
If you want to get in on the next round of gold, Triple Flag will likely be a major success story when it comes.
Consider shares of Triple Flag today.
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