Fund Manager
Norm Lamarche
Stocks fell to new lows in November as investors rushed to the cash-sidelines on the mounting evidence of weak economic conditions. After the major sell-offs during the months of September and October, investors took November to cycle lows, with the Material groups leading the way. The Golds were the lone bright spot during the recent month, as investors began to worry about the world post-reflation. Canadian markets sold off 5.0% during the month, with the Materials subgroup up 9.4% (Golds) while the Energy sector dropped 4.3%. For the same period, the Front Street Resource Hedge Fund was down 9.60%, while the Golds provided some relief, the rest of the Materials complex continued to sell off in a dramatic way, from the large caps, down to the juniors, as has been the case for the whole year, however, the juniors bore the brunt of the market illiquidity. Rio Tinto led the way among the majors, (-45% on the month) as BHP put an end to its merger proposal. Canadian small cap stocks fell twice as much as the market in November, as the liquidation sale, for redemption, tax loss, widow dressing, etc. drove valuations into frantic levels. One of the common features this past month was the race to cut back production, capex and the scuttling of all new Greenfield developments.
Producers of all materials are now looking to manage inventories worldwide, as commodity prices trend towards cost of production. On the energy front, WTI dropped another $12/bbl, to the mid fifties, while Nat Gas Nymex dropped a further 5%. Copper, Nickel and Aluminum all dropped 11%, 15% and 14%, respectively. In the case of Nickel and Zinc, much production has been curtailed as commodity prices plunged below many cost curves. Share prices are showing signs of bottoming, notwithstanding the onslaught of further deteriorating economic news. We suspect the reduced redemption and tax-loss selling to be largely responsible. Governments from all over the world, particularly the U.S. and its Central Bank, are stopping at nothing to secure its economic (at banking system’s) recovery. The widespread downturn has been unprecedented. The fiscal and monetary measures to fix it are also unparalleled. We have been adding to positions.
Front Street Energy Venture Fund
Date Published
Related Fund(s)
Fund Manager
Stocks fell to new lows in November as investors rushed to the cash-sidelines on the mounting evidence of weak economic conditions. After the major sell-offs during the months of September and October, investors took November to cycle lows, with the Material groups leading the way. The Golds were the lone bright spot during the recent month, as investors began to worry about the world post-reflation. Canadian markets sold off 5.0% during the month, with the Materials subgroup up 9.4% (Golds) while the Energy sector dropped 4.3%. For the same period, the Front Street Resource Hedge Fund was down 9.60%, while the Golds provided some relief, the rest of the Materials complex continued to sell off in a dramatic way, from the large caps, down to the juniors, as has been the case for the whole year, however, the juniors bore the brunt of the market illiquidity. Rio Tinto led the way among the majors, (-45% on the month) as BHP put an end to its merger proposal. Canadian small cap stocks fell twice as much as the market in November, as the liquidation sale, for redemption, tax loss, widow dressing, etc. drove valuations into frantic levels. One of the common features this past month was the race to cut back production, capex and the scuttling of all new Greenfield developments.
Producers of all materials are now looking to manage inventories worldwide, as commodity prices trend towards cost of production. On the energy front, WTI dropped another $12/bbl, to the mid fifties, while Nat Gas Nymex dropped a further 5%. Copper, Nickel and Aluminum all dropped 11%, 15% and 14%, respectively. In the case of Nickel and Zinc, much production has been curtailed as commodity prices plunged below many cost curves. Share prices are showing signs of bottoming, notwithstanding the onslaught of further deteriorating economic news. We suspect the reduced redemption and tax-loss selling to be largely responsible. Governments from all over the world, particularly the U.S. and its Central Bank, are stopping at nothing to secure its economic (at banking system’s) recovery. The widespread downturn has been unprecedented. The fiscal and monetary measures to fix it are also unparalleled. We have been adding to positions.