LRT - Lowell Resources Fund

[System]

Lowell Resources Fund is a unit trust that is focused on investing in shares and other financial products issued by predominately small cap resources companies listed or seeking to list on Australian and overseas stock exchanges.

The Fund employs an active management style to maximise absolute returns from carefully selected investments. The primary investment targets are junior Australian and overseas mining and energy companies that meet strict investment criteria. These companies will typically show evidence that they are approaching their primary growth phase, and are therefore expected to be positively re-rated by the market if they meet these objectives.

It is anticipated that LRT will list on the ASX during March 2018.

http://www.cremornecapital.com/lrf-profile/

 

[Dona Ferentes]

since listing, LRT had an unspectacular first two years ..... but since April 2020, both in price action and NTA (it is a LIT) the returns have been great. Latest NTA for 07 April was $1.70 so the shareprice has not kept up with stated AUM (it is selling at a discount).

Market cap is only about $50M. LRT is focused on generating strong absolute returns from the junior resources sector. Its experienced team of fund managers has many years of experience in this high risk, high reward sector. Lowell Resources Fund Management (LRFM) manages the portfolio of exploration and development companies operating in precious and base metals, specialty metals and the oil and gas space.

Performance Comparison In the 12 months to 31st March 2021, the Lowell Resources Fund spectacularly outperformed the benchmark, by over 170%. The S&P/ASX Small Resources Index (XSRD) return of 59.7% pa compared to the Fund’s remarkable 233.8% 12month change in underlying net asset value per unit (inclusive of distributions and after fees and expenses.

Top Ten holdings:
Lefroy Exploration (Gold) ....... 7.2%
Predictive Discovery (Gold) .... 6.8%
Musgrave Minerals (Gold) ....... 6.1%
De Grey Mining (Gold) ..............6.1%
Centaurus Metals (Nickel) ....... 5.3%
Talon Metals - TSX (Nickel) ...... 5.2%
Genesis Minerals (Gold) .......... 4.6%
Cash ........................................... 4.3%
Caravel Minerals (Copper) ....... 4.2%
Karoon Energy (Oil & Gas) ........ 3.0%

Since inception:

 

[peter2]

LRT is a licensed investment trust (LIT) as must distribute their profits at the EOFY. Last years div = 0.025/share. This year their NAV has grown >100% comfortably beating the S&P/ASX Small Resources Index over the past 1yr and 5yrs.

Their MO is similar to how I manage the Spec portfolio in that they spread their capital across a large number of mineral explorers. Here's a good pic at their current portfolio holdings.

Their monthly reports include a few lines on their top 10 holdings. I find it a good source of information on companies I'm not familiar with.

 

[Sean K]

LRT is a licensed investment trust (LIT) as must distribute their profits at the EOFY. Last years div = 0.025/share. This year their NAV has grown >100% comfortably beating the S&P/ASX Small Resources Index over the past 1yr and 5yrs.

Thanks for raising this Peter, this is a really interesting company. Doing pretty well the past 12 months. Be worth putting all their stocks on a watch list I reckon.

They have a very similar philosophy and strategy into buying juniors to myself, which is to get in during the early exploration/discovery side of the cycle. Gotta tap into the Lassonde Curve.

 

[Sean K]

Seems like they've picked well. Maybe just a good phase in the commodity cycle and what they're focussed on, but looks like a good return.

 

[peter2]

IMO they've done well because of the economic conditions (right time of the cycle) and that they've spread their investments around rather than a concentrated few. I also notice in their reports that they take partial profits after price surges to new highs. This allows them to reinvest in other promising opportunities. Smart.

I have to point out that fund managers that do very well in a short period (1 - 2yrs) rarely perform at the same level in following years. Many LICs stay invested in companies (married) too long, don't take profits, don't reinvest without raising more capital, believe that their outperformance is innate (ego) and not due to the economic cycle.

Very few LICs/LITs trade at a premium to their NAV. Wilson asset mgt being the exception (WAM, Whoop, Wow etc. )

 

[finicky]

Just hopped in for 5,000 @ market 1.35
Tipped off by bk1 on GMD thread - at today's GMD price LTR's investment in GMD more than doubled (GMD was 5.8% of their p/f). Besides, trading at a discount to assets and they have a few good picks.

 

[finicky]

Today's net asset value announcement as at Sept 22 was 1.73 (prior month was 1.66)
Yesterday's close of LRT was 1.35
The spike in GMD s.p was on Sept 22 - closed at 0.18 but retraced next day to close at 0.15
Prior to spike LRT's GMD holding was 5.8% of LRT's net asset value.

 

[Sean K]

Today's net asset value announcement as at Sept 22 was 1.73 (prior month was 1.66)
Yesterday's close of LRT was 1.34
The spike in GMD s.p was on Sept 22 - closed at 0.18 but retraced next day to close at 0.15
Prior to spike LRT's GMD holding was 5.8% of LRT's net asset value.

Wonder why it's at a discount? Maybe the market will catch up eventually or this is how things go...

Make's me think of DGO's situation where the market value of their investments are worth more than their SP.

 

[finicky]

Risky because of the non producing resource companies it focuses on I guess but as you'd know not a rarity for LICs and LITs to be at a discount as Dona Ferentes has dwelled on. This one gets very little attention on forums. I bought it on impulse because of the possible s.p potential of GMD and I like a few of their other companies. Also, as shown in fy21, their dividend can be phenomenal if the spec resources have a good year - of course miserable if they don't. Not sure that I'll hold it.

 

[Sean K]

Risky because of the non producing resource companies it focuses on I guess but as you'd know not a rarity for LICs and LITs to be at a discount as Dona Ferentes has dwelled on. This one gets very little attention on forums. I bought it on impulse because of the possible s.p potential of GMD and I like a few of their other companies. Also, as shown in fy21, their dividend can be phenomenal if the spec resources have a good year - of course miserable if they don't. Not sure that I'll hold it.

Picked this at the right time, finicky. Good work. GMD and then PDI's initial MRE have been very good to LRT over the past month. DEG also had a good run. I wonder when MGV will wake up...

 

[finicky]

Yes I was just looking at this today @kennas
Considering if I should just take a quick profit - not my normal m.o
Like their picks but just bought it on impulse because of the big value lift in their GMD holding

 

[bk1]

profit - not my normal m.o

What i like about Lowell is that they are NOT shy about taking profits, but still retain a position if the company warrants it.
PDI being a prime example.
They were in TNT before becoming RDT.
I'm trying to do the same and not be hesitant about taking profits from what are still speculative plays.

 

[Sean K]

Yes I was just looking at this today @kennas
Considering if I should just take a quick profit - not my normal m.o
Like their picks but just bought it on impulse because of the big value lift in their GMD holding

I think their top 5 still have a bit to run. Not sure if PDI's run has been factored into LRT as yet. They seem to lag by about a week of their key positions moving.

What i like about Lowell is that they are NOT shy about taking profits, but still retain a position if the company warrants it.
PDI being a prime example.

Yes, I think they own 4% of PDI. Not sure if they've taken profits yet? The coup has put about a 50% discount on PDI's already WeAf discount I reckon. I think they're heading towards a 5m + deposit in their next MRE upgrade in the first half of next year. Adding about 500k oz for every 50m they did deeper.

 

[finicky]

Thanks for your tip off @bk1
P.S I hope they sold a few GMD in that spike and it shows up in the next dividend

 

[Sean K]

@finicky what's the story with the NAV vs SP? Does this indicate it's undervalued by 20 cents or so, or no correlation?

 

[finicky]

Yep, to my primitive understanding it does and was one of the reasons I bought. Not unusual for some of these lesser known LICs and LIT'S to trade at a discount however. Note though that some changes occurred in constituent share prices since Oct 6, e.g PDI down, MGV up ...
Some exposure to exciting stocks here (GMD)

 

[coolcup]

This entity has a very high management fee (3%+) and a very low bar for performance fees (18% of any increase in NAV). I'd price this at a discount with that fee regime!

 

[Sean K]

January update from LRT.

Not sure why they sold out of CTM and kept DEG. Maybe because DEG is further back on the Lassonde Curve in their mind, but I think CTM still has quite a bit of exploration upside. Maybe because CTM's into a DFS that puts them over the edge for their investment philosophy.

Some good Market Notes in the update, worth a read.

Price has gone sideways in line with market correction.

 

[Dona Ferentes]

What i like about Lowell is that they are NOT shy about taking profits, but still retain a position if the company warrants it.

Fund Investment Actions - March 2022

In energy, the Fund exited its position in ASX listed Cuban oil explorer Melbana Energy. Melbana’s share price rose almost 5 times since the start of February as it announced 2.5bn barrels of oil in place for in the upper sheet of its Alameda-1 JV well, and 119m bbls of prospective resource. The Fund took up its entitlement in the Hydrocarbon Dynamics rights issue.

In gold, the Fund participated in rights issues by west African explorers Golden Rim Resources and Marvel Gold. The positions in gold explorer’s E2 Metals and Carnavale Resources were increased while Carawine Resources received a takeover offer which allowed the Fund to exit at a profit. Investments were made in two new gold IPO’s Sierra Nevada Gold and Southern Cross Goldfields.

In March, the Fund trimmed some existing base metals exposures, but continued to add to its copper related investments in TSX listed Aguila Copper and Rugby Mining, and ASX listed Westar Resources.

A new rare earths investment was made in ASX-listed Rare-X Limited.