My Largest Small Cap Holding
If you asked my wife or my
employees what kind of investor I am, they'd probably tell you that I'm a
growth-oriented value investor.
I made my bones as an
analyst over the past 12 years by focusing on small-cap companies for
that very reason; I enjoy doing in-depth research of undiscovered, small
companies with the potential for significant capital
gains.
My research focuses on
uncovering great growth companies at attractive prices. Typically, this
is pretty hard to do. After all, once a company is well known to be a
"growth stock", then investors pile in and the stock's valuation
soars.
But my goal is to never buy
a "growth stock" after it's well known. As you probably realize, when you
buy these types of companies ahead of the crowd, you have an excellent
chance of doubling or tripling your money in a very short period of
time.
***The potential for
finding a 10 bagger - a stock that goes up over 1,000 percent - isn't
outside the realm of possibilities. My best stock recommendation ever was
for True Religion (NYSE:
TRLG), a
denim retailer stock that returned 2,218% to subscribers of
my Small Cap Investor
Pro service in
just over four years.
That's more than 22 times your money - and it turned every $5,000 invested into over $110,000.
You don't need more than a
few of these kinds of winners to build a substantial fortune that can
fund your retirement, pay for that vacation home, or put your kids
through college.
Today, the single largest
stock holding in my personal investment account is a small cap company
that few investors have ever heard of. No surprises
there.
But you might be surprised
to learn that it's a silver company.
Typically, you might think
of silver companies as having depreciating assets - in that the longer
they're in business, the less silver they have in the ground and the less
their asset is worth.
And that's the case for
many publicly traded silver companies.
But in the specific case of
small cap silver companies in the early stages of exploration and
development - it's a completely different story.
Many of these companies -
like all of my favorite small caps - are largely ignored or undiscovered
by institutional investors and analysts. That's because they don't yet
have any significant production. And therefore have minimal revenues, and
almost never any earnings. They're extremely difficult to value when
they're this small.
And in some cases, they're literally months away from incredible profitability as they bring their production on line.
That's when institutions and analysts pile into these companies. And that's when early investors can become incredibly rich as the crowd discovers the stock.
***Today, my largest stock
holding is a tiny silver company that's still many months away from
producing a single ounce of silver. But that's exactly why I've been
accumulating a sizable position in the stock right
now.
At $37 an ounce silver, the
company has an estimated $2.3 billion of the metal sitting in the ground.
But this company has a market cap of under $400 million. So buying shares
of this company today is like buying the silver in the ground for about
$5.50 an ounce. It's truly an astounding reserve - what's been called the
biggest silver discovery in more than a decade!
Even if silver prices drop
to $30 an ounce, this company will be incredibly profitable over the
coming years as its mine starts to bring silver to market. With a
projected cash-cost of less than $6 an ounce when a mine is built silver
prices could go in the toilet and this company's bottom line would still
be fine. With that kind of downside protection, it's tough to
lose.
These types of
opportunities only come around about once a decade. So when I find a
company with this type of resource, I start digging.
I've been recommending
shares of this small cap silver company to subscribers of my Small Cap
Investor PRO newsletter for many months. And in my personal investment
account, I've built up a sizeable position. In fact, this stock is my
biggest single stock holding in my investment
portfolio.
I've worked very closely
with my small cap research analyst Tyler Laundon, as well as Kevin
McElroy, our resource editor, to put together an exclusive report on this
opportunity.
I invite you to get a copy
of my complete research report, titled Sierra
Madre Silver Profits. Inside this special
report, you'll get my in-depth research into silver mining in Mexico, and
find my full report on this small cap gem that could see its shares soar
in the coming months.
