Snowball Author Discusses Buffett; Pierre Lassonde on Royalty Companies


Tim Du ToitFounder & CEO of

Alice Schroeder, author of The Snowball: Warren Buffett and the Business of Life. Looking forward to your questions. (self.investing)

Royalty Companies: Pierre Lassonde, Chairman of Franco-Nevada. Not cheap but you pay a fair price now for quality.

If you ever wanted the cheapest way to own precious metals and/or copper, then focus on micro-cap companies with good assets and that are NOT producing–got that?

Now if you don’t want to wade through then I suggest GLDX.

GLDX May 22

Counter intuitively, this may be a safer investment than GDX or GDXJ.  WHY? Aren’t explorers and pre-production companies risky? Yes, of course, you must diversify, but if gold declines these companies can hibernate by cutting costs sharply–faster than Newmont. And if gold turns, this can double or triple. A 50% loss for a double or triple is what I am assuming.  I could be wrong. Remember you are not buying quality but cheap, cheap assets.   This is NOT a recommendation but an idea for YOU to investigate or forget about.  This is about cheap OPTION value.  Do not do anything before going to school. 

Go to the mining investment university: then click on mining 101


5 responses to “Snowball Author Discusses Buffett; Pierre Lassonde on Royalty Companies

  1. My view is a little different : I think it is not wise to work it out all for yourself, especially if you are a beginner.
    All advances are made by standing on the shoulders of giants. This is true for all disciplines. We must use the expertise of successful value investors (successful with consistency over many decades).
    Sam Walton copied the best ideas of other reatilers. He did not try to do it by himself. Lesson : learn from others – it`s faster, and you may reduce your error rate.
    Also, try to avoid difficult areas like mining — it`s too complex. Almost all investors have never visited a mine, but they have drunk a coke. Invest in businesses that are simple with inherently good economics. Ask yourself : is it an accident that Malone chose cable? Is it an accident that Buffett`s captains (Weschler, Combs) keep buying media businesses?

  2. Excellent points. I wish I could find those excellent businesses now at fair prices.

  3. John,
    I hear you!
    There may be some potentially good spinoffs toward the end of the year. 2 on my radar are : Liberty Broadband from LMCA with a rights offering , and Dealer Services from ADP . This blog has multiple posts on Malone:

  4. Believe me, I abhor mining companies and don’t like gold. Even airlines might be better than mining. That said, wherever I look I see ‘dead people’ or high valuations across the board from Coke to Google to IBM not even accounting for artificially high profit margins due to quantitative easing.
    Then I see that precious metals mining companies are at 100 year lows (1940) last time as cheap mining companies to gold and silver. Yes, investors have been hurt and they are punishing the sector. But will the world need more copper or silver or gold in five years if Chindia wants sell phones and a middle class life. My assumption is yes. Therefore, I believe I am being PAID for most of the risks. But because the business is so high risk other than the big Royalty companies which are already diversified across many properties, you MUST diversity–minimum 15 names.

    If you can buy a call option on gold for $5 to $10 in the ground and the company can survive a few years, then perhaps there is a skewed risk reward bet. At SOME price I will buy anything I think is worth more given my required return. This is NOT franchise type investing, but cheap, distressed asset based investing in a HATED sector. Other than coal find me a more hated sector.

    Then you must wait.

  5. Yes, if you choose to invest in distressed cyclical commodities , diversification is the way to go. It`s THE key point to internalize here .

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