Wednesday, October 10, 2018

Recent Buy – KL

A quick update on a a recent purchase in my portfolio.

Hard to ignore some crazy cheap valuations in the precious metals mining sector. Last week, I nibbled a bit and added more to my already largest position in portfolio. I added 100 shares of Kirkland Lake Gold (KL.TO) @ CAD$23.00. I have been buying KL (and its pre-merger Newmarket Gold) for a while now. The company has been one of the best performing stocks in TSX (and my portfolio) and executing even better than expected. Management continues to make fantastic progress with their revenue and earnings quarter after quarter, started issuing dividends last year (and has tripled them since!), news flow has been stellar every few months where higher/better/richer resources discovered in their existing mines. It’s hard to find a fault with this company.
Lately, the company has come under selling pressure and was a head scratcher for everyone. Finally, it was revealed last week that Van Eck (the ETF company) was dropping KL from its junior index (GDXJ) and promoting it to the senior index (GDX). GDXJ’s top holding was KL and this explained why there was so much selling over the past few weeks. It was also announced that Sep 21 would be the final day of selling out from GDXJ. When the market provides you fat pitches, you have to swing! I decided to wait until this window was closing and added to my position on the last day of selling. It has also been noted that insiders have started buying below CAD$25.00, so I think it provides good valuation at the current price. Current yield is close to 0.5% and with this purchase, I add $12 to my forward dividend income.
Full Disclosure: Long KL.TO. Our full list of holdings is available here.

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