Mid-year Top Performer: Stephen Leeb
At the start of the year, MoneyShow featured its annual Top Picks report asking the leading advisors for their favorite investment ideas for 2016. In the report 85 stocks and funds were recommended. This interview is part of our series highlighting the top performing advisors as of mid-year.
Steve Halpern: Today, I'm thrilled to be talking with our special guest, growth stock expert Stephen Leeb, editor of The Complete Investor. How are you doing today, Stephen?
Stephen Leeb: I'm doing fine, Steve. Thank you very much.
Steve Halpern: In our 2016 Annual Top Picks report, you chose Pretium Resources (PVG) as your favorite stock. Now, this stock is up an astounding 136%, which makes it the number one performing stock out of the 85 in our annual report. Could you give our listeners an overview of the company, and remind people what its basic operations are?
Stephen Leeb: Well, it is a junior gold mine, which is to say that it has a deposit, several deposits, and they're in the process of developing those deposits.
They have not started producing gold, but the deposits are extremely well-defines, and in a market that favors gold, junior golds typically outperform, because there's a lot more leverage there.
You're starting from zero and you can go way, way, way up, and it's essentially run by someone I've had the pleasure of meeting, Robert Quartermain.
He has a tremendous reputation within the gold mining industry, and actually, I spent about an hour with Mr. Quartermain 2000 feet underground, not looking at Pretium, but looking at another mine.
I was just basically cold and everything, nervous about the elevators and things like that. He had on these goggles and was taking in everything. He is the consummate pro, and he has a superb record.
I thought gold was going to do very well, and I expect the junior minors to always do better when gold does very well, and I just knew Robert Quartermain, and I know him to be an extremely honest and thoroughly high-level professional. That was Pretium.
Steve Halpern: Could you review the developments over the past six months that have led to such a sharp appreciation in the stock, and perhaps touch on the gold sector in general, as well as company-specific issues that have impacted Pretium?
Stephen Leeb: Well, sure. What he's managed to do, he's managed to raise money, he's managed to start development on one of his projects, he's managed to outline future developments on other projects, and they're such that if you just discount the projected cash-flow, you come up with numbers that are very, very high.
If you're a bull on gold, as I am very bullish, you come up with, I don't want to say telephone numbers, I'm not going to give a long-term projection that would be way up there, but it would be way up there.
I think there's a lot more to go with the stock. Essentially, Steve, he has executed on what he said he would do, and he executed very, very well when gold wasn't really rising that much.
He managed to raise capital, he managed to start development, and he's really sitting in the catbird seat with gold at, what, $1350. It's still way below its high of $1900, and this remains one of the best mines, I think to own, if you do believe gold's in a new bull market, and I do.
Steve Halpern: Looking ahead to the second half of the year, it sounds like you certainly remain optimistic on both the sector and the stock in particular.
Stephen Leeb: Absolutely, and I think history again shows, I can't stress this enough, that when gold does very well, you want to own junior minors.
The caveat, and it's a critical caveat, is you have to have the right junior minor, and it's very difficult to find the right junior minor. The best way to do it is to look at who is running the show.
In this case, in the case of Pretium, Robert Quartermain is running the show. Again, I know I've used this expression before in the context of this interview already: he is the consummate professional.
He doesn't over-tout. He's not crazed about getting publicity, etc. He's trusted, and he will deliver, and if gold does well, I can't think of a better spot you want to be in.
Steve Halpern: Before we go, perhaps you'd be kind enough to highlight another name or two of a minor, or even a fund that you think investors might also consider for the second half of the year.
Stephen Leeb: Well, sure. I would go with one junior and one senior mine. The junior mine was actually the one I picked last year, and I think it did very well against the gold market that was not particularly strong, and that's Novagold (NG).
Here, too, I know the people that run the show there, and they are consummate professionals. They are just tremendous, and in this case they are still getting permitting, but they happen to own an ore body that is one of the, maybe, the greatest or largest undeveloped ore body in the world.
Their partner, which is the other name I would recommend, and it's certainly not a junior, but it's been a spectacular performer so far, and I think it will continue to be a spectacular performer, is Barrick (ABX).
That's run by John Thornton. It was an ex-CEO of Goldman Sachs Europe, I believe. He has many, many contacts with China, and he again has a track record that's just spectacular. Almost everything he touches turns into gold, pardon the pun.
The same thing with Novagold. The people running that have had success after success, after success. You have those two twins, which happen to be partnered on one major project, which I think will do extraordinarily well going forward. Novagold, Barrick would be a very good combination that would go extremely well with Pretium.
Steve Halpern: Again, our guest is Stephen Leeb of The Complete Investor. Thank you so much for your time today. It was really fascinating to hear your thoughts.
Stephen Leeb: Thank you.
By Stephen Leeb, Editor of The Complete Investor