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Franco-Nevada Corporation (FNV)
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Wheaton Precious Metals Corp. (WPM)
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Agnico Eagle Mines Limited (AEM)
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Gold Fields Limited American Depositary Shares (GFI)
Q: Hello 5i, I've held FNV at 2% weight for the past 6 years as a hedge and precious metal/materials component. It's total return is close to 8%. Shares are in a non-registered account so modest cap gain if I sell. My question is should I hold or sell for WPM , AEM or GFI. All three have materially outperformed FNV past 5 years. Based on your outlook, does it make any sense to trade FNV for WPM or others or just hold in the anticipation of FNV sorting out their issues in Panama, etc? Thanks for all you do.
5i Research Answer:
It's always a tough call to 'switch' after underperformance. We think FNV is OK, and its issues largely price in. It's now up 14% YTD. We would say we like AEM and WPM 'better'. The question then becomes should an investor just own one name in the sector. We would prefer at least some diversification. Considering FNV's future potential and AEM's better performance and lower valuation, we think a FNV/AEM combo might be the best move here rather than a swap.