Q: I have two small holdings in the materials sector, EQX (1% of portfolio) and NGT (1.5% of portfolio). I am thinking of consolidating them. NGT is the larger company by far, and has faced some negative investor sentiment recently, but to my knowledge, remains profitable and should perform better in the next several quarters. EQX has had better recent momentum, but is much smaller than NGT. This would be for a longer-term hold.
An alternative strategy would be to sell both and purchase another gold mining company with these funds.
I would appreciate any thoughts or insights you would be willing to share. Thanks so much, and I look forward to your reply.
An alternative strategy would be to sell both and purchase another gold mining company with these funds.
I would appreciate any thoughts or insights you would be willing to share. Thanks so much, and I look forward to your reply.
5i Research Answer:
EQX is smaller and pays not dividend like NGT. NGT has had its share of troubles in the past, and it can take a while for sentiment to shift. EQX is set to grow earnings very sharply, but it is also highly leveraged right now. Debt will come down, but it will take years. NGT is in better financial shape but has a much lower overall growth profile. We do not know if these are the ONLY holdings in the sector. We would prefer AEM and WPM to both of these, if one is only holding a couple of positions. If consolidating, we would lean to EQX if an investor truly believes in the sector. If the sector does well, we think EQX has the most upside potential of the two discussed.