We Study Billionaires - The Investor’s Podcast Network TIP271: An Intrinsic Value Assessment w/ Dan Ferris (Business Podcast)
Dec 1, 2019
Dan Ferris, a valuation expert with over two decades in financial evaluation, shares his insights on the complexities of investing in mining stocks. He discusses the cyclical nature of the mining industry and the influence of market trends on investment strategies. Ferris delves into how to accurately assess the intrinsic value of companies like Altius Minerals, emphasizing the importance of management relationships and understanding royalties. He also explores the balance between business acumen and investment strategy, providing valuable advice for entrepreneurs seeking growth.
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Mining Stock Challenges
- Mining stocks are capital-intensive, requiring billions upfront before revenue.
- The process from discovery to production can take decades, making it highly cyclical.
Mining Stock Research
- Understand the industry's state and compare companies' margins and cash costs per commodity unit.
- Know the management team well, especially in smaller companies, to avoid shady dealings.
Reading Mining Cycles
- Focus on extreme market tops and bottoms in mining cycles, not the middle ground.
- Extreme tops occur when even high-cost producers are profitable and financing is easy.