Rick Rule: There’s beginning to be a desire to, ‘buy the next thing to move’ in resource markets
The recent Sprott Natural Resource Symposium in Vancouver assembled some of the most accomplished builders & explorers in the natural resource space.
Following the conference, Rick Rule, President of Sprott US Holdings, was kind enough to share comments on investment opportunities offered up by the conference, as well as reflect on the experience, with Sprott’s Thoughts readers.
[Editor’s Note—If you were unable to join us at the Sprott Natural Resource Symposium—please consider our Sprott Conference MP3 Package—which includes presentations by Rick Rule, Ross Beaty, Robert Friedland, Bob Quartermain, Rob McEwen, and many others.]
Here are Rick Rule’s full interview comments:
Tekoa Da Silva: Rick, I’d like to ask about your experience at the 2016 Sprott Natural Resource Symposium, in Vancouver over the summer.
This was your third year leading the conference. What comes to mind when you compare this years’ experience to prior years?
Rick Rule: I think it’s easy to say (and the attendees confirm this) that this was probably the best in the history of the conference going all the way back 20 years. You will recall Tekoa that we took this conference over from a sector of Agora that was less interested in resources than they had been. So as you suggest, this is the third time we put on the conference.
But I do have to say a couple of things. One, the whole team that put the conference together did a spectacular job; and two, the group of speakers, exhibitors, and most importantly the group of attendees that we had, all came together to put on four very high-quality information-filled days.
TD: What were your thoughts in terms of issuer-exhibitors at the conference, and potential investment opportunities that were represented there?
RR: Well, it’s important to remember that we sort of self-selected in that regard. The attendees have told us for many years that the exhibitors are not advertisers like they are at most conferences but are rather content ‘in and of themselves’. The attendees expect us to in some way shape or form, ‘vet’ the exhibitors.
The way we did that was by only inviting issuer exhibitors that were owned in Sprott performance-fee generating accounts. So it’s actually the substantially high quality of the exhibitors that make this conference so unlike any others.
But the interplay between the exhibitors and the speakers, and the exhibitors and the attendees was fantastic. So one thing that comes to mind is that while there was a lot of attraction to gold and silver as commodities, as a consequence of the fact that they have run up fairly substantially in price, there was a lot of love shown by exhibitors to other exhibitors, by speakers to exhibitors and by attendees to exhibitors for the investment ideas that might come up next in the cycle.
In other words, there’s beginning to be a desire to get in front of the market and buy the next ‘thing’ to move. The consequence of that as an example was that there was substantial interest shown to copper as a commodity, to uranium as a commodity and once again, substantial interest among the attendees in particular to exploration stories.
The things that have moved in this market of course have been precious metal production and near term production stories, but people are coming to understand that high quality discoveries are rare.
As an example, we were able to have at the conference Mariana Resources, which has a high-quality gold discovery in Turkey, Azure Minerals which has the highest-quality silver discovery in Mexico, and Orex and Canasil which together have a high-quality silver discovery.
The fact that we were able to have three of the four most exciting discoveries worldwide represented at the conference I think added a lot to the tone and excitement of the conference.
TD: There was a speaker who showed a slide of share-price performance of exhibitors at the 2015 Sprott Symposium, illustrating outperformance when compared to junior resource indices. How might you expect 2016 Sprott Symposium companies to perform over the next year?
RR: Yes, I have to give a shout-out to John Kaiser who presented a wonderful slide during his presentation of the outperformance of the exhibitors at the 2015 conference over the ensuing year and I would absolutely expect that a handpicked group of high quality exhibitors like we had in 2016 would also handily outperform the broad junior resource markets over the next 12 months.
I think one of the advantages that we get out of putting on this conference is that we expose our clients and attendees to a group of 60 companies that will likely handily outperform the 2000 public companies worldwide which are (or purport to be) in the mineral and mineral exploration business.
TD: How important is ‘quality’ in the context of those exhibiting resource companies and for investors in general?
RR: I think it’s absolutely critical. As I pointed out during my presentation at our conference, probably 80% of the issuers in the junior resource space have absolutely no value whatsoever. It doesn’t mean that they don’t go up in a good market, but they don’t go up as far as high-quality companies, and they fall a lot further when the market turns against them.
Concentrating your portfolio on the best 1% of the issuers is the sort of thing that you need to do to get ahead in this market and having an outfit like Sprott, which manages $10 billion (to call its own portfolio), to attempt to bring you a selection of the ‘best of the best’ I think is very useful for the reason that you mentioned. The quality is what’s critical.
TD: Rick, who were your favorite speakers at the conference?
RR: Tekoa, I’m embarrassed to say – although I worked very hard and I’m a pretty good speaker – I think I was only the fourth best speaker at the conference. Robert Friedland, as he always did, gave an absolutely superb performance. Grant Williams who was a newcomer to the conference but certainly isn’t a newcomer to our industry I thought gave a great speech, and Jim Rickards I thought gave a really stunningly simple explanation of the gold market and its attraction relative to more conventional Wall Street assets.
But the truth is there were many great presentations.
I guess one benefit Tekoa that I have received having participated in, spoken at and run conferences for 30 years is that over time, you find the best speakers who can deliver for an audience and you bring those speakers to your own conference.
So every day was packed with good speakers, but the truth is that I can’t think of one presentation that disappointed and I’ve never had that before.
TD: Rick, we also have a package here which is—to give a plug—an MP3 package for the recordings from the 2016 Sprott Symposium, with keynote presentations and breakout sessions.
What does the package offer in your opinion in terms of listener enrichment?
RR: Well, I think a couple of things there. First, there were a thousand people at the conference, which means in the North American retail natural resource market, there were 600,000 people who weren’t at the conference and for those who weren’t there, it gives them the ability to enjoy and learn retroactively from all the lessons that were learned at the conference.
For those people who were at the conference, it’s important that you reinforce the ‘how-to’ and ‘why’ lessons that were learned at the conference.
Once you return home from the conference and begin to enjoy your everyday life, some of the lessons you spent the time and treasure on attending the conference to learn, begin to fade.
So I think there are multiple uses of the MP3 even for people who were at the conference. In fact it’s useful to note that the majority of subscriptions for the MP3s that have happened so far have come from people who were at the conference and wanted to continue to use the experience as a tool for their investing over the next year.
But for those who weren’t there with us, if you just look at the line-up of speakers that were there, it was really unparalleled in terms of a junior resource conference and it isn’t just the editors (the gurus if you will) that gave fantastic presentations. There were a lot of exhibitors whose presentations were included in the MP3, and I would look at those both as educational material and also as prospective speculative fodder.
In other words, look at the issuers in terms of both learning how they accomplished what they’ve done, and what they think is important with regards to their companies, but also think about them as prospective targets for your speculative portfolio. The idea of course is not merely to get educated here but rather to come home and make some money from this conference.
The MP3 set gives you a more permanent ability to do it almost irrespective of how good your note-taking skills at the conference were.
TD: Rick, over the last few years I’ve noticed you have an obsessive focus on developing high-quality products. If I’ve characterized it correctly, how do you feel that focus translates into the quality of the conference?
RR: Well, I think you have been able to watch me at fairly close range Tekoa and I think it’s fair to say that I am obsessed with creating value for my customers. The truth is that I’ve worked very hard in my life and I’ve been very lucky. So unlike a lot of people, I don’t have to do this job for money anymore.
That’s not to say I don’t like getting paid, but the truth is we have positioned Sprott to be the leading firm in the world in micro-cap natural resource investing and I think that shows-through in many respects from the organization. Our research and development budget is larger than many of our competitors combined, as an example. I think the conference reflects the same thing.
You’ve probably also noted Tekoa that I’m a highly competitive person and when I chose to put on a conference – by the way, I chose to put this conference on because the customers who had attended the conference in the past urged me to do it. They said it was an important part of the value they received from their Sprott affiliation.
When I decided to take on this mantle with my team, I decided that I would do what I could do to make this the best micro-cap resource conference on the planet and I humbly suggest to you that I have succeeded.
I think it was an absolutely fantastic show for the purpose that it purported to be for and the overwhelming number of reviews we have gotten from every constituent that we had; speakers, the press, exhibitors and attendees—were universal in their praise for the quality of the conference and I think that will come through in the MP3.
TD: Rick, is there anything you think we may have missed?
RR: I think we’ve probably covered it very well. I think it would be a mistake for people reading this interview, who are by nature of their being interested in this interview, interested in speculating in natural resources—I think it would probably be a mistake not to listen to the MP3s.
The truth is that there is so much information and education in place there. So many great thoughts and ideas from so many thinkers and ‘doers’ in the industry that if you’re serious about speculating in the space—I think you’re making a mistake not listening to it.
TD: Can we offer a money-back full refund guarantee, no questions asked?
RR: Absolutely. 100% no-questions-asked, money-back guarantee.
TD: Rick Rule, President of Sprott US Holdings. Thanks for sharing your comments with us.
RR: Thank you sir.
For a full compendium of audio material from the Sprott Natural Resource Symposium, please consider our Sprott Conference MP3 Package—which includes presentations by Rick Rule, Ross Beaty, Bob Quartermain, Rob McEwen, and many others.
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