Given the high declines and stretched balance sheets in the US, production growth should be more difficult in 2020. In the first few weeks of 2020, the portfolio reduced it’s energy weight as the stocks appreciated on US/Iraq tensions and the post tax loss selling bounce. We anticipate we will be adding back to the portfolio’s energy positions later in the quarter on a pull back, as energy stocks continue to offer great long-term value. We anticipate stocks like Parex, Kelt, MEG Energy, Tamarack and TOG will appreciate materially in the next 12 months.

We are increasingly convinced copper will trade through $3.00/lb in 2020. Despite the global slowdown last year, copper was able to stay within a tight pricing band. As the graphs below highlight, copper demand is stable, and inventories are tight.

economic growth can improve in 2020, we would expect to see a copper squeeze (like nickel last year) which would see copper stocks do exceedingly well. Portfolio holdings with copper exposure include Lundin, Ivanhoe, Capstone, Ero and GTT.

With rates remaining low and real rates threatening to be negative, the portfolio continues to hold a large gold stock position. We have seen a pickup in activity on the M&A front after a year of consolidating the mega mergers which took place the previous year. This is good news for the small to mid-cap gold companies, as larger companies look to have multiple producing assets and diversify geopolitical risks. Our favorite names in the portfolio include K92, Equinox, Terranga, Dundee Precious Metals and Endeavour Mining.

Within the Canadian small cap technology sector, we see many great opportunities, including Tecsys, Sangoma, Lightspeed, Mcloud and Docebo.

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