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John Feneck: Finding Deep Value in Mining Stocks

Tom welcomes back John Feneck, CEO of Feneck Consulting to the show. John discusses how different the miners feel now than back in 2016. He explains his investing approach and how he avoids certain issues. It’s important to be able to sleep at night. Currently, he’s heavily invested in junior miners.

He’s surprised how few advisors and managers are in the sector. He feels the broader equity markets are dangerous as they keep melting higher.

He’s speaking with many mining CEOs. Most are having problems getting drills rigs and are experiencing delays for lab results. At present, there are numerous other opportunities for investors to chase than the mining sector.

Non-farm payroll results come out on November 5th and investors will want to pay close attention. The Fed is watching these numbers closely as they have been two misses recently. A higher CPI with lower non-farm payrolls is not a recipe for the Fed to raise rates.

He discusses fall tax-loss selling and how that has been a persistent issue for the past several years. Pay close attention to the next Fed meeting on November 3rd. If everything seems normal then tax-loss selling may not be bad. If instead, the Fed appears hawkish we could see additional tax selling.

John discusses how there are companies in the GDX and GDX.J that he doesn’t want to hold. These ETFs tend to rotate names in and out which accounts for some of the underperformance. If you are willing to do the work then you can easily beat the ETFs by picking juniors. There are times however when it makes sense to buy the ETFs.

John explains his tactics around structuring buys, visualizing the order book, and why he likes to use multiple limit orders to gradually build positions.

Lastly, he discusses the energy and copper space as both have been outperforming. They’ve also recently started a newsletter which will be released twice a month.

Time Stamp References:
0:00 – Introduction
0:32 – Past Comparisons
5:23 – Finding Opportunities
9:02 – Company Themes
10:45 – FOMC & Inflation
15:19 – Tax Selling & Bonuses
17:38 – ETFs and Underperformance
22:14 – Structuring Buys
23:59 – Short Interest & Depth
32:35 – Energy & Copper
37:37 – Wrap Up

Talking Points From This Episode

  • Junior mining market observations and recent performance.
  • Thoughts on the upcoming FOMC meeting and non-farm payroll expectations.
  • GDX and GDXJ underperformance and when to buy these ETFs.
  • Structuring buys and gradually building positions.

Guest Links
Website mentioned:

John Feneck, CMFC is Founder and CEO of Feneck Consulting

John began his career in 1992 as an equity analyst on the Merrill Lynch global allocation fund. From 1993-2019, John was a senior executive for Mutual Fund and ETF providers, spending most of his career at Merrill Lynch Funds and JP Morgan Chase Funds. He was ranked #1 in both gross and net sales once at Merrill Lynch and three times at JP Morgan Chase. John is a regular contributor to various seminars, conferences, and media events.

John was a member of the precious metals PM team at Sprott in 2017 and has developed a compelling track record based on a proprietary method. He believes that building a diversified portfolio of 25 to 50 exceptional resource stocks is critical to success.

In September 2019, John started Feneck Consulting, LLC, based on demand from commodity companies, especially those in the metals and mining sector. They help small and mid-cap companies to raise awareness about their brand. The enterprise also works with HNW Financial Advisors and clients, educating them about the opportunities and risks in the financial markets and, specifically, in the commodities markets. John holds the series 7, series 63, CMFC, and has passed CIMA level one.

John lives in Scottsdale, AZ, and is a single Dad to an amazing 7-year-old daughter that is his best friend. On the weekends, he is a professional musician who enjoys performing and writing music, along with playing sports and traveling.

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