For most Australian investors, it’s the dream. Find a junior explorer or miner, pick up thousands (or millions) of shares for a pittance, and ride them to a valuation worth billions of dollars.
Think Poseidon Nickel (ASX: POS) back in the 70's and, more recently, Fortescue Metals (ASX: FMG) and some of the lithium plays.
But the sad reality is that most investors wouldn’t have a clue how to identify these stocks, let alone have a formula for how to invest in them, and therefore any windfalls are likely due to lady luck. Like anything, the skills required to be able to identify such opportunities take the best part of a lifetime to acquire and, even then, nothing is guaranteed.
25 years as a geologist and 10 years as a research fellow at prestigious universities is a good start. It’s also the profile of Rick Squire, Portfolio Manager (Energy and Resources) for the Acorn Capital NextGen Resources Fund - and a self-described “nerdy scientist”.
"When you're working at the small end of the market, particularly with the explorers where there's no resource, it's very difficult to evaluate what this company is," he says.
"For us, in the explorers where there are a lot of players and only a few of them cross the divide to become producers, that technical knowledge is absolutely paramount”.
As part of Livewire’s Undiscovered Fund Series, Squire shares:
what it takes to identify up-and-coming mining and energy companies,
why the process is part science and part art,
why looking within the ASX-100 is a fool’s errand, and
his formula for investing at the right time.
Squire also shares the commodities he believes have the biggest upside potential right now, how he is seeing deep value in a lot of smaller stocks, and one stock that stands out.