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An Investment for all Seasons

Bob Moriarty
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Oct 19, 2012

I just returned from a grueling 6-day trip to Perth Australia to see the Pilbara project of Novo Resources. I flew 50 hours in the air in 6 days and did just about 24,000 miles. You can fly no further on earth. It was painful and I’ll be sharing my thoughts in a piece on Novo in a few days when I recover. If I recover.

One of the people on the tour was from Pinetree Capital. Pinetree is a mutual fund of sorts with investments in over 401 junior resource stocks. The legendary Canadian investor Sheldon Inwentash runs it.

The company came to mind first because of the 10% or so they own of Novo Resources, making them the 2nd biggest shareholder but more so because of the absurd price of their own shares.

On September 28th, 2012, Pinetree closed the quarter at $1.21. A couple of days ago Pinetree reported Quarter End Net Asset Value for their fund at $1.91 a share. So you pay $1.21 for $1.91 worth of junior resource assets run by one of the smartest guys in Canada. That’s absurd.

Pinetree Capital happens to own some 3.2 million shares of Novo Resources. That’s 10.1% of the shares they control. In effect, by buying Pinetree, you are getting $1 Novo shares for $.63. You are getting $100 bills for $63 apiece. I don’t think any investment gets better than that.

Maybe it gets a little better. Pinetree issued $75 million worth of 8% debentures a couple of years ago. They have a coupon of 8% and pay about 9% to maturity at May 31, 2016. As of today the debentures trade at 93.75. So for punters who want some interest with their investment, the debentures offer a good interest rate.

And for the real punters in the crowd who don’t want $100 bills for $63 or 9% interest with an option on shares, there are always the PNP.WT.B warrants for shares at $3.50 until July 11, 2013. Those go for $.08.

For the vast majority of investors, investing in a resource mutual fund selling at a steep discount makes a lot more sense than trying to figure out what lottery ticket to buy. Pinetree is an investment for all seasons and all investors.

I like Pinetree but as always, you are responsible for your own due diligence.

Pinetree Capital Ltd
PNP-T $1.10 (Oct 18, 2012)
PNPFF-PK 136.4 million shares
PNP.DB 750,000 shares
PNP.WT.B 8,638,650 shares
Pinetree Capital website

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Bob Moriarty
President: 321gold
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