What is Chen Lin buying? Right now, silver. Lots of silver.
The asset manager and author of the What is Chen Buying? What is Chen Selling? newsletter said he is bullish on the precious metal because the push for greener energy will lead to the adoption of more solar energy, a technology that requires large amounts of it.
“The rising silver loading factor times explosive growth of solar panel demand will create a silver tsunami,” Chen wrote.
“The rising silver loading factor times explosive growth of solar panel demand will create a silver tsunami,” Chen wrote in his newsletter in December.
“Silver mine production, mostly as a by-product, has been very stable for the past decade. As we know, it takes years to explore, then years to permit and build a new mine. So, it will likely take a decade to bring up the production even as the demand explodes.”
The Silver Institute has predicted that global silver demand will reach a new high of 1.21 billion ounces in 2022, up 16% from last year. Industrial demand is on course to grow to 539 million ounces (Moz). And it won’t be just for solar panels.
Chen also suggests that those who wish to have a happy new year invest in companies specializing in rare metals, biotech, and/or energy stocks.
“Developments such as ongoing vehicle electrification (despite sluggish vehicle sales), growing adoption of 5G technologies, and government commitments to green infrastructure will have industrial demand overcome macro-economic headwinds and weaker consumer electronics demand,” the report said.
The global silver market is forecasted to record a second consecutive deficit between supply and demand this year, the Institute said. At 194 Moz, it will be a multi-decade high and four times 2021’s level.
Chen also suggests that those who wish to have a happy new year invest in companies specializing in rare metals, biotech, and/or energy stocks.
SilverCrest
Chen says he has a collection of silver companies, large and small, in his portfolio, but he is especially interested in SilverCrest Metals Inc. (SIL:TSX.V; SILV:NYSE.American).
SilverCrest is developing a 1,250-tonne-per-day processing plant at its Las Chispas Mine located in Sonora, Mexico, with initial proven and probable reserves of 94.7 million ounces (94.7 Moz silver equivalent (AgEq), placing it among the highest-grade primary silver projects in the world.
“I think 2023 could be the year for SILV as it advances the mine production,” Chen said.
The mine would have an initial life of 8.5 years. Analyst Phil Ker of PI Financial Inc. wrote on Dec. 8 that Las Chispas was expected to produce 9.9 Moz AgEq in 2023. Ker rated the stock Buy with a CA$14 target price.
“We believe a premium valuation is warranted and suggest investors continue to accumulate shares ahead of achieving positive cash flow from Las Chispas,” he wrote.
Sprott Asset Management LP owns 5.75% of the company, Gilder Gagnon Howe & Co. LLC owns 5%, Van Eck Associates Corp. owns 4.38%, ETF Managers Group LLC owns 3.46%, and Sprott Asset Management USA Inc. owns 2.94%, according to Reuters.
It has a market cap of US$934.66 million with 146.5 million shares outstanding, 140.6 million of them free-floating. It trades in a 52-week range of US$10.13 and US$4.58.
Chen says he also has other silver producers in Mexico, including MAG Silver Corp. (MAG:TSX; MAG:NYSE American) and GoGold Resources Inc. (GGD:TSX).
First Tellurium Corp.
Another element critical to solar panels is tellurium, one of the planet’s rarest elements. First Tellurium Corp. (FTEL:CSE) has two important tellurium resources at its Deer Horn project in British Columbia and its Klondike Tellurium project in Colorado.
“Governments are just starting to understand the importance of tellurium,” said First Tellurium President and Chief Executive Officer Tyrone Docherty. “It has flown largely under the radar, even though it’s essential for cadmium-telluride solar panels and new lithium-tellurium (Li-Te) batteries that could revolutionize energy storage.”
Chen said that North America is too dependent on foreign sources for the element.
“This metal can be in demand, this is a pure-play, and management just a lot of (its) own money in the stock,” Chen said.
Reuters has Docherty as the top shareholder in the company with 10.46%, Josef Anthony Steve Fogarassy has 1.38%, and Lyle Allen Schwabe owns 0.85%.
Its market cap is CA$9.44 million, with 72.7 million shares outstanding, 63.4 million of them free-floating. It trades in a 52-week range of CA$0.71 and CA$0.085.
Amyris Inc.
A returning favorite of Chen’s is Amyris, Inc. (AMRS:NASDAQ), a synthetic biotech company that “programs” cells to create sustainable ingredients.
The company has begun production at its new precision sugar fermentation plant in Brazil. The plant comprises five precision fermentation “mini-factories” that can produce 13 of Amyris’ molecules, which are used in everything from health and beauty products to flavors and fragrances.
Amyris is a frontrunner for the US$1 billion the U.S. Department of Defense will be investing in the bioindustrial domestic manufacturing infrastructure over the next five years. It’s part of the US$2 billion the U.S. government plans to spend to boost biomanufacturing under an executive order announced last month.
Amyris on Tuesday announced a US$500 million contract to supply two of its ingredients.
“If the stock is over US$5, I wouldn’t buy it,” Chen told Streetwise Reports. “But if it’s two and change . . . it’s very good risk-reward.”
Amyris’ top shareholders include Foris Ventures LLC at 22.39%, The Vanguard Group Inc. at 5.98%, Koninklijke DSM NV at 5.06%, BlackRock Institutional Trust Co. N.A. at 3.57%, and Vivo Capital LLC at 2.35%, according to Reuters.
Its market cap is US$564.57 million, and it has 330.2 million shares outstanding, 234.2 million of them free-floating. It trades in a 52-week range of US$6.37 and US$1.44.
Viking Therapeutics Inc.
Viking Therapeutics Inc (VKTX:NASD) saw its stock price rise nearly 75% earlier this month when another company, Madrigal Pharmaceuticals Inc. (MDGL:NASDAQ), reported positive results from its Phase 3 clinical trial of its nonalcoholic steatohepatitis (NASH) treatment.
Viking is working on its own NASH drug and is holding a Phase 2b clinical trial. Shareholders are hoping for similar success.
The “situation is very good,” Chen said. “Most fund managers are on vacation. So, if you can get in before the end of the year when they come back . . . they will start buying, and you can sell.”
The company is also running a Phase 1 clinical trial to develop a drug that could treat various metabolic disorders.
Ligand Pharmaceuticals Inc. owns 8.76% of Viking, the Vanguard Group Inc. owns 4.34%, Millennium Management LLC owns 4.05%, Balyasny Asset Management LP owns 3.49%, and Two Sigma Investments LP owns 2.47%, Reuters said.
Its market cap is US$651.47 million. It has 76.7 million shares outstanding, with 67.8 million free-floating. It trades in a 52-week range of US$8.63 and US$2.02.
TAG Oil Ltd.
In the energy world, Chen likes TAG Oil Ltd. (TAO:TSX) if you can take the risk that its projects are in the volatile Middle East and North Africa.
The company is initiating Phase 1 of a fracking program in Egypt in Q1 2023. It anticipates providing results as early as March.
“This seems to be a relatively low-risk fracking play,” Chen said. “The market value could increase at least tenfold.”
Askar Alshinbayev owns 10.99% of TAG Oil, YF Finance Ltd. owns 8.42%, Abdel Fattah Z. Badwi owns 2.06%, Shawn Reynolds owns 1.54%, and Suneel Gupta owns 1.03%, according to Reuters.
It has a market cap of CA$83.71 million with 154.6 million shares outstanding and 113.2 million free-floating. It trades in a 52-week range of CA$0.70 and CA$0.195.
Canacol Energy Ltd.
Another company returning to Chen’s list is Calgary-based Canacol Energy Ltd. (CNE:TSX; CNNEF:OTCQX), which is a major player in natural gas production and exploration in Colombia. Its stock dipped earlier this year when the country elected its first leftist leader, Gustavo Petro.
While Petro is against new oil and gas exploration, favoring elements needed for the green economy like copper and silver, the company has natural gas contracts that give it a dependable income.
BTG Pactual Affiliate Research analyst Daniel Guardiola rated the stock a Buy with a CA$5.50 target in November.
Canacol said it’s the largest independent onshore conventional natural gas exploration and production company in Colombia and that it supplies about 20% of the country’s natural gas.
Fourth Sail Capital LP owns 20.49% of Canacol, Cavengas Holdings S.R.L. owns 19.12%, Cobas Asset Management SGIIC SA owns 3.12%, Dimensional Fund Advisors LP owns 0.96%, and Abaco Capital Investments owns 0.27%, according to Reuters.
Canacol has a market cap of CA$353 million and 170.6 million outstanding shares, including 137.7 million free-floating. It trades in a 52-week range of CA$3.62 and CA$1.75.
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Disclosures
1) Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: MAG Silver Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with First Tellurium Inc. Please click here for more information.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of First Tellurium Corp., a company mentioned in this article.
5) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
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Disclosures:
1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Outcrop Silver & Gold Corp. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Outcrop Silver & Gold Corp., a company mentioned in this article.`
