Evolution Mining (EVN)
Thanks for the gold shares breakdown yesterday, but I noticed EVN was missing and I understood MM were bullish on EVN. Has the view on EVN changed? Thanks
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Answer
Hi Stu,
A well-timed question as we bought EVN for our Active Growth Portfolio on Thursday, Alert Here.
The reason we omitted EVN from Tuesday’s report focusing on gold stocks was twofold:
- EVN is more of a copper/gold business enjoying ~25% of its revenue from the industrial metal.
- There are ~15 gold stocks in the ASX200 giving us plenty to pick from for such a report without needing to cross into a more diversified option.
However, we bought Evolution on Thursday as both gold and copper stocks took a hit as both metals struggled on Wednesday night as oil tested $US110 and the Fed cautioned about the impact that energy prices could have on inflation.
EVN delivered a strong quarterly earlier this year, which is a tick for MM, but it only hedges a small portion of its gold production, making the miner very leveraged to movement in the precious metal, in both directions – hence the almost 30% pullback over the last 3-weeks.
NB We’re starting with a smaller ~3% weighting, leaving room to average if the stock pulls back further.
