Hi Steve, thanks for posting your insights regarding SLW.
I’m sure that there’s a lot of merit in what you say, and maybe those factors regarding Barrick could dissipate and no longer adversely affect SLW’s performance, if that is, in fact, what has been the major negative factor.
However, the more fundamental problem I have with resource based companies is how they can be adversely affected by the international price of their commodity over which they, generally, have no control.
As Sergio H pointed out, quite correctly in my opinion, that SLW is a well run company, which infers that they also have good management.
But what can that management do when external factors, either international or national, influence, for example, the price of silver. One of the things that affect precious metals, such as gold, silver, etc.., is how the market views the current financial state of affairs.
If the market loses faith in paper currency it tends to move towards hard assets, which tends to cause their price to rise. When Central Banks step in and attempt to increase confidence in currencies, then the market tends to move away from gold, etc.., and the price of the metal falls.
In recent years that’s created a fair amount of volatility in the price of gold, silver, etc..., which, I suggest, can be seen in SLW’s share price chart below.
So if one has SLW in one’s portfolio, there could be times when it contributes, negatively, to the portfolio. And we may just be unlucky to catch it at a time when its price is in a longer term decline.
On the other hand, if we look at a company such as Disney (DIS), you generally have a fairly good idea where you are with such a company due to the nature of its business, its management, the state of its financial fundamentals, etc..
Its price performance tends to be less volatile and probably more predictable, as one can also see from its chart below.
I think that’s why the likes of Buffett tends to own shares in companies such as Coca Cola, Proctor & Gamble, Wal-Mart, IBM, Amex, etc ... They have fairly straightforward business models, they just keep rolling along, they make fairly good money year after year, they have great durable competitiveness.
And there’s not generally one great aspect of their business, that they have no control over, that’s likely to cause their share price to move up and down, on a fairly regular basis, by 60% to 80% as we’ve seen happen with SLW over the last 3 years.
Anyway, that’s just how I see it and why I’ve voted the way I have with regard to SLW.
Needless to say, it will be the majority vote that will count at the end of the day, and if that majority votes your way then so be it ....
Ciao for now,
bruwin
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