Sprott Asset Management's Portfolio: Canadian Equity Fund (Longs & Shorts) ~ market folly

Tuesday, July 7, 2009

Sprott Asset Management's Portfolio: Canadian Equity Fund (Longs & Shorts)

Since many of our readers desire more coverage of Canadian based Sprott Asset Management, we thought we would post up this nice tidbit that a reader sent to us. We have been slacking in our coverage of this talented firm and we apologize. There's just too many funds out there to cover these days! If anyone wants to be our "go-to" Sprott info guy (or gal) please get in contact with us as we are very interested in tracking their movements. For those of you unfamiliar with Sprott, they were recently ranked 49th in Barron's top 100 hedge fund rankings for 2009.

At any rate, attached below is Sprott's Canadian Equity Fund quarterly portfolio disclosure. This shows their positions as of March 31st, 2009 (exactly like all of the hedge funds we track in our portfolio tracking series). However, this form is a bit different in that it reveals their short positions as well in the interest of full transparency. Keep in mind that this specific portfolio is from that of a mutual fund, not a hedge fund. Nevertheless, we feel there is still information to be gleaned from them.

As we look at the broad overview, we see that they have 42.9% of their net asset value invested in gold and silver bullion on the long side of the portfolio. This simply cannot be overlooked. Additionally, they have another 22.2% in mining and precious metals plays. On the short side of the portfolio, their largest allocation there is in financials, as they are (13.5%) allocated to financial short positions. Their total long positions are 83.4% of their net asset value and their shorts are (16.8%) of their NAV. Then, on top of all that, they still have 33.5% of their NAV in cash and short-term investments. This is another feature of their portfolio one must pay attention to. Typically, cautious managers will keep up to 20% of assets in cash. Sprott is up to 33.5%. Not to mention, their large weighting in 'uncertainty plays' like gold and precious metals further reiterates their cautious stance.

After their cash, gold bullion, and silver bullion positions, First Uranium Corporation is their largest equity position at 2.7% of NAV. Shifting to the short side of their portfolio, Toronto-Dominion Bank is their largest short at (4.2%) of NAV, followed by Canadian Imperial Bank of Commerce at (3.1%). Obviously, take this information with a grain of salt as it is all delayed and positions were reported as of March 31st, so there is definitely a big time lapse factor here. At the same time, it's hard not to notice their very cautious stance with large amounts of cash and precious metals on hand.

Here is the full embedded document:

For those of you wanting some more reading material from Sprott, we'd suggest checking out an older special report from them that was an excellent read.

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