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Buy Fortuna Silver Mines (FSM; MCap: $838.6M)
Fortuna is a past pick of mine and a stock I've followed since 2015. I've been skeptical of their strategy ever since they acquired a development stage asset in Argentina in 2016, but the stock made for a perfect trading sardine with a tendency to mean revert all through the years.
The company started out refurbishing a crappy old silver mine in Peru during the early 2000s bull market in precious metals, used the cash to acquire a decent silver mine in Mexico, and hummed along quite well until they got it into their head that they needed to expand. Then came the disastrous Argentina acquisition, and hefty capex overruns and time delays as they tried to bring the new mine (Lindero) online. With the Peru asset in decline, and repeated problems with the Mexican government putting their future there in doubt, the company decided to shift its focus to Africa.Â
In 2021, Fortuna acquired Roxgold (ROXG.TO) for $884.32M in an all-share deal.
Fortuna's current market cap: $838.6M.
This is a troubled company with a history of poor decisions. Yet, we are buying the stock because it is cheap. The idea is to buy and wait for mean reversion as more investors start buying into the miners.
This is not a stock that I'd want to own through the entire bull market in the miners, but it is worth buying today.
Good Trading!
Kashyap