Franco-Nevada Corporation (FNV): A Bull Case Theory 

We came across a bullish thesis on Franco-Nevada Corporation on Value Investing by Double Alpha Factory’s Substack by Maksim. In this article, we will summarize the bulls’ thesis on FNV. Franco-Nevada Corporation’s share was trading at $197.27 as of September 8th. FNV’s trailing and forward P/E were 47.61 and 34.97 respectively according to Yahoo Finance.

Franco-Nevada (FNV) stands out as a premier royalty and streaming company that provides a unique way to gain exposure to gold while avoiding many of the risks faced by miners. With only 40–50 employees and an expense ratio of just 0.1%, it is more efficient than physical gold ETFs. The company generates exceptional 70–80% EBITDA margins, requires no sustaining capex, carries negligible debt, and has a history of highly accretive acquisitions that compound value over the long term.

Unlike owning physical gold, FNV offers perpetual call options on gold prices and exploration, with 62% of its assets still in the exploration phase, positioning it for substantial upside as new discoveries are made. Importantly, royalty companies benefit not only from higher gold prices but also from miners’ increased reliance on alternative financing in a higher interest rate environment.

The strategic option on the Cobre Panama mine adds a powerful catalyst. The mine, which historically accounted for 25–30% of FNV’s production, was shut down in late 2023, leading to impairments and a significant stock decline. However, with Panama’s new President Mulino expressing support for reopening and both FNV and First Quantum halting arbitration, prospects for a resolution are improving.

Given the mine’s importance to Panama’s GDP, exports, and employment, the economic incentives for a restart are clear, creating the potential for a 30% re-rating in FNV’s stock if operations resume. Even without this upside, FNV remains fairly valued at ~22x NTM EV/EBITDA and provides uncorrelated exposure to gold, which serves as a hedge against inflation, geopolitical instability, and de-dollarization trends. For long-term investors bullish on gold, FNV offers both resilience and significant optionality, making it a compelling core portfolio holding.

Previously we covered a bullish thesis on Garrett Motion Inc. (GTX) by Maksim in November 2024, which highlighted the company’s leadership in turbocharging, resilient ICE and hybrid demand, and strong free cash flow outlook. The company’s stock price has appreciated approximately by 80% since our coverage. This is because the thesis played out. The thesis still stands as GTX maintains visibility into cash flows. Maksim shares a similar conviction on Franco-Nevada Corporation (FNV) but emphasizes gold royalty optionality and the Cobre Panama catalyst.

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Disclosure: None.