Sprott Asset Management’s Top Stock Picks for 2013

The emphasis on silver continued as the fund reported a position of about 780,000 shares in Silver Wheaton Corp. (NYSE:SLW), about even from three months earlier. It too reported a drop in financial performance in its most recent quarterly report, with double-digit percentage declines on both top and bottom lines. Silver Wheaton, at a market cap of almost $13 billion, is considerably larger than either First Majestic or Coeur d’Alene. Renaissance Technologies, managed by billionaire Jim Simons, added shares during the third quarter and owned a total of 1.6 million shares at the end of September (find Renaissance’s favorite stocks). The current-year P/E is 17.

Alexco Resource Corp. (AMEX:AXU) does produce some silver, but is also a miner of other minerals including zinc and lead. While its market capitalization is only about $270 million, an average of about 250,000 shares are traded per day and the current stock price is about $4.40; this equates to over $1 million in daily dollar volume. Sprott kept its stake in Alexco about constant during Q4 at 6.9 million shares. Net income here has actually been up sharply, but sales have been down and so we’ d include that growth rates in earnings are unsustainable. Alexco also trades at a premium to many of the companies we’ve discussed at 26 times expected earnings for 2013.

Sprott bought shares of PRETIUM RES INC (NYSE:PVG), an exploration stage precious metals miner with properties in Canada, during the quarter and reported 1.7 million shares in its 13F. The stock is generally highly sensitive to broader market indices- it has a beta of 2.3- yet has fallen 34% in the last year. The sell-side does not expect it to generate profits this year. Pretium’s exploration interests focus on gold, copper, and silver. We would recommend that investors avoid the stock because of its speculative nature.

This article was edited to correct Alexco Resource’s production mix and stock ticker.

Disclosure: I own no shares of any stocks mentioned in this article.