Trading Journal – Australia

We have added Newcrest Mining to our Australian portfolio.

Summary

Newcrest Mining Ltd (NCM: ASX)

Market Cap (AUD): 10 B

Shares Outstanding (M): 766.511

Average Volume: 3,549,288

Activity: Exploration, development, mining and the sale of gold.

We based our investment thesis on the following premises:

  1. As a major gold producer, NCM is highly exposed to the precious metal, which we believe to be currently undervalued.
  2. Gold has appreciated against all the currencies (except for the USD) in the last couple of years and therefore NCM becomes a natural currency hedge;
  3. NCM has large reserves of gold and an appreciation of the yellow metal, which we believe is about to happen, would be translated into higher shares value;
  4. NCM`s productions costs are low compared to the other companies in the same industry, which reduces risk and makes it an even more attractive bet in case of a bull market in gold;
  5. We write calls on NCM in order to create a cash flow that nearly turns the security into a fixed income asset.

Trades

Buy (Share)

Security: NCM

Price (AUD): 11.98

Date: 03/11/2015

 

Sell (Call)

Security: NCM call

Price (AUD): 0.385

Date: 03/11/2015

Strike: 12.50

Expiration date: 26/11/2015

 

The call expired worthless, so we sold another call the very next day:

Sell (Call)

Security: NCMR87

Price (AUD): 0.62

Date: 27/11/2015

Strike: 12.00

Expiration date: 28/01/2016

 

The price of the stock today is just above A$13, which means that we are going to hand over our shares. So far, this strategy has brought +8.5% return in only 2 months.

 

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Brasil
Vila da Serra, Nova Lima - MG
CEP: 34.006-059

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