TGF – Tribeca Global Natural Resources

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TRIBECA GLOBAL NATURAL RESOURCES LIMITED (TGF) is an ASX listed investment company that joined the ASX in November 2018, raising capital at $2.50 a share.

It is part of Tribeca Investment Partners, which is a “leading boutique fund manager with a twenty year history of innovation and investment excellence. With offices in Sydney and Singapore, Tribeca manages a suite of actively managed traditional and alternative strategies. “

TGF invests in metals & mining, energy and soft commodities and the portfolio is currently circa 140% net long :

The Company’s net long exposure is at the top end of its historical range given our view of the upside potential from current levels. However, having invested through the peaks and troughs of several commodity cycles we strongly believe that at this juncture we are correctly positioned.

Our investment approach is based on the ability to invest actively both long and short and across equities, credit and commodities which does help insulate downside and preserve capital in what is a highly cyclical and volatile sector. There will be other times in the cycle when we expect the portfolio’s net exposure to be materially lower, or possibly net short.

Similarly, our ability to focus on high conviction investment ideas across metals & mining, energy and soft commodities provides investors with a diversified and unique way to gain access to the natural resources sector compared to investing in single stocks, ETFs and indices.

Current approximate sector weightings as follows:

35% Base Metals: Mainly exposed to high-quality producers of copper and nickel globally where we see demand and supply deficits for the remainder of the decade as decarbonisation policies consume unprecedented quantities of base metals. We are of the view that equity valuations have more that 100% upside compared to prior cycle multiples.

10% Battery Metals: Mainly expressed through lithium and rare earth companies that are producing at the bottom of the cost curve and will benefit from the rapid expansion of electric vehicle penetration globally.

25% Uranium: There has been a watershed change in recent months with respect to nuclear energy’s role in the global energy mix with China, the US and Europe all talking to its strategic importance in the race to decarbonise and we see 200% plus upside to the price of uranium over the medium term.

25% Precious Metals: Historically, positively correlated to rising nominal yields and inflation expectations, the precious metal sector is also trading at historic lows from an equity valuation perspective and provides an ideal counter lever to the remainder of the portfolio.

15% Oil & Gas: Key beneficiary of a rebound in growth as vaccine rollouts globally increase trade and movement leading to a higher consumption of oil. Equity valuations for the sector remain undemanding and cashflow generation is strong at current prices.

20% Infrastructure Related: Key steel making ingredients including iron ore and coking coal will be key beneficiaries of fiscal stimulus programs across the G20 and we see material upside for the equity valuations of producers who are trading well below prior cycle multiples. As an example of this we see BHP trading to over $100 per share during this cycle.

10% Soft Commodities & Renewables: This part of the portfolio has been increasing and will likely become larger over coming quarters. In prior cycles soft commodities have tended to lag hard rock commodities but subsequently outperform. We appear to be in the very early stages of this playing out.

with a market cap of $125million, the LIC is currently trading about 10% below NTA.

since inception (daily)

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