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Added a little NovaGold (NG)

March 10, 2012

In my quest to add some exposure to gold as an asset class to my portfolio I’ve opened a tracking position in another stock with interests in gold mining but, like with Aberdeen International, there is a bit of a twist. NovaGold, which is a holding of both Klarman and Paulson, is in the process of spinning off their copper mine holdings at the end of April. The interesting part of this is that Van Niewenhuyse, the CEO of NovaGold through this past January, will be moving over to  become CEO of NovaCopper when it is spun off at the end of April, and the new CEO of NovaGold is a veteran of Barrick Gold. The Barrick Gold connection is interesting because they are the other 50% holder in the Donlin Gold project, NG’s largest investment. Inelegant Investor  at Stock Spinoffs thinks that this corporate restructuring might presage closer cooperation with Barrick or even a Barrick buyout of NG, and I would tend to agree. In any case, with Tom Kaplan, Paulson and Klarman holding substantial positions in NovaGold, I think shareholders interests are well protected, and we are likely to see some valuing enhancing transaction in the mid to long-term.

As I noted, this is a tracking position, and I hope the bulk of my purchases can be made at lower prices. I’m not yet sure whether I want to purchase a full position before or after the spin. It’s all a matter of price.

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2 Comments
  1. Jake permalink

    any new thoughts on NG/NCQ?

  2. I’m going to be adding at around the $4.50 level shortly, probably after selling my tracking position in Aberdeen, as I think tax selling is keeping the pressure on the NG share price here. This is my ‘market crash’ holding and, as such, is more of a hedge than anything else. In any case, even after bulking up the position, this will be a rather small percentage of my portfolio.

    I don’t have an opinion on NCQ. My general thought about copper is that it probably won’t do well in the upcoming deflationary environment, but that’s neither here nor there as NCQ is more of a play on exploration and development. I’m certainly not buying more but I will probably hold on to the few shares I have.

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