Focused Investing: Monthly Update for January 2025
This month has mostly been calm for my investing, even as the world has sometimes seemed crazy.
The Monarch of Mar-a-Lago (credit Niall Ferguson) became merely the President of the United States. The Monarch could dominate the world with a wink. The President has found his desires thwarted at all levels.
Judges stayed and will soon overturn his unconstitutional executive orders. He is having trouble getting his way internationally. And Congress is already showing signs of fracturing. Entertainment will abound, if one can just stay detached.
On the flip side, I personally was shocked by the degree of closet censorship and intellectual oppression practiced by the Biden administration and now being exposed. I’m neither Republican nor Democrat, nor right nor left; I’m a disgusted.
The markets seemed to take all this quite calmly, at first. But it was another story when Deep Seek tried to deep six Big Tech, or at least Nvidia (NVDA) and a few of their friends.
And then on Friday the apparent reality of tariffs on our close trading partners sent the markets down hard to end the week and the month. Color me skeptical; my view is that Trump see those tariffs as a tool to get other things he wants; I did not expect them to last.
And indeed, overnight Friday the latest indication was that key tariffs might only be at 10%, not the previous 25%. If you think that is the end of the story, you have not been paying attention.
Throughout, my portfolio cared more about the price of oil (see below) than about any of the above. This is how I like it.
The conundrum of a weakening thesis
For me, the ongoing investing challenge is a weakening thesis. It is easy to sell a position when a thesis outright breaks.
When a firm abandons a project you had seen as securing their future, sell. When a firm whose dividend you thought was rock solid announces a major dividend cut, sell.
It is harder when things are just worse than you thought. My issue right now is Alphamin (AFMJF), a tin miner. Here are some of the above-ground facilities:
Alphamin has been firing on all cylinders. Over the past year, they increased tin production 38% and held cost per ton nearly flat yet their stock price is down. I bought in anticipation of recognition of their progress and of the coming turn in the tin markets.
Part of that thesis was that rebel activity, which could potential threaten the mine or transport of the tin, was far away. Well, that is less true than it used to be.
The M23 rebels, backed by neighboring Rwanda, have now captured the city of Goma. This is where the Alphamin regional headquarters is located, as there is an airport.
Now Goma is 300 km by road from the mine. More importantly, the International Tin Association “considers that Alphamin is unaffected by recent developments in eastern DR Congo, as concentrates from Bisie are transported on routes far from the affected areas.”
This is good news, and tin is not all that valuable by weight. Other minerals, and in particular gold and silver, have far more value to a group of rebels.
On top of that, this revolt seems more about local issues involving ethnic groups than about trying to overthrow a national government. In Goma, the rebels are trying to maintain civil order, not to sack and burn.
So one can think that the mine is safe, and it likely is. But I would not have bought then if the rebels were in Goma at the time.
I could sell and take a 32% loss. Perhaps I should. But the position is small and if it goes to zero the loss will be far less than my annual dividends.
My inclination is to hold and watch this play out. Or I might add a bit. We will see how that goes.