VIDEO: AlphaNorth Asset Management CEO Steven Palmer on What Companies to Invest In


AlphaNorth Asset Management CEO Steven Palmer sat down with James to talk about what companies the Toronto-based investment manager has invested in, including in the blockchain, AI, lithium, gold, and cannabis sectors.

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James West:     Steve, thanks for joining us today.

Steve Palmer:     Thanks for having me.

James West:     Steve, in your role as a fund manager, I’m curious as to how you view the Blockchain phenomenon generally and cryptocurrency specifically?

Steve Palmer:     There’s a lot of opportunities in both. I think the Blockchain technology will have a lot of game-changing impacts.

Cryptocurrencies is kind of hard to know what’s going to happen there. It’s been quite volatile – many of the, like Bitcoin for example. So many people are saying that’s a bubble, but it could have several years to run still; we don’t know.

James West:     Right. In your understanding of Blockchain versus cryptocurrencies, there’s something definitely useful underlying something whose use and value might be more subjective?

Steve Palmer:     Yeah. Crypto coins – I don’t even call them currency, because they’re not currencies – are highly speculative. Like it’s not an investment, in my view, it’s just a wild speculation. The Blockchain technology, though, is more real.

James West:     Mm-hmm. And it’s something useful.

Steve Palmer:     And that’s where we’re focused more on investing, in the Blockchain applications. Leonovus has been a big one for us; there’s another one that just started trading, XBlock, and it’s done very well in the first, you know, it’s only been trading several days.

James West:     Sure. Do you see that the cryptocurrency phenomenon that has sort of spread around the world – has it, at all, had a negative impact on the valuations of precious metals?

Steve Palmer:     I think it’s a definite headwind for gold. Many other reasons that people argue that you should own gold, the same applies; they’re talking about the same reasons for the cryptocurrencies, or coins.

James West:     Okay. So then going forward, do you see that the cryptocurrencies, if they were to sort of explode as a bubble, if they are, in fact, a bubble, would that be, in your view, a catalyst for a rebound in the gold price?

Steve Palmer:     It might have a modest impact. Gold is highly correlated with the US dollar, so I always look at that in terms of where gold’s going. It’s just kind of hard to value it; there’s really no basis of value for gold.

James West:     Okay. So what about some of the other metals, particularly I’m thinking of nickel and copper, which are both arguably fundamentally about to see a lot more interest because of the success of the electric vehicles?

Steve Palmer:     Yeah, those commodities have done well this year too, also zinc, we like zinc, and we’re more focused on zinc than those you mentioned. They’re also used in batteries, but they’re much wider uses, more industrial nature.

James West:     Sure. So any zinc names in particular that you think are outstanding relative to the group?

Steve Palmer:     One we invested in recently, Hannan Metals, is quite cheap versus some of the comps. So we participated in a private placement on that.

James West:     And the lithium prices generally, do you see those as continuing their sort of annual incremental ascent, or are they, at some point, going to plateau out?

Steve Palmer:     I think so. I think they’ll continue to go up because the demand for batteries is growing quicker, I think, than the supply is able to keep up.

James West:     Mm-hmm. And then what about cobalt, which is also sort of promoted as a future shortfall metal?

Steve Palmer:     Yeah. And cobalt’s been one of the best-performing commodities in 2017. Some of the stocks have not really reflected that strength in the commodity price yet, but there will be a point where the stocks really run, I think.

James West:     Sure. Okay. Let’s turn our focus a bit towards the cannabis sector now. What do you see as the general condition of that as an investment class in Canada? Do you see it as more of a bubble, or do you see it as the early onset of a fundamental birth of an industry?

Steve Palmer:     That’s been a very hot sector for a while now, and many of the names have had exceptional performance.

James West:     Any in particular that you have had a good experience with?

Steve Palmer:     The way we’ve preferred to play it has been through niche-y kind of companies in the space, whether there’s a valuation discrepancy with the group, or some technology, like Radiant technology was…Aurora Cannabis made an investment in them, so they have some proprietary technology that has applications for more efficiently and cheaply extracting the oil from cannabis.

James West:     Okay. And so in the technology sector generally, what do you see that you like right now?

Steve Palmer:     Well there’s other areas, too. I think AI is going to be big; it’s maybe at an earlier stage of investor awareness and opportunities as some of these other sectors we’re talking about, so we’re looking at that.

James West:     Sure. Are there any AI opportunities in terms of Canadian public issuers that investors could possibly look at, at this point?

Steve Palmer:     Well, Analytics Insight is one that we’ve had an investment in for a while, and that’s just recently started to get some traction in the market. A couple years, the stock has basically done nothing, but it’s doubled in the last few weeks.

James West:     Wow, that’s great. I’ve been following Analytics Insight from the beginning as well. Okay, well, let’s leave it there, Steve. Thank you very much for joining us today.

Steve Palmer:     Okay. Thanks for having me.

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Midas Letter LIVE is the video channel from Midas Letter's headquarters studio in the heart of Canada's Financial District in downtown Toronto, Ontario. We interview CEOs from top emerging companies and the best financial analysts with the highest reputations in the business.
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