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Eric Sprott – From Hero to Zero?
Posted by: Mariusz Skonieczny (IP Logged)
Date: December 29, 2013 08:32AM

On February 5, 2012, I wrote an article titled Bruce Berkowitz – From Hero to Zero? This is what I said in the first two paragraphs.

“Within less than two years, Bruce Berkowitz, founder of Fairholme Funds, went from being a hero to being a zero in the eyes of fickle investors. On January 12, 2010, Morningstar gave Berkowitz the Fund Manager of the Decade award. Everything was perfect. Everybody was in love with this guy. As investors piled in, his assets under management grew from $10 billion to $20 billion.

Unfortunately in 2011, the love affair ended. He officially “lost his touch.” He was down more than 30 percent, and clients were pulling their money out. It did not matter that he was still up almost 200 percent since his fund’s inception on December 29, 1999, versus 7 percent for the S&P 500. In the money management business, you are only as good as your most recent performance.”

Then, I said that I had no doubt that Berkowitz was going to come back form the slump which is exactly what happened. Berkowitz is a hero again. Today, the media, redeeming clients, and other investors are torturing Eric Sprott, the founder of Sprott Asset Management. His funds are down a lot over the last three years because the price of gold experienced a significant decline and he had heavy exposure to the mining stocks. So here we go. It is time to abandon him. He has lost his touch or maybe he never had any touch.

I have absolutely no doubt that he will come out of this slump with huge returns going forward. The values in the mining stocks are freaking unbelievable. I already identified four 100-baggers in the making. I have never seen anything like this before. I kid you not. Anyway, Eric if you are down these days, watch this video because this is what is going to happen to you over the next three years.

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Re Eric Sprott From Hero to Zero
Posted by: AlbertaSunwapta (IP Logged)
Date: December 29, 2013 10:27AM

The author should have stopped writing one paragraph sooner than he did.

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Re Eric Sprott From Hero to Zero
Posted by: LwC (IP Logged)
Date: December 29, 2013 10:51AM

FWIW here's the link to an article that also addresses Sprott's gold investments, albeit in more detail: 

Eric Sprott: Can the gold hawk find magic after the commodities crash? TIM KILADZE AND JACQUELINE NELSON 

The Globe and Mail Published Monday, Apr. 22 2013 


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Re Eric Sprott From Hero to Zero
Posted by: Praveen Chawla (IP Logged)
Date: December 29, 2013 02:20PM

Mariusz, thanks for broaching this topic and for LwC for providing the G&M link.  I think Sprott Inc. is looking very interesting at these levels.  The asset manager has no debt so will not go belly up - so it may be a safer way to ride out the precious metal down cycle.  (it still pays a 4.85% div - but that may be at risk).The big question is, how long will the down cycle last.   The "problem" in my view is lack of inflation and the huge slack in employment and industrial capacity utilization.  It may take several years for inflation to reappear in any meaningful way.  However the rewards for that patience should be very lucrative for investors who get in now and manage to hold on to the eventual survivors.  

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