In the lead up to this week’s The Insider: Meet the Fund Manager, Hedley Widdup from Lion Selection Group (ASX: LSX) sat down with Reach Markets to provide a bit of information about his investment strategy, industries of interest and view on the market.

LSX is a specialist mining investment manager that focuses on the junior exploration market, with a particular affinity with pre-development Australian projects. Since their lucrative exit from a gold project in Indonesia, the fund has been sitting on a $76 million war chest of deployable cash, waiting for the right time jump into the market.

LSX has a long track record of creating value for shareholders and paying dividends. Since 1997, Lion Selection Group has achieved market-beating performance and generated returns in excess of $3.40/share. They currently trade around $0.435/share and have an NTA of $0.66/share – most of which is cash ready to be deployed.

Hedley Widdup entered funds management with the best background a resources investor can have – a seasoned career as a geologist. After graduating from Melbourne University’s prestigious BsC in Geology (Hons), Mr. Widdup worked at various mining companies – including the prestigious Olympic Dam mine in South Australia. The project was acquired by BHP and is now one of the world’s largest producers of copper, gold and uranium.

Mr. Widdup’s decision to wait for a better time to enter the market has proven to be savvy. LSX’s investable universe, which is categorised as the 511 ASX-listed metals and mining companies with a market capitalisation of less than $50 million, have performed negatively since  the start of 2022. This group of companies is currently down over 50%, and Hedley is confident that this has presented once-in-a-cycle investment opportunities to take positions in companies for cents on the dollar. 

Hedley recognises that there are exploration companies out there that have been making good progress on their respective projects, but their share price has not reflected that value created. This, combined with the macro environment around inflation and interest rates, has made it exponentially harder for these companies to raise capital – giving Lion an opportunity to enter at attractive valuations.

They took one of these opportunities at the end of last month, placing $1 million into Alto Metals (ASX: AME) at $0.052/share after the company had been successfully drilling out their Sandstone Gold Project 660km east of Perth. Despite the progress Alto has made over the past couple of years, their share price has declined from $0.12/share. These are the types of opportunities Hedley is currently seeking.

Valuations across many markets were getting inflated throughout 2021 in response to the loose monetary policy designed to boost the global economy during covid, and during this time Hedley only had around 10 stocks on his watchlist that he was considering buying. As time has gone on, many valuations have collapsed, Mr. Widdup’s watch list has grown to 60 which could be entering the LSX portfolio.

This illusive list, which will be slightly revealed in a bit more detail on Friday, consists mostly of ASX-listed gold, copper, nickel and lithium stocks with mostly Australian projects. There are a couple of rare earths plays buried in there too, specifically chosen by Hedley for their attractive metallurgical properties – a factor he believes is missing from quite a few rare earths stocks that investors have been hunting. Keeping with his target of a diversified portfolio, there is also a bit of zinc and manganese as well. 

Join Hedley Widdup this Friday, 18th August at 12pm (AEST) on our The Insider: Meet the Fund Manager webcast to hear about his favourite stocks, investment strategy, market insights and more. There will also be an opportunity to ask questions during the session. To book yourself in, click here.

Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets’ position. Any advice is general advice and does not consider your personal circumstances, you should consider whether it is appropriate for you. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss. 

Past performance is not a reliable indicator of future performance.