In the lead up to this week’s The Insider: Meet the Fund Manager, Jeremy Bond from Terra Capital sat down with Reach Markets to provide a bit of information about his investment strategy, industries of interest and view on the market.

Founded in 2010, Terra Capital is an Australian based specialist fund manager that brings significant expertise to the resources and mining sectors. Mr. Bond is the largest investor, and the performance speaks for itself. Up until April 2023, the Natural Resources Fund has produced an annualised return of 15.6% p.a. since its inception 13 years ago.

The fund typically holds 25-40 stocks, with the top 10 picks being high conviction ideas that account for 50% of the portfolio. It is currently heavily weighted towards gold, copper, lithium and uranium – with the bulk of exposure spread across Australia, North and South America.

While Jeremy is treading carefully in the current market and closely watching economic data, a recession hasn’t come yet despite many economists, fund managers and investment banks having predicted it would have occurred by now for most of the past year. 

When he forms a solid view on a commodity’s outlook and an adjoining high conviction investment thesis about a company that has an attractive valuation – it will likely be added to the portfolio.

He is particularly bullish on copper, especially over the medium and long term. Last month’s sell off in the metal that is critical to the world’s renewable energy plans, where it touched a four month low, proved a worthy buying opportunity for the fundie. He cited China’s ability to provide stimulus, which they have already begun doing, and copper’s increasing cost curve that should provide price support. He is still looking for further weakness in some of the bigger names before significantly increasing the portfolio’s exposure.

Terra Capital isn’t limited to the ASX, which proves particularly advantageous when looking for exposure to certain commodities. In the case of copper, of which there are limited options on the ASX after the takeover of Oz Minerals by BHP, they consider that there are many more and much better priced opportunities available when looking at North America.

The mid tier miners section of the market is where the fund particularly specialises. The average market cap of a portfolio company is $900 million, and while Mr. Bond doesn’t invest in early stage exploration, he does actively invest in later stage projects with a clear development pathway. He has recently added some more lithium, after a bunch of development ready projects have been beaten down over the past few months on the back of the battery metal’s spectacular price collapse that saw it sink over 70% from it’s all time high.

The future movement in lithium’s price is something that none of the world’s biggest investment banks can agree on, and the thinly traded market has been rocked multiple times by both bearish and bullish research reports. Mr. Bond does commodity price analysis in house at Terra Capital, where they use the same data that is analysed by the world’s biggest financial institutions to form their own view.

Mr. Bond previously worked as an analyst at RAB Special Situations Fund at RAB Capital Plc. The RAB Special Situations Fund had an investment bias towards natural resources and was previously rated the Best Energy and Natural Resources Fund by Hedge Fund Review in 2007 and ranked No 1 in Barron’s Hedge Fund 50 Global rankings in 2007.

Prior to joining RAB in 2007, Mr Bond was an Associate at Azure Capital, a boutique investment bank based out of Perth, WA. Here he worked on numerous mergers and acquisitions, as well as being involved in a number of capital raisings in the small cap sector.

Join Jeremy Bond this Friday, 9th of June 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.

Past performance is not a reliable indicator of future performance.