Positioning for 2026

There is almost no chance that 2026 returns will be anywhere close to as good as 2025 returns. But I'll continue to do what I always do, look for bottoms up stocks that I can go long where I see value. I'm not going to look at last year's returns in a commodity bull market and let some luck affect my risk taking. I wasn't an idiot in 2024 nor a genius in 2025.

I'll be wrong a lot in 2026 and a lot of the themes that will emerge in the year are unknown now. If you read some of my ideas for the year do your own diligence and evaluate your own risk tolerance.

OK, with that disclaimer let's get to it.

Less Commodity Exposure

The reason I love to invest in commodity stocks is that it's an inefficient market driven by wild excesses and poor judgement. So I'll always have some portion of my portfolio in commodity based stocks.

That said, I'm intentionally trying to lower that exposure and find non-commodity areas of the market to invest in. If you have a gold explorer/developer/miner/royalty company and gold is down 40% you can bet your company will be down too. No amount of good stock picking will overcome a commodity bear market.

A year or two ago there were good project that couldn't raise even tiny amounts of money to continue to advance their projects and plenty of well run producers struggling with cashflow issues. Now we see depleted low grade high cost mines reopening. Commodity prices could double or halve this year and my crystal ball is broken but in the end gravity of production costs drive prices over a long enough time horizon. Capital doesn't get paid as well here even if things go up as there is plenty of cash sloshing around in the industry.

Instability to Continue

The market will likely continue to have news driven rapid repricing. We are in year 1 of 4 of a president who starts a trade war with Canada and that whole thing with Venezuela. Regardless if you love or hate these policies it's pretty clear that nobody including his inner circle or even himself knows what's going to happen next.

I don't see any obvious themes for 2026, instead I think being able to have a good understanding of several sectors and an ability to move quickly in size to the right places as things change is the way to make money in 2026.

2-Sided Marketplace Companies

I love these kind of companies and those with slowed growth (or negative growth) are trading super cheap. I'm actively looking for more of these.  Are they value traps or resilient high return on capital businesses, I'm betting they are the later and not the former.

Currently holding Paypal $PYPL, Remitly $RELY, Bumble $BMBL, & Yelp $YELP. Re-visiting Camplify $CHL.AX.

Learning

Most of 2026 investment themes aren't obvious in January 2026. It's a year I'm going in blind, but here's a couple of areas I'm learning about now.

AI Beneficiaries

I think AI has a lot of parallels to the .com boom/bust. It's world changing but also there is over-investment in capital on a scale that isn't sustainable and can't generate a positive return. Much of that capital is circular and when the music stops a lot of people will be left without chairs.

That said, it's real and a lot of companies who use the technology will benefit. I'm on the lookout for those, though I haven't made any investments here yet.

Healthcare

Waymo is lowering car accidents 90+%, GLP-1 and related drugs are dramatically impacting obesity and related disease, AI is helping complex patients find answers, non-prescription continuous glucose monitors are helping people optimize and personalize their diets, smartwatches are getting more and more health monitoring sensors. It's clear we are in a time of massive change to healthcare.

When an entire industry gets disrupted some of the profit pools are going to shift. I'm looking for the new winners.

Variable Grid Beneficiaries

Solar and grid scale battery storage both continue to go down the cost learning curves. Wind also contributes to variable electrical production.

During ERCOT's past winter crisis Bitcoin miners were shutting down and re-selling their electricity contracts at a huge profit. Water desalinization plants can shut down a few hours or even days at a time when electric prices are high. I'm looking for companies that benefit from low electricity prices but also are able to shut down to reduce grid demand when things get off kilter.

Royalty

I continue to want a large exposure to the royalty model. I feel underexposed right now as I closed a lot of my acquiree targets; I will almost certainly add more royalty names I don't mention here. There are no longer precious metals royalty companies trading at a discount to NAV using conservative metal prices. But the business model works and I continue to want to be invested in it.

Franco Nevada $FNV - the best quality and I think Cobre Panama eventually gets reopened and that gives a stock price bump.

Royal Gold $RGLD - By my math the cheapest of the big 4. The market still overvalues current cashflow and undervalues royalties on projects that aren't cashflowing yet.  Royal has invested a lot in the future and I'm here for it.

Deterra $DRR.AX - The MAC royalty is great and I liked the Trident acquisition. Not a lot of iron ore royalty driven companies so here we are.

Viper VNOM - Oil and gas royalty companies don't usually have the same assymetric upside, but I still like them.

Watching: Summit, LunR, Versamet, Altius, & Evolve all look interesting here.

Project Generators

What happens when miners are running at a large profit and making major cashflow? They may give a little to shareholders in the form of dividends and buybacks, but mostly they are going to spend it. Mill expansions, new shafts, new mine builds, the works.

One of the things that profitable miners with cash in their pockets ramp up is exploration budget. If you've got a legitimately interesting project ready for the next stage of exploration there's a miner willing to option it and drill a few holes. The value creation for project generators is proportional to the amount of drilling going on on their properties.

I currently have two project generators and am looking to add more.

Kenorland $KLD.V is a long term position for me. They didn't have a lucky year on the discovery front, but they continue to execute well and with what they are doing I think it's only a matter of time before they make another major discovery. Top-tier management and I sleep well at night holding this one.

Latin Metals $LMS.V has a nice pipeline of project and are getting a lot of activity.

Pre-Production Sweet Spot

I just hope I have more of these opportunities in 2026.

Montage $MAU.TO has a ways to go but my others all got exited in 2025.

Producers Expanding

There are some existing miners who are building new mines that will expand their total production and the market doesn't give them as much credit as they deserve until the new production is online. This is often less of a move than the pre-production sweet spot but is the same underlying cause. Here you get to benefit from the cashflow from the current operations while you wait.

Warrior Met Coal $HCC - Blue Creek is progressing and their current mine is really great.

Minera Alamos $MAI.V - I get why people don't trust management right now after the shift in strategy. However, their new plan seems pretty reasonable.

Alphamin $AFM.V - OK, expanding is a stretch. They are doing some exploration drilling that looks likely to extend mine life. Mostly they are just too cheap for where tin prices are.

Pre-Discovery Explorers

I think this class of investment if you were to average the industry is value destroying, but the winners are huge returns. It's also nice that Canada has flow-through financing that lets juniors raise money at above market prices and a Critical Mineral Exploration Tax Credit that gives an additional 30% tax credit back.  There's also stable rule of law and a lot of mining companies that are willing to step up and invest early. More of my pre-discovery investments tend to be in Canada for these reasons.  These are still hugely risky so they tend to be very small position sizes.

If you can control yourself don't invest in pre-discovery explorers. As far as addictions go this one is probably worse for you than cigarettes.

Kingfisher $KFR.V - I like Dustin and they've managed to consolidate a handful of prospective projects into a single exploration area. Access to the area is getting better, though they still have to service drills via helicopter any future mine will be easier to access.

Metals Energy $MERG.V - Not even a drillhole yet and they got Centerra and Teck invested. I like Charlie and there's drillholes on both sides on trend of this property and a lot of geophysics and surface data.

Watching:

• King Copper $KCP.V - Too much hype for me but I have to admit it's interesting. With projects like this I'm more than willing to pay up after they hit and not take the risk that they don't.

Post-Discovery Explorers/Developers

If you believe the Lassonde Curves that are shared around this isn't the good part to invest in. Informally I've gone and looked at projects that became mines and they tend to generate value all along the curve. The reason for the average value destruction is that a lot of projects fall out for various reasons. Poor metallurgical results, trouble permitting, maybe the grade and scale come in short.

For these investments I'm asking myself what are the chances it's going to be a mine and what's the upside if I'm right. I'll miss some but hopefully I'm right enough that the gains on the winners to cover the losses.

Stock price moves in this category are particularly violent in both directions.

Q2 Metals $QTWO.V - This is a globally significant spodumene deposit near a highway. I know it seems in the depth of the lithium price bear market that no projects will ever get built again, but they will someday and I think this is likely to be one of them.

Andina Copper $ANDC.V - Colombia is no longer the worst country to be an explorer and their Argentina ore body has some value.

American Eagle $AE.V - The main high grade orebody is size constrained, but recent drilling is hinting at putting together some more scale.

Prospector $PPP.V - That's a huge hit, next season will see if they can follow it up.

Awalé $ARIC.V - Partner funded program at Charger, BBM initial resource coming, and a large amount of recently granted land you can screen through termite mound sampling.

Watching

• Hercules $BIG.V I think it's too deep but it's possible they find the next Resolution.

Specialty Finance

Royalty is a kind of specialty finance. Back in the day I invested in American Tower who acquired or built cellphone towers and leased out space on them. I like it when expertise can make capital productive.

Aercap $AER - A long term position that doesn't trade as cheap as it used to. Buys planes (and engines and helicopters post acquisition) and leases them to airlines. One of the best capital allocators out there.

Queens Road Capital $QRC.TO - I only have a starter position and there isn't a lot of liquidity, but they seem to have good judgement on their convertible debt investments. I hope to grow the size of this position if the market doesn't run away from me.