Reuters- Top-performing British Empire Securities & General Trust has upped its stake in listed hedge fund RAB Special Situations because it believes it is a cheap way to gain exposure to mining stocks.
According to a regulatory filing, the 834 million pound investment trust raised its stake in the RAB hedge fund last week to 1.97 million shares, or 3.28 percent of the total, from just over 900,000 shares.
“Commodity prices are near all-time highs … mining stocks are generating huge cashflows and are arguably cheap relative to their earnings power in this commodity environment,” fund manager John Pennink told Reuters.
“China is something very obvious to everyone. It is growing at 10 to 11 percent per annum, it is very resource-intensive and so long as it continues we see good demand for many commodities.”
Earlier this month, for instance, copper prices hit an 11-month high of $8,335, less than $500 from the record high of $8,800 set last May. However, prices have weakened in recent days on concerns about a glut of the red metal in key consumer China.
Alternative Investment Market-traded RAB Special Situations invests in RAB Capital’s largest strategy, which focuses on the energy and mining sectors and has assets of more than $2 billion (1 billion pounds).
