We closed 2025 with 10 of our positions up over 50% and 6 of those advanced more than 100%. We had a few nonperformers but those were limited to very small losses. Let’s start with the winners.
In my year end letter for 2024 we talked about my bullishness towards precious metals, and natural resources. One of my top picks for 2025 was silver. This was due to several factors including silver’s underperformance to its sister metal gold. Gold and silver have a somewhat symbiotic relationship that when disrupted tends to readjust back to normalcy in due time.
Our top pick to click in 2024 was First Majestic Silver. We were rewarded with a gain of 204%. Our best performer of 2025.
Over the last 5 years gold and silver producers have become more cost conscious, lowering all in sustaining costs to record lows in contrast to retail pricing. That means as prices increase the spread between revenues and costs increase as well. Which means gold producers are minting money right now. The result certainly started to show up in stock prices. We had 6 gold related stocks up more than 100% in 2025.
Seabridge Gold +160%
Barrick Gold +180%
Agnico Eagle Mining +117%
Sprott Inc +132%
Sprott Gold Fund +146%
Novagold +168%
As my friend Rick Rule likes to say, our work here is not done. You do not make money in the natural resource space until you have booked it. Which means proper portfolio management is paramount. I believe many of these positions will continue to run after having a proper breather but paring back and hedging your gains is prudent. Each investment has different traits and characteristics, so we would deal with each one separately.
We’ve talked at length about the disruptions in the uranium market. A decade of underinvestment eventually leads to higher prices. Our miner of choice Cameco advanced 78% this year. We first took a position in the world’s largest producer nearly 7 years ago, paying around $4 a share. Today it flirts with $100 a share and is no longer a secret. One would think that with increased demand for the next decade on the agenda the price will continue to advance as the rest of the investment world takes note. Again, prudent money management and position sizing is our thought process now.
Our top 5 positions to date are Berkshire Hathaway, Dollar General, Markel, Alphabet, and Sprott. Each was up this year as follows: 11%, 75%, 25%, 65%, and 132%.
Berkshire’s steady performance is not surprising. Net asset value and earnings continue to compound at high single digit rates. This means that over time the stock will advance at a similar rate. Calculated intrinsic value today is 10-12% higher than the stock price so growth in book value plus a small contraction in that discount i just alluded to equals a 9-12% annual increase. Greg Abel holds the largest corporate cash reserve in the U.S. Nearly $400B that can be called upon should a terrific opportunity arise.
I wrote about Dollar General in an earlier missive citing the Earnings Power Value (EPV) as significantly higher than the share price. Also, I believe that Wall Street sometimes just doesn’t understand the middle of the country. Sometimes you have to live near Peoria to understand what plays in Peoria.
There’s always a lot of hyperbole, corporate speak, and talking points about investments out there, but the reality is there are usually 1 or 2 things that drive a successful investment over time. In DG’s case this driver is simply margin expansion and customer captivity. Up 78% this year the market is starting to catch up. DG has a long way to go and should margins retrace to prior normals should trade significantly higher.
I love well run property casualty insurance operations and Markel is our choice. The US insurance operations have underperformed the last few years which is more than reflected in the stock price. Markel has a new head of US insurance operations, Simon Wilson, who ran the international ops with great distinguishment and success. Simon is one of the best PC insurance people on the planet (in the same league with Ajit Jain at Berkshire). Markel models their operations after Berkshire and I think are well on their way to similar results after a brief respite.
For such a large company Alphabet’s 65% move in 2025 is unprecedented. I would not expect a replay in 2025 however i believe the company will benefit from AI and has many levers to pull to enhance shareholder value. While due to regulations Alphabet does not have to disclose certain subsidiary financials and metrics such as Waymo sales we can garner this information from 3rd parties and competitors. In fact in its financials Alphabet cites Waymo as “other” without any additional disclosures. This is a compounder that could morph into multiple companies at some juncture.
Every once in a while, you run across a business that has an enormous competitive advantage in an interesting niche market. This is Sprott Resources Inc. Sprott is an investment manager. We became acquainted with the company nearly a decade ago. I met Eric Sprott and the president of his firm Rick Rule. What I realized very quickly was that these were people that had a next level understanding of natural resource markets. I always wondered why major brokerage firms did not embrace natural resource investing. And listening to Eric and Rick I realized the rest of the retail market (the Edward Jones & Morgan Stanley etc.) didn’t understand natural resources and were way out of their element.
Having learned so much that day when I came home, I decided to commit myself to understanding the dynamics, the history, and the people that work and invest in these markets. Natural resource market cycles are longer, deeper, and when correcting more robust than other markets. This is driven largely by capital investment flows. I feel that my tuition that day has paid handsome dividends to our clients.
As to Sprott we started investing in the company with a small position nearly a decade ago. The company has the largest and most intelligently constructed ETF’s for gold, silver, and uranium in the world. They also manage mutual funds and private equity. The stock trades for a premium valuation today at nearly 40X earnings but I believe they really have no peer in the space. The company is totally debt free and has low fixed costs. As metal prices advance their profitability as viewed through operating margins grow. They have brought on specialized personnel and purchased several mutual funds that enhance their competitive position. Revenues have grown 50% the last 2 years and the company could scale their platform to be much larger.
As an aside Eric Sprott told me 10 years ago that 6 entities owned 80% of the worlds silver supply. Point being that the supply dynamic is heavily skewed toward scarcity. I believe we are seeing that in todays market.
We made a few changes in our portfolio’s this last quarter. We swapped our position in PayPal for a position in Global Payments Inc. While I am still bullish on PayPal I believe that Global has considerably more upside. File this one under a little lower quality but much higher upside potential.
My bonehead move of the year was selling our Warner Brothers position at a small profit before the bidding war for those assets played out. WB today is the target of Netflix and Paramount. We valued the WB net assets to be around $25 a share. But frankly yours truly became a little frustrated. Given that opportunity costs in investing is a real phenomenon we sold out too soon. I had the analysis right on but simply needed to exercise a little more patience.
It would be wonderful if our 2026 mirrored 2025 but I would not expect it. Having said that our picks to click in 2026 are next
PICKS TO CLICK IN 2026
SIRIUS XM HOLDINGS-
this stock is hated by many. They see no growth and a melting ice cube of a business. No, it’s not growing but it is a cash cow. This one will require patience so in the meantime a 12-14% free cash flow yield is helpful. This stable business is a merger/acquisition candidate which pays a plus 5% dividend while we wait.
AMAZON
When you mention Amazon most think about retail, but Amazon Web Services is one the best businesses on the planet. They are also best in class in AI enhancements that will soon be ubiquitously incorporated into their businesses. Using a 10% revenue growth rate and a 30% operating margin gives us nearly a $300 stock price ($225 today).
TRIPADVISOR
TRIP has 3 different businesses that require different valuations.
1) The original Tripadvisor business. This business is low growth but has stable margins and steady cash flow. This is about 65% of total revenues.
2) Viator/Experiences business. This business books people different experiences such as museums, tours, and trips via a tour guide or professional. The platform has 300k different experiences and 50k tour guides and growing. This is a higher growth business that should trade at a higher multiple.
3) The Fork. The Fork is Europe’s highest profile online restaurant reservation business. It’s growing and has deep market penetration.
Using discounted cash flow and median comparisons for all three businesses, we estimate a value of about $25-30 a share. But the best way to value TRIP is through a sum of the parts basis valuing each business separately. Under that scenario one can get to around $40 a share which is roughly 2 1/2 times todays share price.
As an aside TRIP had offers to be purchased between $25-30 a share in 2024. Activist investor Starboard Value owns nearly 10% of the stock and I believe they will assist the board in getting the best outcome for shareholders.
GLOBAL PAYMENTS INC
Having owned Global Payments before we know it quite well today. GPN just acquired WorldPay for $24B so it’s a different business today than when we first acquired it. Our base case is $140-150 a share roughly a double with our worst case scenario being around $80 a share. Heads we win tails we don’t lose. That’s bets I like.
MADISON SQUARE GARDEN SPORTS
I wrote a piece on MSGS using an asset valuation so I won’t repeat it here. Suffice it to say that the stock has been moving consistently upward and I think will continue to do so. At today’s stock price you’re paying for the New York Knicks and all the rest is free which includes the Rangers franchise. Net asset value sums to around $10B versus a market cap of $6B, so there is significant upside.
MARKET HEALTH
The market appears pretty healthy today given there are pockets of overvaluation and maybe even a bubble. (AI is trading at silly prices). Advancers are increasing at a greater rate than decliners which is an old trading sign of bullishness. I don’t see a broad based bubble but do see certain large caps as generously priced including Nvidia, Netlfix, Apple, and Palantir.
Valuations in large caps are elevated, but this is offset by opportunities in the mid and small cap space. International remains attractive. Put simply there are places to put new money.
In the future we will talk about competitive advantages and moats. The importance of capital allocation via dividends and share buybacks. And many more investing topics.
Thank you for your business. My largest personal holdings today are Berkshire Hathaway, Dollar General, Tripadvisor, Sprott Resources, and Warrior Met Coal.
C Steve Henry\