The last few years have seen more tailwinds than headwinds for Kennox

October 2024

The last few years have seen more tailwinds than headwinds for Kennox – the fund is up 35% over the last three years and up 9% this year – but it’s never the case that all holdings purr along smoothly at the same time. This month, Newmont came out with results that were soft and the share price finished the month down 11%.

There are frustrations here unquestionably, but let’s consider the big picture:

• The outlook for gold remains robust for the foreseeable future as many long-term factors are extraordinarily supportive – such as over-promising governments, high levels of global debt, and a wave of central bank buying
• Future production and cost numbers for Newmont look better than the most recent quarter as they streamline to their core portfolio of assets
• The company has returned to generating much improved free cash flows and profits after a lull in 2022 & 2023
• At current (albeit high) gold prices, Newmont trades at low-teen multiples of likely profits, providing significant upside if gold continues to rally.

Even after the bad news, the share price is up 11% this year, not a terrible result. For now, Newmont deserves the benefit of the doubt, sitting alongside our other gold holdings (Agnico Eagle and Pan American, YTD up 59% & 44% respectively).

Elsewhere, Yue Yuen jumped up 15% this month as they improved their profit forecast again (see the Kennox comment from April). Having emerged from a time of headwinds, Yue Yuen continues to come good, up over 100% this year.

It was ever thus with investing, experiencing both wins and losses. At Kennox we continue to nudge the odds in our favour: investing in industry-leading companies, only when prices are substantially in our favour. Finally, we are also pleased to attach the latest fund factsheet.