US Global Investors CEO Frank Holmes loves the movie Moneyball. If you haven’t seen it, it’s the story of a baseball manager named Billy Beane who, faced with crippling budget cuts, rejects conventional wisdom and sets out to reinvent his team by outsmarting the richer ball clubs. Frank Holmes will tell you that his new Gold ETF, the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE Arca: GOAU), uses intelligent quantitative analysis to pick stocks, just like Billy Beane did in Moneyball. It’s what Frank refers to as the ‘secret sauce’ that’s going to make GOAU, launching at the opening bell today, a winner.
I know – you’re thinking the Gold ETF space, overcrowded already and literally hammered in recent months, doesn’t need another player. But I spoke with Frank on the phone this week (always a dynamic and entertaining interview) and he’s got an interesting story to tell.
GOAU has been in development for almost 3 years. During that time, Frank and his team have formulated their so-called ‘secret sauce’ and come up with an ETF that he says really is different from the rest. GOAU will not just focus on mining stocks with large market caps, as many funds do. Instead, it seeks high quality, well managed producers that have a proven track record of sustainable profitability even when precious metals prices are down.
Frank calls GOAU “a superior product – a scooper – that scoops up the cheapest names every quarter on a serious litmus test”. That test involves shopping for companies with strong momentum, high revenue per share, and low revenue to SGA, among other factors. Frank says their model takes out a lot of the negative downdrafts. “The math always wins”, according to Frank, “and the timing is good as there is some serious repositioning going on in the space”.
Frank is also a fan of royalty companies, which he calls the ‘smart money’ in the metals and mining space. GOAU will be comprised of 30% royalty and streaming companies, which he believes helps investors manage many common risks associated with traditional producers, like building and maintaining mines, etc. At the same time, the lower risk may produce greater upside – royalty companies have a history of rewarding their investors, increasing dividends at a faster pace than the broader equity market.
There’s a point in Moneyball where Brad Pitt (who plays Beane) says, “If we win with this team, we change the game”. I won’t spoil the ending for those of you who haven’t seen the movie. But I can tell you that this morning, when Frank Holmes rings the bell at the NYSE and GOAU is launched, he’s not thinking in terms of ‘ifs’. After all his years and many accomplishments in the investment world, this CEO still gets excited.
Frank Holmes may not change the game with GOAU, but don’t be surprised if he hits it out of the park.
For more information, check out: https://www.usglobaletfs.com/ and Follow Frank Holmes on Twitter: https://twitter.com/bulldogholmes
