BT Global Growth’s game plan is to go long and short on a wide range of investments, but in this interview with The Gold Report, Paul Beattie, cofounder and managing director of the hedge fund, focuses on four undervalued extraction companies on which the fund is definitely long.
The Gold Report: Welcome, Paul. Would you tell us a little about Montreal-based BT Global Growth and your investing philosophy?
Paul Beattie: BT Global Growth is a hedge fund that I cofounded 10 years ago. We’re focused on the Canadian capital markets, especially international companies listed on Canadian exchanges. The business is abroad, but the company may be listed here. We find this to be the most inefficient part of the Canadian market.
We are long and short on all sorts of things and we don’t use leverage. We look for companies that are trading three and four times cash flow and have enterprise value:earnings before interest, tax, depreciation and amortization (EV:EBITDA) as low as three times or four times, if we’re lucky and find these opportunities. Then, of course, there are stocks in the same sector that have monumental valuations and trade at 50 times or 35 times cash flow, and it makes no sense. We short one against the other, and over time it works.
And on top of that, we short other things. The Japanese government wants the yen much lower, so we short the yen against the U.S. dollar. We’ve been doing it for years, and we’ll probably continue to do it for years.
We have macroeconomic views that tie into a lot of the main themes. They work as good hedges on the existing portfolio. We’ve been compounding at 10+% a year, year-in and year-out, and the stock markets have been doing about half that. We’re never fully exposed to …read more