Sprott 2011 Flow-Through Limited Partnership
Senior Portfolio Manager, Director of Small Cap Investments
Senior Portfolio Manager, Director of Small Cap Investments
Allan Jacobs joined Sprott Asset Management LP in August 2007 as Director of Small Cap Investments, with a focus on the Sprott Small Cap Funds.
Prior to joining Sprott, Allan was Lead Portfolio Manager of Canadian Small Cap Equities and a Managing Director at Sceptre Investment Counsel. There, he managed the Sceptre Equity Growth Fund, the Sceptre Canadian Equity Small Cap Pooled Fund and the Canadian Small Cap component of institutional portfolios. He also managed the Sceptre Small Cap Opportunities Fund, which was launched in January 2007 – now called the Sprott Small Cap Hedge Fund.
Allan was acknowledged for his achievements at Sceptre on several occasions: the Sceptre Equity Growth Fund was awarded the Best Canadian Small Cap Fund over one, three, five and ten year periods at the 2007 Canadian Lipper Fund Awards. The Fund was also a finalist for the 2006 Small Capitalization Equity Fund of the Year and was chosen Canadian Equity Fund of the Year in 2005 at the Canadian Investment Awards. The Small Capitalization Canadian Equity Pooled Fund, also managed by Allan, was awarded Canadian Small Cap Pooled Fund of the Year in 2006. Furthermore, Allan was chosen the 2006 Fund Manager of the Year at the Canadian Investment Awards.
Prior to joining Sceptre, Allan managed the largest equity fund in South Africa (a $5 billion fund for Old Mutual), and thereafter, managed Small Cap Canadian Equities at Canada Life Investment Management Limited.
Eric Nuttall is a Portfolio Manager with Sprott Asset Management LP. He joined the firm in February 2003, and over the years, has become a nationally recognized expert on the Canadian oil and gas sector. A popular industry commentator, Eric is a frequent guest on the Business News Network (BNN), a regular contributor to Alberta Oil Magazine, often interviewed by The Globe and Mail, the National Post, the Calgary Herald, and has appeared in both the Wall Street Journal Asia and Barron’s.
Eric is Lead Portfolio Manager of the Sprott Energy Fund, and co-manages the Sprott 2011 and 2012 Flow-Through Limited Partnerships with Allan Jacobs. Eric is a key contributor to Sprott’s internal macro energy forecasts, and supports Sprott’s portfolio management team by identifying top performing oil and gas investment opportunities.
Eric graduated with High Honours from Carleton University with an Honors Bachelor of International Business.
|Eligible for Registered Plans||No|
Fund ObjectiveThe Partnership’s investment objective is to provide for a tax-assisted investment in a diversified portfolio of Flow-Through Shares and other securities, if any, of Resource Issuers with a view to achieving capital appreciation and significant tax benefits for Limited Partners.
January 2013 Commentary
Resource stocks performed poorly in 2012 for the second consecutive year. Small cap resource stocks performed significantly worse than their larger sized counterparts, while the stock prices of microcap and/or pure exploration companies were particularly hard hit. As a result, current sentiment towards the sector is not much better than it was in early 2009. It is important to note that these stocks bounced back dramatically in 2009 and 2010 from very low levels as market conditions improved.
The most recent (January 14, 2013) net asset value (NAV) per unit of the Sprott 2011 Flow-Through LP was $8.29. On a pre-tax basis, the LP has been a below average performer relative to other Flow-Through offerings launched in early 2011. However, on an after-tax basis our LP’s ranking would be significantly better due to the approximately 109% in net tax deductions which unit holders received in the 2011 tax year. The after-tax cost of a $25.00 unit was approximately $10.27 at the highest marginal tax rate of 46.41% in Ontario in 2011.
As at January 14, 2013, the LP’s net assets of $30 million were 48% invested in mining stocks, 29% invested in energy stocks and 23% in cash holdings. The LP will roll over on a tax-advantaged basis to the Sprott Resource Class mutual fund (the “Fund”) on or about February 1, 2013. This Fund is managed by resource experts, including Jason Mayer who is a key addition to the Flow Through LP management team. Investors may switch on a tax-deferred basis into eleven other Sprott corporate class funds (six equity, two fixed income, one balanced and two bullion funds).
For investors looking for another tax-advantaged investment option, Sprott has filed a preliminary prospectus dated December 19, 2012, offering units of the Sprott 2013 Flow-Through Limited Partnership.* Because of the current depressed valuations of small-cap resource stocks, the new Flow-Through LP will be well positioned to benefit from a recovery in prices over the two year life of the LP.
Due to the fact that small-cap resource companies are currently trading at significant discounts to their larger peers, we expect to see a high level of takeover activity in 2013 with significant premiums tied to the transactions. Also, when valuations return to more normalized levels relative to commodity prices we should see a dramatic recovery in stock prices off a low base.
*A preliminary prospectus containing important information relating to these securities has been filed with securities commissions or similar authorities in all the provinces and territories of Canada. The preliminary prospectus is still subject to completion or amendment. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final prospectus has been issued.
The indicated rates of return for series A/class A securities of the Funds are based on the historical annual compounded total returns including changes in unit/share value and reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication does not constitute an offer to sell or solicitation to purchase securities of the Funds.