Ad-venture capitalist, explorer and discoverer of heaps of gold, copper, oil, timber and rare earths like zircon, Joshua Fink, 32, has traveled on cold war Russian helicopters to coal mines in Mongolia, gone a mile down in South African gold mines and traveled to copper mines in the middle of the jungle in the Congo.
"I'm not Indiana Jones. I just love the sense of finding the unknown in off-beat places, of uncovering a stone and finding value and seizing a huge opportunity." Indeed, Fink's investment company, Enso Capital, has investments in far-flung spots like Eritrea and Tanzania in Africa, gold mines in Colombia, oil and gas in the Brazilian Amazon, basin and timber on the eastern part of Canada. Over the past 2 years Enso has made returns of over 80% using only a slight amount of leverage, Fink claims. (The notion of enso is derived from the Zen sense of wholeness.)
What's shocking about Fink is that he began his ad-venture at the age of 23 (after a Penn BA) despite the fervent opposition of his father Larry Fink, the founder and CEO of BlackRock, the largest investment management firm in the world. "Josh is a strong-willed young man," the elder Fink says today. "I am very proud of him."
Indeed, young Fink hid from his parents the fact that, while in high school, (ages 15 to 17) he was making $20-30 an hour working on a tow truck operating on the New Jersey Turnpike. He claimed he was out visiting friends. He was determined to make his own money at a young age and thereby assert his independence
Then, while an undergraduate at Penn (he did not go to Wharton) Josh came into New York on an early morning train several times a week to work for Tiger Management, Morgan Stanley and Argonaut, a hedge fund offshoot of Tiger.
From this meager professional training the precocious 23-year-old raised $4 million including a small amount from his father and went to seek his fortune in the glamorous but volatile natural resource and commodities business.
At 29, Fink got his comeuppance during the 2008 financial markets meltdown. Enso was wasted, losing 40% of its valuation. But 80% of the investor base asked for their money back and got it all in cash Fink proudly recalls.
His biggest mistake: "fooling myself" into taking a position in the shares of Mag Industries, a Canadian company (MAA CN) which owned hydro-electric projects and huge potash deposits in the Congo. "We couldn't develop those assets because the Congo government kept changing the rules every 5 minutes, and the government ministers were looking for kickbacks."
He decided then; no more deals tainted by corruption; no more joining with fast-talking smooth charlatans, of which there are hordes everywhere in the emerging markets. Fink calls this lesson one of "jurisdiction. I learned to stay away from places where the ministers all hang out."
Today, he has another rule of thumb; if you land in a place like Mongolia's Ulan Bator -- and the airport is full of bankers you reject the deals. "It is better to invest in a place where the perception is bad, but the reality good, like Colombia" where he has investments in two gold mines -- Medoro Resources (MRS CN) and Gran Colombia Gold -- the latter of which is still in an early stage of mine development.
Going against the grain, Fink loves Russia, where he spotted no hordes of bankers in the Moscow airport. "If you have the right trustworthy partners that's the key in Russia; know your partner."
Fink's spectacular returns are the result of getting into some situations when they are still private and then watching the shares soar after a public offering. A prime example is HRT, a Brazilian oil and gas operation in the Amazon jungle. Fink was able to buy a barrel of oil for $2-3 a barrel, because Petrobras, the national company and the Chinese were concentrating on offshore properties. A few months after buying HRT at $220 a share, the company went public and Enso sits with its position at $1100 a share. HRT will be listed in Canada by the end of the year.
Many of Enso transactions are in already public trading situations in Canada where many resource companies sell for less than $1 a share, and are considered too promotional or risky to commit money. Fink's team, headed by Neil A. Hourihan, portfolio manager, looks at literally hundreds of these deals, some schlocky, some promising. Fink's portfolio, which includes stocks few have ever heard of, requires daily thorough vetting and research. It is not a sport for widows and orphans.
Still, at year-end Enso's portfolio was 77.3% in Canada and 12.6% in Asia Ex-Japan, only 3.6% in Africa. Its industry breakdown was 63.1% in basic materials like copper, gold, iron ore etc. and 29.4% in energy.
One of Fink's favorites is Eacom Timber (ETR TSX), which has sawmills and timber concessions in eastern Canada. Enso bought in at 45 cents a share and are selling at 57 cents a share today. Fink sees ETR as a beneficiary of Chinese demand for lumber, a hoped-for rebound in housing in the U.S. and the reduction in supply from a beetle infestation.
Another one is Sunridge Gold (SGC CN), which Fink claims has "significant amounts of copper, gold, silver and zinc in the East African nation of Eritrea, which is performing an exploratory drilling program. "We believe Sunridge represents an outstanding investment opportunity due to an attractive valuation on current assets," Fink wrote to his investors in December. SGC stock has moved from 66 cents a share to $1.11 currently. "The risk associated with Eritrea is more than priced into the current share price of Sunridge," according to Fink's November letter to his investors.
Looking forward, Fink has been taking positions in areas of promise; for shale oil in Europe he owns Realm Energy International (the shale oil is outside Paris), which has run-up from 50 cents a share to 88 cents, for iron ore; Oceanic Iron Ore (FEO), which has doubled from 40 cents a share to 80 cents -- but is worth $3.00 on a buyout according to Hourihan, Enso research head.
Fink just came back from a whirlwind visit on Canadian mining entrepreneur Frank Giustra's jet to Brazil, Moscow and Ulan Bator, where the ground temperature was 37 degrees below zero. The Giustra-Fink team are looking for coal deposits because Fink believes good coal could move up in price 10-15% a year, and so double in 5-7 years.
Last year Enso traded in and out of two rare earth stocks, Molycorp and Lynas, buying them cheap and liquidating them because they ran up so dramatically. Another short term trading profit came from the shares of Eastern Platinum, which also skyrocketed.
Besides coal, Fink is extremely " excited by prospects for uranium even though prices have jumped considerably this year." He is looking into undeveloped copper deposits, which could be valuable due to Chinese demand and the world shortage in copper. Enso owns Baja Mining (BAJ TSX), which owns one of the cheapest copper developments and is owned 30% by a Korean consortium. The stock trades at $1.14 a share and could be worth $2.oo a share suggests Hourihan. Fink also wants to exploit shale gas, which is found in shale rock deposits all through western and eastern Europe.
Roaming the globe for rare earth metals or unsung, undeveloped reserves of valuable natural resources in such great demand by the developed world and the emerging economies has toughened up Fink, made him realize the dangers that lurk everywhere. He recognizes that some unseen geopolitical or economic disaster could set him back again. But, then as his father told me, "Josh is a very strong-willed young man."