Brian Leni | Successful Mining Stock Investing Can Result in Financial Freedom

Brian Leni is the founder of JuniorStockReview.com which exists to offer information, ideas, and strategies for managing speculation in the junior resource sector. Brian first discovered mining stocks about 13 years ago and was immediately intrigued. In 2014/2015, Brian anticipated that the resource sector was closing in on a bottom, and he wanted to access more capital for the expected up-cycle. So he sold his home and then invested 2/3 of the home sale proceeds into resource stocks. By August 2016, he saw his invested funds triple in value. Due to his large gains, Brian quit his professional job as an engineer and now devotes his time to researching and investing in mining stocks.

In this interview, Brian shares not only his success story, but also insights on how he manages risk, where he looks to find investing opportunities, and books he recommends. Brian’s website is http://www.juniorstockreview.com/

BEGIN TRANSCRIPT:

Bill: Welcome back, ladies and gentlemen and thanks for tuning in. You’re listening to another Mining Stock Education expert interview. I’m Bill Powers, your host. Rick Rule has said that it only takes one commodity of up-cycle invested in successfully to change your family’s wealth for a lifetime. That’s why most of us invest in mining stocks for that expected and hoped for out-sized gains.

The person I’m speaking with today has discovered and already experienced the wealth-multiplying potential of successful resource investing. I had the pleasure of meeting this individual a few weeks ago when I was in Vancouver, and I invited him onto the show today to share his story and insights regarding mining stock investing. I’m speaking about Brian Leni the founder of www.JuniorStockReview.com. The purpose of Brian’s newsletter and website is to offer information, ideas, and strategies for managing speculation in the junior resource sector. So, Brian, thanks for taking the time to chat and welcome to the show.

Brian: Thank you very much for having me.

Bill: Brian, you have a very unique story and I got to learn more of it, more the behind-the-scenes how you came into mining stock investing as we briefly chatted in Vancouver. Could you share with listeners both how you discovered mining stocks, and also, how you’re now in the place to where you’re a full-time investor and running the website and newsletter?

Brian: Sure. So, it goes back in probably around 2005, 2006. It was actually the first time I met my future brother-in-law and he was talking about gold and a guy named Doug Casey. And I was extremely curious to understand, because you could tell that he was an intelligent guy, why he was sort of obsessed with these two topics. So I followed along and did some more research and reading on my own. And I kind of got into the monetary policy history, the stuff that’s going on with the Fed, and then would eventually led into the quantitative easing. I was hooked on the subject from that early standpoint of gold. And then from there, I learned trial and error.

And in 2013, I took a major step, a major risk in my life and what we ended up doing, we sold our house and I took two-thirds of the proceeds and put them into the stocks that I felt had the most opportunity or potential for profits. And so for those that have been following along with the junior sector for the last cycle, you’ll know that 2013 to about the end of 2015 were just about the bottom of the cycle. And over those two years, I deployed that cash. And in 2016, I reaped the rewards. And so what this enabled me to do was to leave my career as an engineer and pursue both investment and writing. That’s what I’m doing now.

Bill: So when you first discovered mining stocks and this sector via Doug Casey and your future brother-in-law, how long thereafter did you first invest in a mining company?

Brian: It would be the next year. I think was 2005 or 2006. So it was that very next year that I bought my first stock. It’s one of those things where the first stock that I bought doubled. As Rich Rule says, I confused the bull market with brains. I definitely was overconfident. I think the only thing that saved me, especially in the beginning was my ignorance. So I was more concentrated on the short term and I was in and out of position so much that when the market crashed in the fall of 2008, I really didn’t feel it, like I definitely felt like it was the first time that I’d been hit by like a major correction with the market. But I didn’t have enough money in there at that time to really feel it. So it wasn’t until 2011 that I had my next sort of learning cycle, and as the market kind of precipitated down after gold reaching a high around $1,900 per ounce.

Bill: Did you invest at that bottom in 2009 after the Lehman Brothers crash? Did you take initial positions there and were you able to sell some of them towards the 2011 peak?

Brian: Definitely, definitely. I would say the only thing that I didn’t do and, of course, maybe everybody’s susceptible to this in 2011 where that sort of topple in the market occurred, I didn’t sell enough. From 2011 to 2013, I actually didn’t do a lot in the market. I spent a lot of time reading and just referencing different books specifically to do with human behavior because I think it’s probably synonymous with the majority of investors out there. I really felt like I had to work on myself more than even learning market fundamentals, but just different mistakes that I could see that I was making with myself. So I was concentrating on that over those two years. And then in 2013, I needed a bigger chunk of money. And so we sold the house and I took a chance.

Bill: So that was strategic then. You sold the house in order to access that capital for the expected up cycle, is that correct?

Brian: Absolutely. Yeah, the two-thirds specifically gave me a large enough portfolio where I felt that it made it worth the risk. That’s another thing I’ve sort of learned was before I would take a lot of small positions and putting in all that effort, putting in 2 or 3 weeks of due diligence on 1 company and then I would take let’s say a $500 or a $1,000 position in the company. And then everything I thought would happen would happen and I ended up let’s say with three or four grand in profits. And really, even though that’s great and there’s nothing wrong with that, but I wanted to make a bigger difference and say, “Okay. If I’m gonna do the due diligence and I’m gonna put the time in and I’m gonna set out a plan of how I think this stock or the management team is gonna execute upon their vision, then I need to make the stakes a little bit higher.” And that’s where I got to this thing of you know what? I need a bigger chunk of money, which I didn’t wanna borrow. I wanted to use money that was actually mine and I had the support of my wife. Yeah, so that’s kind of what brought me to selling the house.

Bill: Could you talk a little bit about how you had the support of your wife because often times, those of us that invest in mining stocks we may be absorbed in this little world, but our spouse has their own life and daily activities. How were you and your wife able to come into agreement with taking that large sum of money and placing it in mining stocks?

Brian: Yeah, that’s a great question. I never really asked her to be honest with you. But I would say because I’ve taken…like if it wasn’t selling my house then I took a big step in 2016 by leaving my career of over a decade to pursue writing. So I think it just comes down to she believed in me and trusted. But in saying that, without that kind of coherence between the two of us, I don’t think it could have ever worked. And I really caution people from not involving their spouse and especially when you start dealing with larger sums of money or sums of money that can affect your life.

Bill: Absolutely. So in 2016 when the market went up, you had much of your previous home equity in the market. What were your gains like in 2016 and then how did you judge your exit strategy in order to seize those gains?

Brian: Overall, my portfolio went up 300% and that’s about in 6 months, so the first 6 months in 2016 and for a while, the idea of leaving my career it was percolating in the back. And so what I’ve done or what I did was I started to take even before…because the market sort of petered out after August of 2016, if you recall. And so it was about May or June where I started taking money out. And the idea was we were renting a place. And I knew I wanted to leave my job. So we bought a place out in the country. That’s where I live now. And so I took a chunk of money, put a down payment on. And I still do it to this day. Even though my whole portfolio is resource based, I don’t invest in anything else. I still allocate money every year to what I would call safe investments and that’s paying off my mortgage, paying down a car loan, these sort of things that sort of offset the risk that I take in the market.

Bill: Yeah, I was driving with my 11-year-old this afternoon and I mentioned to him our upcoming interview and how you sold your house and invested the money in mining stocks and did really well. And my 11-year-old said, “Well, dad, where do they live?” So you just answered that question. I said, “They probably bought a house or rented a house, son.”

So how did you analyze risk? This was a question I have. You take that large sum of money, which I would assume would be a large chunk of your net worth or the primary chunk of your net worth and you’re gonna put it in mining stocks. How did you go about analyzing risk? Could you speak to that please?

Brian: Sure. It’s something that’s ever evolving. The latest thing for the last couple of months that I have been kind of debating with myself was jurisdictional risk and how that fits in with my overall risk profile. But if we rewind back to, let’s say 2014 and 2015 when I was putting that initial chunk of money in the market, one thing I’ve learned, and this goes back… So I’m an engineer by trade. I worked in the steel manufacturing industry for over a decade and I was an engineer and then a manager. And what I can tell you is that when you find the right people to work for you or work with you, it makes all the difference in the world. So that was sort of ingrained in me.

So, the first thing I was looking for when I was investing was the people. And I know that sounds cliché because a lot of people like to reference it. It can’t be understated because it’s absolutely true. It actually feeds into another thing, conferences. For me, I think I’m a very good judge of people and I use conferences to meet them. It’s not only see how they treat me, but how they treat other people, the way they answer certain questions. It tells you a lot about the person. And for me, I’m very selective in who I wanna associate myself with and I take that very seriously.

For instance, I also with the risk profile, I went from having, let’s say 30 to 40 companies in my portfolio, to now, I usually don’t carry any more than 15. And that’s another way I reduced the risk of even though I’m looking at the market full time, it allows me to focus my energies on a dozen or so stocks and I can follow the news flow. I can follow how the stock is trading and make my moves in there.

Bill: And I’d like to also point out for the listener that you had 10 years of experience thinking about successes and failures in investing in mining stocks by the time you decided to sell your house and invest the money and go for it big.

Brian: Yeah, absolutely, absolutely. It’s still a big risk and one that shouldn’t be taken lightly. And it’s something that I didn’t. But I think also the other mantra I suppose that I kind of live my life by is that I want to take risk. I wanna get ahead. And to me, I can’t have the type of reward I want without taking some risk, and yeah.

Bill: When you’re looking for investment opportunities today, you’ve talked about a little how you analyze risk. Can you talk more about your process that you undertake when you wanna discover and do your due diligence on potential mining investment opportunities?

Brian: Okay. So one way I’ve done it and having been around this sector long enough now there’s management teams that I follow. And I’ve had success with them in the past. And so their next project are typically things that I follow and I’ll end up buying because I’ve got a familiarity with the team that’s executing.

Secondly, I try to be contrarian as I can and it is extremely hard to buy sectors that are out of favor. Nickel, for instance, for the 4 years preceding 2016 was in a major bear market in terms of the spot price where there was so much supply on there that the spot price just kept on falling, falling, falling, and those are sectors that I sort of look for and then what companies are either searching or developing in commodities such as nickel. So, yeah, those are two ways that I kind of direct my thought process.

Bill: How do you utilize newsletters specifically, paid newsletters, and also everything the internet has to offer?

Brian: Okay. I don’t subscribe to any paid newsletters. But there are a couple of people that have newsletters that I really like and one of them being Brent Cook and Joel Mazumdar from Exploration Insights. I think they’ve got the best product out there. If I were to buy or subscribe to one, theirs would be the newsletter. I’m really trying to develop my own strategies. And I limit the amount of influence from others actually that I let myself be influenced by. So next I listen to interviews that Brent and Joe gave.

Another fantastic mind in the business is Jayant Bhandari. And I have tremendous respect for that name and for a number of different aspects, not just investing but also his philosophical mind. And then there’s the James Rickards. I’ve read all of his books and have definitely influenced the way that I look at money and sort of…although no one has a crystal ball, sort of how I look at the future and how I think it might evolve. That does affect the way that I invest for sure.

Bill: When it comes to books that are specific for teaching the retail mining investor who doesn’t have a background in mining, getting them indoctrinated or introduced to the whole realm of money stock investing. Are there any books that you would recommend and that was helpful to you in your journey?

Brian: Sure. I would say bar none, and this is a book I try to read at least once a year. It’s called “The Battle for Investment Survival,” and it’s by G.M. Loeb. And for me, I would say it’s the single most or the single best book on investing. It’s more generalized, but it does get into speculative investments, not specifically to mining, but just how to deal with speculative investments. So I really recommend that.

And the second book would be “Seeking Wisdom” by Peter Bevelin. And again, this one is more focuses on human behavior. You having an introspective look at yourself because I do think no matter what your knowledge is in to do with mining or the way projects are developed or geology, I think the basis for your success will start with working on your behaviors and the criteria that you set for yourself when you go to make an investment.

And then probably more derived into the mining side of things, The Northern Miner has a book called “Mining Explained” I believe. And I think that’s a pretty good baseline knowledge book for people that are just getting into it.

Bill: Brian, when it comes to today, we see one of your sponsors was Northern Empire and they were taken over by Coeur Mining just within the last week. What are your thoughts about that take over?

Brian: I think it’s a great bear market take over, the fact that they sold the company share price that’s higher than its VIP. The all-time high for their shares means everybody made money at varying degrees of it. But in the end, everybody made money that help. So I think it’s a great feather in the cap with the Northern Empire management team. And for people that were investors, I think the bottom line is they can be happy with the win in a market that is very tough.

Bill: In your portfolio now, it’s the latter half now of 2018, gold has been going sideways for 2 years now. What is your expectation for the next two years for gold investors and commodity investors, and also, how are you positioning your portfolio in terms of what you hold in equities and what you hold in cash right now?

Brain: Sure. Gold’s, as far as the price is concerned, has been tough the last couple years. But I tend not to be concentrated on actual spot prices other than when I’m looking at a company, I wanna see that the company is profitable or potentially profitable at the current spot price. And this actually goes for all the metals. I see huge opportunity in gold and basically all the base metals.

So in terms of how I proportion my cash to equities position, I’ve been a net buyer for the last probably two months and especially in the last couple weeks having attended the Sprott Natural Resource Symposium a couple weeks ago. There was definitely a lot of concern over where the market was and not necessarily as optimistic about where it was going. And for me, I think that that’s a great contrarian sign.

So I’ve been more active in taking positions in companies that I really like. And so right now I probably stand at 60% equities, 40% cash. But I’m looking to buy more over the coming weeks. And basically how I deploy my money is in tranches. You can never tell where the price is going. Again, like I said, I don’t think that you should really concentrate on that, especially in the short term. But I’ll buy a tranche just in case the market does or is gonna go down further, and yeah.

Bill: Brian, your latest musings and research can be found at www.JuniorStockReview.com. Could you share with us what are you offering there and what can readers find?

Brian: Sure. So at juniorstockreview.com, I publish my work on what I’m investing in personally. The research is free and you get an account of exactly what I’m doing in the market and how I see different commodities, nickel, zinc, gold. Yeah, the research is free and you can sign up.

Bill: You can go there and I believe right at the top of the homepage, you can enter your email if you’d like to be on Brian’s email list. And best way to keep up with your day-to-day thoughts, is it on Twitter or any other presence online you like to share?

Brian: Yeah, social media, Twitter, of course, there’s my LinkedIn account or CEO.CA, I’m also frequent on there. And yeah, email me if you have any questions. I’d be happy to chat with you.

Bill: Well, Brian, I’ve appreciated our conversation. I know the listeners have as well. Thank you very much for your time today.

Brian: Thanks, Bill. I appreciate it.