Canadian asset manager Sprott says earnings hit bottom in 2013

Thu Mar 27, 2014 3:29pm EDT
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By Andrea Hopkins

TORONTO (Reuters) - Alternative asset manager Sprott Inc SII.TO said on Thursday its earnings hit bottom in the final quarter of 2013 as resource markets swooned, and it expects to do better in 2014 as it considers what to do with ample cash.

Toronto-based Sprott has long been bullish on precious metals and profited handsomely when their prices soared after the financial crisis.

But the company was sideswiped by a dramatic reversal in bullion prices last year, which spurred investors to bail out of many of their funds. Assets under management (AUM) dropped 29 percent to C$7 billion ($6.33 billion) at the end of 2013 from C$9.9 billion a year earlier.

Sprott Chief Executive Peter Grosskopf said 2014 will be better and noted the company has had a strong start, with a 35 percent stock price increase since the start of the year. Higher prices for precious metals including gold and silver, which have made double-digit gains so far in 2014, have helped the Canadian asset manager's funds.

"Just as AUM led performance metrics on the way down, it will lead our metrics on the way up," Grosskopf said on a conference call with analysts.

"(Our) platform is capable of managing a substantial increase in AUM with minimal new investment. We have the capital, as mentioned, to seed and launch new products and selectively pursue strategic acquisition opportunities."

Grosskopf said the money manager is not simply going to wait out the downturn in natural resources, but was careful not to raise expectations that it will deploy its C$350 million in capital on big acquisitions.

"There are some ... what I call in-market Canadian diversification opportunities. But on the precious metal side, all those franchises have been reduced dramatically in value from two, three years ago. So those are the real turnaround opportunities," he said, noting that acquisitions might be in the C$10 million to C$20 million range.   Continued...

Fifteen new wind turbines were officially opened by Sprott Power Corporation in Amherst, Nova Scotia, June 25, 2012. REUTERS/Paul Darrow