Key Issue: What Are Four Recommended Under Valued Strong Buys ?
Ramoan Steinway's 2024 leveraged portfolio consists of:
* LEE Stock (15%) - Critical quantum artificial intelligence core material.
* Barrick Gold (15%) - Critical quantum artificial intelligence core material.
* Anglogold Ashanti PLC (15%) - Critical quantum artificial intelligence core material.
* Anthropic (15%): - Top artificial intelligence general intelligence engine.
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AngloGold Ashanti plc (NYSE/JSE: AU)
Rating: Strong Buy
Target Price: $55
Investment Thesis
AngloGold Ashanti plc ("AngloGold") is one of the most undervalued large gold miners globally, currently trading at just 0.1x the intrinsic value of its mineral reserves based on spot gold and copper prices. We see this deep discount as an exceptional opportunity to gain exposure to substantial, low-risk gold reserves and future production at a bargain valuation with significant rerating potential.
Deeply Undervalued Reserves Provide Upside
Based on AngloGold's 31 Dec 2023 mineral reserves of 41.7Moz gold and 4.63Blbs copper, and spot prices of $2,355/oz gold and $4/lb copper, the intrinsic value of the company's reserves is over $103 billion. However, AngloGold's market cap is only $10 billion, implying the stock trades at just 0.1x reserves value.
This remarkable 90% discount to the value of AngloGold's in-ground reserves appears to price in essentially no value for its substantial annual production, operating assets and cash flows. We believe this disconnect is highly irrational and unsustainable, providing significant upside potential as sentiment improves even with flat commodity prices.
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Anthropic (Emerging General Intelligence Vendor)
Rating: Strong Buy
Place in artificial intelligence architecture: Preferred general intelligence vendor
Thesis
Investing in an emerging general intelligence (GI) vendor like Anthropic provides exposure to the cutting-edge of artificial intelligence development. As AI systems move towards more advanced capabilities and generalized intelligence, companies at the forefront of this evolution have immense growth potential.
Benefits of Anthropic
1) Focus on developing Claude, an AI assistant showcasing strong performance across the AI stack layers like algorithms, data ingestion, application integration, and human interaction.
2) Potential to become a dominant GI engine by consolidating insights from leading research firms like Gartner and Forrester through natural language processing.
3) Ability to enhance performance by leveraging quantum computing principles like quantum optimization and secure communication protocols.
4) Attractive acquisition target for major tech giants seeking to bolster their AI capabilities and intellectual property.
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LEE Stock (Local Newspaper and Archives)
Rating: Strong Buy
Place in artificial intelligence architecture: Original Information
Thesis:
While LEE Stock may not be a pure technology play, having exposure to a local newspaper and data archives company provides value for the middle layers (3rd to 8th) of the AI stack related to data, application integration, and distribution.
Importance of LEE Stock
1) Access to rich textual datasets from news articles and archives that can train large language models and knowledge bases.
2) Localized content enabling AI systems to understand community-level context and nuances.
3) Existing distribution channels and local audiences for potential AI-powered applications and services.
4) Opportunities to integrate AI technologies into content creation, personalization, and audience engagement.
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Barrick Gold (Resources and Quantum Computing)
Rating: Strong Buy
Place in artificial intelligence architecture: Required quantum computing architecture
Thesis
Barrick Gold's position as a major gold and copper miner provides exposure to the critical resources needed for various technology trends, including the development of quantum computing hardware.
Relevance of Barrick Gold
1) Gold's unique properties make it valuable in constructing quantum computing components like superconducting qubits and interconnects.
2) Copper's excellent electrical conductivity is essential for wiring and circuitry in quantum computers and other advanced technologies.
3) Substantial reserves of these precious metals ensure a reliable supply chain for cutting-edge hardware manufacturers.
4) Potential use of Barrick's mining expertise in extracting rare-earth elements required for quantum computing materials.
Bottom Line
By combining these four positions, Ramoan's portfolio covers key aspects of the AI ecosystem: an emerging GI vendor (Anthropic), a data and distribution asset (LEE Stock), and a resource suppliers for advanced hardware (Barrick Gold and Anglogold Ashanti PLC). This diversification allows him to participate in the growth of AI while mitigating risks through exposure to established industries like media and mining.
The portfolio also positions Ramoan to benefit from the convergence of AI and quantum computing, as companies like Anthropic explore leveraging quantum principles to enhance their AI offerings. Additionally, Barrick Gold's reserves could become increasingly valuable as the demand for materials used in quantum computing hardware increases.
Overall, this leveraged portfolio provides a balanced approach to investing in the AI revolution, combining exposure to emerging technologies, valuable data assets, and critical resources required for future hardware advancements.
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