Silver Wheaton Corp. (SLW), Ultra Petroleum Corp. (UPL): Out of Favor, Overlooked, and Misunderstood Gems

Sandstorm Metals & Energy

The best way to explain Sandstorm Metals & Energy is to start with Silver Wheaton Corp. (NYSE:SLW). The CEO of Sandstorm, Nolan Watson, was the CFO at Wheaton and helped create that company’s business model. Essentially, Silver Wheaton Corp. (NYSE:SLW) buys interests in the output of silver mines. This gives mining companies the money needed to fund their explorations and locks in a revenue stream for Wheaton, usually at relatively low cost.

The arrangement works because it’s often hard for silver miners to get money from traditional sources. Since leaving Wheaton, Watson used the same model to build Sandstorm Gold. Roumell notes that these are good businesses, but they don’t interest him. The problem is that they are both one-trick ponies. So no matter how well run Silver Wheaton Corp. (NYSE:SLW) or Sandstorm Gold may be, their value is tied to the price of often volatile silver and gold.

This is why he and Crawford like Sandstorm Metals & Energy. This company is diversified across commodities, including natural gas, copper, and palladium, among others. Few in the investment community follow it. And, it has the ability to get opportunistic prices on the deals it enters into because the small companies it finances have limited access to capital. The co-managers believe the shares could have notable upside potential over the long term as its business expands.

Looking Where Others Don’t

Roumell specializes in looking where others aren’t. That makes his fund a great option for contrarian types. While his stock ideas may not be appropriate for everyone, the above companies represent unique and compelling opportunities.

The article Out of Favor, Overlooked, and Misunderstood Gems originally appeared on Fool.com.

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