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Sandstorm Gold: Share Buyback Drives Strong Momentum

Adrián Hernández profile picture
Adrián Hernández


  • Sandstorm outperformed all of its rivals with a 50% return since November.
  • The company announced a share buyback program on November 15, 2018. I think that this event alone has changed the market sentiment about Sandstorm.
  • The latest royalty acquisition added a near-term cash producing asset, increasing the company's net asset value with no dilution to the shareholders.

In the last weeks, gold price went up ~8% and all the royalty companies - but one - had positive returns. In this period, Sandstorm outperformed all of its rivals.

ChartData by YCharts

In this article I will focus on the reasons behind the strong momentum in Sandstorm's stock price and I'll justify why I think that the company is still undervalued, offering a 30.7% upside potential for 2019 and a 117% for 2023.

Latest News

Let's check the last announcements of Sandstorm.

  • November 15, 2018, share buyback program announcement.
  • December 6, 2018, credit facility increased from $150 million to $225 million.
  • January 4, 2019, the company reported record gold sales for the fiscal year 2018, in the middle range of its guidance.
  • January 18, 2019, 0.9% NSR royalty acquisition in the 'Fruta del Norte' mine.

I think that is relevant to check the daily return for each of these announcements:

Date Sandstorm Gold Return

Gold Price Return

Relative Return
Nov. 15, 2018 +5.4% +0.3% +5.1%
Dec. 6, 2018 -0.2% -0.1% -0.1%
Jan. 4, 2019 +0.4% -0.7% +1.1%
Jan. 18, 2019 -0.8% +0.2% -0.6%

Source: Author using data from Investing and PMbull.com

So, the stronger short-term catalyst seemed to be the share buyback announcement with a +5.1% relative return versus the gold price. That's why I think that the market sentiment about Sandstorm has changed, after several years of negativity and skepticism.

The return in January 4, 2019 was also relevant, when the company reported record gold sales for the fiscal year 2018. Sandstorm's shares relative return was +1.1%.

Sandstorm's stock price also outperformed the gold price (GLD), VanEck Vectors Gold Miners ETF (GDX) and Junior Gold Miners ETFs (GDXJ).

ChartData by YCharts

Strong Momentum

Let's take a look at the momentum tabs on SeekingAlpha. In

ChartData by YCharts

This article was written by

Adrián Hernández profile picture
Buy-side business analyst. Focus on moats and overlooked small/micro/nanocap companies with high margins and ROCEs at a fair price (yes, they exist!) led by an outstanding management team.

Analyst’s Disclosure: I am/we are long SAND. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article does not represent any kind of investment recommendation or advice.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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