May 23rd, 2023 | 08:15 CEST
Bringing the lead home: Borussia Dortmund, BYD, Defense Metals
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
Borussia Dortmund: Only Champion of Hearts?
In the past season, league leaders FC Bayern have stumbled more often than usual. They tripped up twice in the last five matches alone. The beneficiary could be Borussia Dortmund for the first time in more than ten years, who can clinch the championship with a win against Mainz this coming weekend. On the stock market, euphoric Dortmund fans are already anticipating the pre-season surprise triumph and drove the share above the EUR 5 mark at the start of the week. But is the advance praise justified, or could Mainz spoil Dortmund's party in their own football temple?
The fact that anything is possible in football is shown by the example of FC Schalke, which was caught by FC Bayern in injury time on the last match day more than twenty years ago. It would be premature to put all one's eggs in Borussia Dortmund's basket now. In the long term, however, the share is in a favourable position: after years of decline, it is on the verge of a turnaround. However, precisely because anything is possible in football, and the market would quickly shift its focus to the upcoming season and, most importantly, the operational figures for Borussia Dortmund after the championship, investors should not rush into anything here. Investing in tranches has always paid off in turbulent times.
BYD: Industry leader with a good starting position
In a certain sense, there is also some turbulence at BYD. Like Borussia Dortmund, the share rallied after a long dry spell. We remember: For months, the exit of US star investor Warren Buffett weighed on the share price. However, many ignored that Buffett had already been invested for around a decade. Since it became clear how weak the Western carmakers are in the Chinese market, especially in e-cars, more investors are turning their attention back to the shares of BYD, which also stands for energy storage for houses and chips for cars. Unlike Borussia Dortmund, however, BYD's prospects cannot be clouded by a "shirt-pull" in the 91st minute or the famous "Bayern-luck". The BYD share has catch-up potential after weak months with an operationally favourable starting position. More investors should realize this in the coming weeks.
Defence Metals: Rare earths from Canada - fund gets in on the action
However, just like in football, there are few consistent winners in the stock market. Despite the promising prospects for BYD, governments are increasingly getting serious and paying attention to the sustainability of supply chains. In France, subsidies for e-cars are to be made dependent on this. Chinese manufacturers could then no longer be subsidized. Companies like Defense Metals could benefit indirectly. The Canadians are pushing ahead with their Wicheeda rare earth project. Only recently, they managed to close a financing of CAD 12.5 million. RCF Opportunities Fund II LP played a key role in the financing round with a share of CAD 6.5 million. "At Resource Capital Funds, we are committed to investing in unique and high-quality opportunities in the mining industry, and we are pleased to support Defense Metals as an outstanding rare earths developer with a highly strategic asset in North America as the market continues to sharpen its focus on the supply of these critical metals," commented Russ Cranswick, Partner and Head of RCF, on the transaction.
Defense Metals intends to use the new funds to explore Wicheeda further and complete a preliminary feasibility study. Then the economic key data of the project will become clearer and further investors might be interested in the property. The commitment of the RCF Opportunities Fund II alone is a positive signal. Rare earths from safe regions are considered to be in particularly high demand. In addition, Defense Metals wants its Wicheeda project to be sustainable and meet Canada's strict environmental requirements. This could ultimately be decisive for the attractiveness of potential end products on the world market. After the share price of Defense Metals has recently fallen back a little, it could go up again after the completed financing round.
While stocks like BYD are already picking up, Defense Metals could react with some delay. The reason for this could be the lower market capitalization and the comparatively early project status - the more speculative a share, the more cautious the market. However, the recent price gains should make investors sit up and take notice. Keeping stocks like Defense Metals on the radar may be worthwhile even in the medium term.
Conflict of interest
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