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Century Management's Van Den Berg Favors Miners Despite Selling in Q3

Century Management founder Arnold Van Den Berg (Trades, Portfolio) drew much attention at the beginning of the year for buying a slew of low-priced mining companies. The sector had lost half its value in the previous five years, while gold also suffered - falling about 35% from its peak in 2011 after a historic rally to the start of 2014.


Van Den Berg has situated 21.8% -- doubled from 10% in the first quarter - of his portfolio into the Basic Materials sector, making it his second most substantial sector investment behind Industrials, which comprises 22.4%.

His third quarter portfolio released Monday, however, showed a great deal of selling. Of the 19 mining positions he holds, he reduced the size of 14.

Scott Van Den Berg, president and COO of Century Management, explained to GuruFocus that they continue to like the sector:

"We continue to own gold in the same percentage that we have for most of this year. Minor reductions you might have seen were caused by us selling one gold stock only to buy back another or from a few clients specifically asking us to sell the minors. I don't think either of these reasons should have any material change in our overall gold holdings though. Matter of fact, we are adding to some of our names. So the bottom line is we continue own and hold our gold positions and have not reduced our position size."

In February, Van Den Berg said gold mining companies appealed more to him than the metal they generated, particularly with his view of the economy, in a presentation titled "Inflation, Gold and Gold Mining Companies:"

"By analyzing the gold mining companies on an individual basis using price-to-book and price-to-sales ratios, as well as our proprietary resource valuation models, we see many of the gold mining companies trading as if the price of gold is $800 to $900 per ounce rather than its current trading range of $1,225 to $1,300 per ounce. Relative to the price of gold, we believe the miners offer a tremendous value today."

The price of gold closed at $1,209 per ounce on Tuesday - about where it closed at year-end 2013.

Gold SPDR ETF price history (GLD)

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The gold positions Van Den Berg mentioned that they increased in the third quarter were Comstock Mining Inc. (LODE) and Seabridge Gold Inc. (SA).

Comstock Mining Inc. (LODE)

Van Den Berg purchased increased his position in Comstock Mining 21.51% to 16,587,119 from a previously held 16,587,119 shares. The holding represents 22.41% of the company and 2% of Van Den Berg's portfolio.

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Comstock Mining Inc. was incorporated in Florida in 1999 and reincorporated in Nevada in 2008. Comstock Mining Inc. has a market cap of $97.200 million; its shares were traded at around $1.14 with and P/S ratio of 3.08.

Seabridge Gold Inc. (SA)

Van Den Berg increased his position in Seabridge Gold by 34.1% to 1,168,024 shares, from a previously held 1,168,024 shares. The position represents 0.93% of the portfolio and 2.48% of shares outstanding.

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Seabridge Gold Inc., a British Columbia corporation, was incorporated on Sept. 4, 1979 under the name of Chopper Mines Ltd. Seabridge Gold Inc. has a market cap of $377.1 million; its shares were traded at around $7.73.

For more of Van Den Berg's stocks, visit his portfolio. Not a Premium Member of GuruFocus? Try it free for 7 days here.

This article first appeared on GuruFocus.

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