Michael Goldberg of the Collins St Value Fund is renowned for his dynamic investment strategy, eschewing the “set and forget” approach. Three years ago, he made a bold move into gold, a decision that has since proven remarkably prescient. Today, Goldberg remains optimistic about gold’s potential, albeit with a touch more caution.
“I’m not sure that gold is properly represented in most people’s portfolios,” Goldberg remarked. “I think there’s probably upside. How much upside? I don’t know.”
This cautious optimism is indicative of Collins St’s broader investment philosophy. The firm was ahead of the curve on gold, choosing to invest in undervalued gold equities rather than the metal itself. Their foresight extends beyond gold, into sectors like rare earths and AI, which are now gaining significant attention.
Why Collins St Backed Gold Early
Goldberg attributes Collins St’s early investment in gold to several factors. Three years ago, when gold was trading between US$1,600 and US$1,800, the team identified strong tailwinds: central bank purchases, inflationary pressures weakening the US dollar, and a dearth of new mining projects due to financial and environmental constraints.
Rather than speculate on bullion, Collins St sought out undervalued gold equities. “We uncovered companies where costs were low based on prevailing gold prices, yet they were forecasting even lower prices, which we found unreasonable,” Goldberg explained.
“Even with gold now around US$4,000, the market still undervalues many producers because broker models assume long-term gold prices well below spot.”
Managing a Gold Surge
Collins St’s confidence in gold led to a significant allocation in their flagship fund, at times reaching 30–35%. To manage this concentration, they launched a dedicated gold fund, which has seen impressive returns, up 150% since inception.
Recently, they returned capital to investors, with half choosing to reinvest, demonstrating continued confidence in the gold theme. The flagship fund has since reduced its gold exposure to 25%, maintaining a strong conviction while being wary of market euphoria.
Rare Earths, AI, and Strategic Investments
Collins St’s interest in rare earths and mineral sands dates back over a decade, long before geopolitical tensions brought these materials into the spotlight. Their investment in Astron (ASX: ATR) and its Donald Project highlights the strategic importance of non-Chinese rare earths.
“If the Western world doesn’t want to be blocked out by Chinese interests, they need to find a way, and quickly, to shore up some of this material,” Goldberg stated.
In the realm of AI, Goldberg sees it as a tool rather than an investment thesis. AI’s strength lies in pattern recognition, not creativity. Collins St favors companies using AI pragmatically, such as Seven West Media and SkyCity, which leverage AI for targeted advertising and regulatory compliance, respectively.
Stocks Collins St Favors
Based on their June 2025 quarterly report, Collins St highlights several key holdings:
- Astron (ASX: ATR): Backed for its Donald mineral sands and rare earths project, with significant unrealized value.
- Boom Logistics (ASX: BOL): A crane business trading at low multiples, expected to unlock value through consolidation and asset sales.
- Carnarvon Energy (ASX: CVN): Priced for cash, with potential rerating from new partnerships or corporate actions.
- Gold Equities Basket: Including Black Cat Syndicate (ASX: BC8), with potential upside as equities align with gold prices.
- Humm Group (ASX: HUM): A financial turnaround story, with a takeover offer seen as undervaluing the business.
- Litigation Capital Management (LON: LIT): Despite negative sentiment, Collins St sees value in its NTA and pipeline.
- Retail Food Group (ASX: RFG): A franchising group in growth mode, with takeover potential from United Petroleum.
- Select Harvests (ASX: SHV): Positioned to benefit from rising almond prices, with a cost advantage over US producers.
- SkyCity Entertainment (ASX: SKC): A discounted casino operator with potential asset sales and dividend returns.
- Seven West Media (ASX: SWM): An undervalued media group with strong ratings and digital growth potential.
Investment Philosophy and Market Outlook
Collins St’s mantra, “slow is smooth, smooth is fast,” reflects their patient investment approach. While AI and mega-caps dominate headlines, they focus on undervalued small and mid-caps, believing that cash flows will eventually drive stock prices to their true value.
“We want to buy a dollar’s worth of earnings for 50 cents,” Goldberg asserts, emphasizing the importance of intrinsic value.
Despite a seemingly disjointed macroeconomic environment, Goldberg remains optimistic about technological progress improving living standards. He advises investors to avoid permanent errors and maintain a consistent process amid uncertainty.
As the market continues to evolve, Collins St’s strategic approach offers a blueprint for navigating complex investment landscapes, balancing conviction with caution, and always returning to first principles.
