Michael Goldberg of the Collins St Value Fund is renowned for his dynamic approach to value investing. Three years ago, Goldberg made a bold call on gold, a decision that has since proven to be astute. As of now, he remains optimistic about the precious metal’s potential, albeit with a hint of caution.
Goldberg explains,
“I’m not sure that gold is properly represented in most people’s portfolios. I think there’s a lot of excitement now and people are tinkering with it, but you don’t see gold forming a material part of people’s portfolio. I think there’s probably upside. How much upside? I don’t know.”
This blend of conviction and humility characterizes the Collins St team’s approach. While they were early adopters of gold, their strategy focuses on deeply researched equities rather than bullion.
Gold: A Strategic Bet
Goldberg traces Collins St’s gold journey back about three years, when the spot price was around US$1,600–1,800. At that time, few anticipated record highs. The team identified several tailwinds: central bank buying, inflation weakening the US dollar, and a lack of new mining projects due to financing and ESG constraints.
Rather than speculating on bullion, they sought out undervalued gold equities.
“What we tried to find and what we uncovered was a host of companies… where not only were the companies’ costs cheap based on prevailing gold prices, but they were predicting much lower gold prices, and we thought that that was unreasonable.”
Even with gold now around US$4,000, Goldberg argues that the market still undervalues many producers.
Managing a Concentrated Portfolio
Collins St’s conviction in gold grew so large that their flagship fund at times held close to 30–35% in the theme. To manage this concentration, they launched a dedicated gold fund, which has seen impressive returns. Recently, they returned capital to investors, reflecting both a strong belief in the theme and a strategic rebalancing.
The flagship fund has trimmed its gold exposure from 30% to about 25%, maintaining a high-conviction position while being cautious of market euphoria.
“When the market gets excited about a commodity, it makes me a bit nervous.”
Rare Earths and Mineral Sands: Strategic Resources
Collins St’s interest in rare earths and mineral sands is longstanding, predating their current geopolitical significance. The focus is on Astron (ASX: ATR) and its Donald Project in Victoria, which holds critical mineral sands and rare earths.
Goldberg emphasizes the strategic importance of these resources, especially given China’s dominance in global supply.
“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.”
With governmental support, companies like Astron have seen significant gains.
AI: A Tool, Not a Thesis
Goldberg views AI not as an investment theme but as a vital tool for businesses. He dismisses the notion of AI as “intelligent” in the human sense.
“It is just the first time in history that we’ve had a tool that was capable of digesting mountains of data and then recognising patterns.”
In the portfolio, Collins St favors companies using AI pragmatically. Examples include Seven West Media for targeted advertising and SkyCity for regulatory compliance. The focus is on practical applications rather than speculative investments.
Stocks Collins St Favors
Based on the fund’s June 2025 quarterly report, here are key holdings:
- Astron (ASX: ATR): Valued for its Donald mineral sands and rare earths project.
- Boom Logistics (ASX: BOL): A crane business with potential for value unlocking through consolidation and asset sales.
- Carnarvon Energy (ASX: CVN): Priced for its cash, with significant oil and gas interests.
- Gold equities basket: Including Black Cat Syndicate, offering valuation upside.
- Humm Group (ASX: HUM): A financial business with a promising lending arm.
- Litigation Capital Management (LON: LIT): Despite negative sentiment, the NTA and pipeline are underappreciated.
- Retail Food Group (ASX: RFG): A franchising group in growth mode.
- Select Harvests (ASX: SHV): Positioned for margin expansion with rising almond prices.
- SkyCity Entertainment (ASX: SKC): A discounted casino operator with potential asset sales.
- Seven West Media (ASX: SWM): An undervalued media group with strong ratings and digital profits.
Investment Philosophy: Slow and Steady
Collins St’s mantra, “slow is smooth, smooth is fast,” has been tested in a market dominated by AI hype and mega-caps. Historically, Collins St held stocks for under two years; lately, value has taken longer to be recognized.
Goldberg emphasizes first principles:
“We want to buy a dollar’s worth of earnings for 50 cents.”
This means resisting fashionable trends and accepting that cash flows may take time to force a rerating.
Macro Environment and Future Outlook
Goldberg acknowledges the disjointed macro environment, with traditional relationships appearing less reliable. However, he cautions against assuming historical patterns have broken.
“When you’re in it, it feels massive… It’s very hard to know while you’re in it if the patterns have been broken or it’s just your perspective.”
Ultimately, he believes technological progress will improve living standards despite volatility. The key for investors is to avoid permanent errors, take affordable risks, and maintain a consistent process through uncertainty.
