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GOLDEN CAREER ADVICE

from Senior Mining Executive, Brian Szeto, CFA

Winfred Lam, CFA

Brian Szeto, CFA, is a senior mining executive with extensive experience in the mining sector. He shares his career path as an Equity Research Analyst, his reflections on how that experience helped prepare him for senior management roles, and his views on gold as an investment.


Brian Szeto, CFA: CAREER HIGHLIGHTS

• President and Director at Ranchero Gold Corp. 

• Over twenty years of industry experience, including roles in corporate development and equity research 

• Top ranked equity analyst in metals and mining in Canada 

• Joint honours degree in economics and business and master’s degree in economics 


What drew you to the mining sector? 

It was a sector that I fell into, so I guess it chose me. It was only after I got into the industry that I fully understood how mining is such an understated part of the Canadian economy, where Toronto and Vancouver continue to be the mining capitals of the world. 

Mining is known to be highly cyclical and capital intensive. Do you feel like the nature of the sector gave you more chances to differentiate yourself as a stock picker, or did it make your job more difficult? 

Every sector is cyclical. There will be good years, and there will be bad ones. As an Equity Research Analyst, there will be years when you are a fund manager’s best friend and they want to talk to you every day, and there will also be stretches of time when it feels like no one cares what you think. The trick is to be primed and ready, because interest in any sector can turn on a dime. 

How was the switch from sell-side research to senior management in the industry? How different/similar are your current day-to-day responsibilities versus back when you worked in equity research? 

Going from the brokerage business to the corporate side was seamless. I was still dealing with the same brokerages, mining corporates, portfolio managers, and investors. Switching to the corporate side was a natural progression for me, as it was really the only thing missing from my resume as a mining professional. I still wake up at 6 a.m. every day and read every press release that gets published by a mining company. So, in a way, I am still covering and analyzing companies and have a healthy working knowledge of their latest developments. Managing my own company now is effortless because I have been blessed with a great team that is young, hungry, and energetic. It is an absolute pleasure waking up every day and working with such a wonderful team. Our team is based across North America in Toronto, Vancouver, Denver, and Hermosillo. The pandemic has proven that we can all work remotely and be just as productive. Being in management does not mean you have to know everything, but you must be able to put the right people in place in order for the company to succeed. 

Any advice for aspiring analysts trying to break into mining/equity research? 

Analysts who have a finance background may prefer an associate with a technical background, while an analyst with a technical background may want an associate with a more traditional finance background. So there really is no one size that fits all, and it depends on who is hiring. But candidates who are working toward a graduate degree and have passed at least one of the CFA exams always seem to have a leg up on the competition. 

How has the CFA charter helped you in your career? 

Complex transactions happen daily, and being able to quickly understand them and comprehend their impact on a company’s stock is of the utmost importance. The CFA charter has definitely helped me in that regard. As an Equity Research Analyst, and later as the head of the mergers and acquisitions (M&A) department of a mining company, the valuation aspect covered in Level 2 of the CFA Program was by far the most important. That said, this obviously varies depending on which area of finance candidates want to pursue. 

ON GOLD AS AN INVESTMENT 

A large segment of the investment management industry views gold as a non-productive asset—Warren Buffett is a vocal non-believer in the yellow metal. What is your view on the role of gold in an investment portfolio? 

Everyone has a view on gold, good or bad, and in my experience, there is rarely any in-between. As a rule, I do not waste time trying to change people’s views, because feelings get hurt, and you may lose your audience forever. Instead, I spend my time showing compelling investment opportunities to fund mangers and investors who are already strong believers in the fundamentals of the gold sector. 

As a top-rated mining analyst back in your equity research days, what was your secret sauce? 

I always try to be the first analyst to cover a stock. By the time you are the fifth or sixth analyst on the story, there is little value you can add—at that point you are just repeating what the other analysts are saying. Being the first analyst to cover a name also means that you have to be the first person willing to stick your neck out and make a call. I was one of the first analysts to initiate coverage of names like B2Gold, Richmont Mines (now Alamos Gold), Wesdome Gold Mines, Maverix Metals, and Atlantic Gold (now St Barbara). These are investments that have been very successful and have made a lot of money for mining investors willing to invest early. Also, if you are the first to show a story to a fund manager, chances are, you will always be the person they call when they want an update on the stock. 

What is your outlook on precious metals in light of the Russia–Ukraine conflict? 

Geopolitical tensions and heightened inflation expectations have always seemed to move gold prices higher. This is exactly what we’ve seen over the course of the first quarter of 2022. My view is that gold bullion will continue to outperform in the near term. The producers have started to catch a bid, but the non-producers are still lagging. If the price of gold continues to hold up, we could very well see the non-producing explorers/developers significantly outperform the market.

Does the emergence of cryptocurrency threaten gold’s traditional role as a “store of value”?

Cryptocurrency has gotten so big that it does not seem to be going away any time soon, and it has evolved into a brand-new asset class. There is value in cryptocurrency because, as a society, we are giving it value—much like fiat currency and gold. In that sense, they are similar. CFA_Toronto_RGB Milly


FUN FACTS 

What’s your morning routine? 

I wake up early and read the news each day, even when I am on vacation. It is important to stay on top of the latest developments in your industry, whether you’re an analyst, head of an M&A department, or running your own mining company. Knowing your competition is key to success. 

If you could do it all over again, what business would you get into? 

I would choose mining all over again. It is an industry that has treated me very well and allowed me to travel the world (looking at mining projects and operations via site visits), and some of my closest friends and mentors are people that I have met in the industry. 

Winfred Lam, CFA, is a Senior Product Manager at BMO Global Asset Management and a graduate student at the University of Pennsylvania. 

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