In the junior resource sector, picking the right company is only half the battle. The other half – often the more difficult half – is determining how much capital to allocate to that idea.
At The Circle, we believe that position sizing is the firewall between a speculative gamble and a disciplined investment strategy.
To give our members more insight to how we allocate capital, we have developed the Allocation Lens. You will see these icons appear next to the companies we analyze in our newsletters and on our dashboard.
When we look at a company based on its fundamental value, management team, and asset quality, we assign it a "Standard" weighting. As our conviction grows, we fill in more of the logo with our standard charcoal and grey slices.
This represents an initial entry or a "watchlist with skin in the game" position. We are interested, but we are likely waiting for more data, a specific permit, or a technical breakout before committing significant capital.
The thesis is tracking well. We have moved beyond the initial speculation phase and are comfortable holding a moderate position while the story develops.
This is a standard weight for a company we believe in. The risk/reward profile is balanced, and it has earned its place as a staple in our model portfolio.
We see significant upside and have high confidence in the management team's ability to execute. This is a "heavy" weighting for us, implying we are willing to weather volatility because the thesis is strong.
This is a rare allocation. It implies that multiple factors – technical, fundamental, and macro – have aligned. We view the downside as limited relative to the asymmetric upside potential.
Sometimes, a company isn't just a good hold; it is sitting on a powder keg. When you see a Golden Slice in the Allocation Lens, it signifies Asymmetry.
The Golden Slice indicates that while the base allocation (the charcoal slices) is justified by fundamentals, there is a specific catalyst — such as (but not limited to) drill results, a potential buyout, or a permit approval — that could cause the stock to re-rate aggressively.
We provide this Lens so you can instantly gauge how we view a company's place in the hierarchy of risk and reward. It brings transparency to what we do, allowing you to see not just what we like, but how much we like it.