June 26, 2025

Portfolio Change: Mitsui (MITSF) – Move from Buy a Half to Sell

RIP Fred Smith

It was a quiet week for Explorer stocks as mega tech momentum stocks have led a sharp rebound from the lows of April’s tariff-driven market pullback. This has led the broader markets to close near all-time highs.

But this is nothing compared with Spain’s IBEX 35 index, which is up almost 40% year-to-date, crushing the Nasdaq’s anemic 4% gain. Spain is now Europe’s fastest-growing major economy with electricity prices helping manufacturing and logistics. Spain brought in 94 million visitors last year and I was one of them. In 2024 alone, 170,000 people migrated from Latin America to Spain, further propelling growth and productivity.

Spain is but a cog in the expansive FedEx distribution machine. It was sad to see Mr. Frederick Smith, the founder of FedEx Corporation (FDX), pass away this week at the age of 80.

What an inspirational life of adventure and accomplishment.

Smith overcame a bone disease as a young boy, learned to fly at age 15 and after Yale served two tours in Vietnam, where he was a platoon leader and forward air controller earning a Silver Star, Bronze Star, and two Purple Hearts.

He established in the 1970s FedEx’s domestic distribution network for overnight package and letter delivery centered in Memphis. Then FedEx introduced the first international priority delivery service in Asia which was more than 300% more profitable than domestic services. Smith stayed at the helm of FedEx until age 77.

It is almost funny that when he was a student at Yale in 1965, Fred Smith wrote an economics paper that outlined his idea for an overnight delivery system to beat the U.S. postal service. His professor gave him a gentlemanly C.

The FedEx elevator pitch was “when it absolutely has to be there overnight,” which attracted substantial venture capital. The runway was not smooth and when the company suffered cash flow problems, Smith covered part of the gap using $27,000 that he won playing blackjack.

Tensions with key FedEx client Amazon mounted as the retailer’s business exploded and Jeff Bezos built out his own warehouse and delivery operations, even leasing cargo planes. In 2019, Smith decided he didn’t want to deliver packages for a rival – and ended the contract.

Fred Smith was active in politics and brave about expressing his pro-market view that he favors “no tariffs, no subsidies” trade. Mr. Smith highlighted how robust trade played a key role in America’s and the world’s tremendous spurt of progress. He was clear-eyed about China, saying, “You can’t pretend that a mercantilist state like China is a free trader. It’s not.”

He often sent warning shots to protectionists linking American innovation, deregulation and trade liberalization to a half century of tremendous economic growth and prosperity.

America and FedEx played a leading and central role in this adventure.

Other key developments were the invention of the container and the container ship which cut the cost of trade by a factor of 50X. The development of fiber optic cable meant communication could circle the globe at the speed of light, creating our global financial market – the engine of capital, investment and economic growth. The U.S. deregulation of airlines, trucking, and rail all led to much lower logistical costs and was the fuel that propelled FedEx. The Boeing jumbo jet alone cut overseas travel costs by 70%.

FedEx now averages about 17 million shipments per business day throughout its 200-country network.

Should you buy this premium logistics stock? It is tempting as the stock is down 19% this year and, at 225, down from a 300 high. FedEx has proven its ability to adapt to new trends and technology.

But given trade friction and economic uncertainty, I would put it on your watch list and be a buyer at 200 if it gets there. Next week’s Explorer issue will come with a new recommendation.

Explorer Weekly Stock Commentary

Below is a brief update on each Explorer stock. Any changes in ratings will be highlighted. This section is all you need to read each week.

Explorer Disrupter Recommendations – need to watch more closely and have a 20% trailing stop-loss in place.

Agnico Eagle Mines (AEM) shares were up again this week. Agnico has low-cost, high- quality mines. Geopolitical uncertainty, inflation, and central bank purchases have been the primary factors driving up demand for precious metals and real assets. Buy a Half

Banco Santander (SAN) shares were up 1.6% this week buoyed by a strong domestic economy. Spain is now Europe’s fastest-growing major economy. Santander also announced it sold seven branches in Pennsylvania this week as it ramps up its digital strategy in America. Buy a Half

BYD (BYDDY) shares were steady this week as it was reported that BYD is now selling as many vehicles as Tesla in Europe. Last year, BYD surpassed Tesla’s revenue, generating $107 billion and $5.6 billion in profits. Buy a Half

Coeur Mining (CDE) shares gave back 4% this week. This stock is driven by institutional investors that collectively own 74% of the company’s outstanding stock. Coeur is a mining company that explores gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. Unlike gold, which is used mostly as a store of wealth and in jewelry, the bulk of silver demand, about 80%, comes from manufacturers. Buy a Half

Dutch Bros (BROS) shares seem to be taking a breather with little news except that the coffee store chain is gaining momentum with its Order Ahead initiative. It is targeting 2,029 stores by 2029, and believes it has a total market opportunity of 7,000 locations. Hold a Half

Luckin Coffee (LKNCY) shares were up 3% this week as the company scales up in China and Asia at an impressive rate. In the first quarter, it opened 1,757 new outlets for a total store count over 24,000 as Starbucks sits at 7,500. Luckin launched a new summer drink this month – the Coconut & Jelly Latte. Buy a Half

Mitsui (MITSF) shares were unchanged again this week. I do not see a short-term catalyst that will lift this stock even though it is trading close to book value and only 10 times forward earnings. Let’s sell. Move From Buy a Half to Sell

Sea Limited (SE) shares have almost quintupled off their 2024 lows, yet the stock remains 58% below its 2021 highs. I suggest taking partial profits to protect gains. Sea is an e-commerce, gaming, and fintech company centered on the dynamic Southeast Asian region with a population of 700 million. Hold a Half

Explorer Dominator Blue-Chip Recommendations – More Buy and Hold

DBS Bank (DBSDY) shares were up a bit this week. Southeast Asia’s biggest bank has a market value approaching $100 billion highlighting its financial strength and shareholder stability. Retail investors own 46% of shares and private equity is next with a 28% stake. Buy a Half

International Business Machines (IBM) blue-chip shares have delivered an impressive 66% total return over the last 12 months. IBM’s history of dividend payments stretches back more than a century, to 1916. IBM is building a quantum computer that is expected to have 20,000 times the computational power of today’s quantum computers. Buy a Half

Visa (V) shares were down 3.5% this week no doubt due to concern over new competition due to the recent Congressional action on stablecoin legislation. Keep in mind that Visa provides banks and consumers with financial incentives to keep using their products. In addition, both Visa and Mastercard enable partners to offer cards whose payments can be funded with cryptocurrencies, including stablecoins. Visa is expected to report its third-quarter earnings on July 22. Buy a Half

Watch List – Stocks we like but do not follow day-to-day

ConocoPhillips (COP), Franco-Nevada (FNV), MOOG (MOG-A)

Explorer ETF/Fund Positions

Grayscale Bitcoin Trust (GBTC) offers investors a way to track very closely to the day-to-day or “spot” movement of bitcoin prices. For aggressive investors comfortable with volatility. Buy a Small Allocation

JPMorgan Equity Premium Income ETF (JEPI) offers double-digit yield coming from both option premiums and dividends using a value-focused strategy. Buy a Full

Oberweis Micro-Cap Fund (OBMCX) fund stands out for several reasons. The fund’s sound investment process and strong management team earns it a rare Morningstar Medalist Rating of Gold. Over the past five years it has posted an impressive average annual return of 24%. Buy a Half

ProShares MSCI EAFE Dividend Growers ETF (EFAD) seeks to capture the performance of companies with at least 10 years of consecutive dividend growth. Buy a Half

Sprott Platinum and Palladium ETF (SPPP) offers direct exposure to both platinum and palladium which are selling at a sizable discount to gold offering potential upside appreciation. Buy a Full

Stoxx Europe Total Market Aerospace & Defense (EUAD) tracks an index of top defense contractors including Leonardo, Rheinmetall, and BAE Systems. Buy a Half

VanEck Junior Gold Miners ETF (GDXJ) is a basket of junior miners that has 84 positions with the top 10 accounting for 44% of total assets. Half of the stocks are Canadian, 21% Australia, and 7% from South Africa. Buy a Half

WisdomTree Emerging Markets High Dividend Fund (DEM) offers a high dividend yield and some of the highest quality emerging market stocks. Buy a Half

Explorer Stocks Summary

Brief company summaries that will not change week to week.

Agnico Eagle Mines (AEM) follows a conservative strategy and with a history spanning more than 60 years, and now operates a sizable portfolio of 11 assets located in four countries. Management forecasted gold production of approximately 3.45 million ounces in 2024. The company estimates it has about 54 million gold ounces of proven and probable reserves. Furthermore, Agnico Eagle has paid a dividend for 41 consecutive years with a dividend compounded growth rate of 23% per year since 2005.

Banco Santander (SAN) was founded in Spain in 1857. The bank’s U.S. headquarters is in Boston, but its strength lies in Latin America and Europe where it has more than 8,000 branches with 171 million customers as well as 58 million digital accounts. About 55% of deposits and loans are in Europe with the balance in Latin America.

BYD (BYDDY) Most of BYD’s sales are still in China but it has a big international expansion underway, including in the U.S., Europe, and Asian markets. BYD will also launch a next-generation Blade battery in 2025, with longer range and faster charging. That, along with various other models, could help rev up BEV sales growth next year. BYD expects solid-state batteries for high-end models by 2027, but not fully reaching lower-end models until 2030-2032.

Coeur Mining (CD) is a mining company that explores gold, silver, zinc, and other related metals in the U.S., Canada, and Mexico. For many precious metal investors, silver is seen as gold’s “little brother,” but it has a long history as a means of payment going back centuries as the Spanish silver dollar was once the reserve currency of the day. In 2025, we passed the 100:1 mark for only the fourth time in a hundred years – a strong signal that silver may be underpriced. While gold has reached an historic high, the silver price is almost 50% off its all-time high in U.S. dollars per ounce.

Watch List: ConocoPhillips (COP) is a global energy industry giant and one of the largest independent exploration and production (E&P) companies in the world, as measured by production levels and proved reserves. The company, founded in 1917 and based in Houston, has operations in 13 countries, although almost half the company’s production is derived from U.S. sources.

DBS Bank (DBSDY) is one of the largest banks in Southeast Asia with a presence in 19 markets. It is headquartered in Singapore, with its main listing on the Singapore Stock Exchange, and is the largest constituent of the Singapore Straits Times Index. The Government of Singapore established DBS in July 1968 and its largest and controlling shareholder is Temasek Holdings, which is one of two large sovereign wealth funds controlled by the Government of Singapore. DBS has assets of roughly $750 billion and a growing presence in the three key Asian areas of growth, which it defines as Greater China, Southeast Asia, and South Asia, meaning India. It is the largest and strongest bank in Southeast Asia and the leading consumer bank in both Hong Kong and Singapore.

Dutch Bros (BROS) is an operator and franchisor of drive-through coffee stores, with 1,012 stores as of the end of the first quarter, including 30 that it opened in the quarter. It’s expanding at a steady pace, expecting up to 150 new stores in 2025, and it envisions up to 7,000 stores over the next 10 to 15 years.

Watch List: Franco-Nevada (FNV) is a company with more than half of its revenue coming from gold, but it also offers exposure to platinum, silver, and oil and gas. Franco-Nevada’s focus on royalties and streaming reduces risk and enables it to sidestep the huge capital costs that impact traditional miners. It enjoys cash flow and profits as its mining partners finance and complete exploration and expansion projects. That cash flow enables it to invest in new deals, pay a dividend, and operate debt free. Franco-Nevada has increased its dividend each year since its IPO in 2008.

International Business Machines (IBM) is a blue-chip artificial intelligence (AI) and India play with a nice dividend yield. Known as “Big Blue,” IBM now primarily helps businesses and governments manage their information technology in the cloud era. The stock sells at a discount to the S&P 500 multiple and the information technology sector’s forward earnings multiple. IBM has paid a dividend every quarter since 1916 and has had 30 consecutive years of dividend increases.

Luckin Coffee (LKNCY) is a leading purveyor of coffee and specialty drinks in China. The price of a cup of Starbucks coffee is more than double that of Luckin coffee. In addition, Luckin is adept at adapting to local tastes and launching new products that broaden the market. For instance, it brings to market about 60 new products each year, offering a new drink every week.

Watch List: Moog, Inc. (MOG-A) supplies advanced primary flight controls on the most modern military aircraft. That includes the Lockheed Martin F-35 Lightning II and the Future Long Range Assault Aircraft program. The company’s major platforms include the 787, A350, Joint Strike Fighter (F-35 Lightning II). The company also supplies primary flight controls for the Boeing 787 and Airbus A350 widebody aircraft, as well as business and regional jets from Embraer (ERJ) and Gulfstream, owned by General Dynamics (GD).

Sea Limited (SE) has three core businesses: 1) digital gaming/entertainment, 2) e-commerce, and 3) digital payments and financial services, known as Garena, Shopee, and Monee (formerly SeaMoney), respectively. Garena is a leading global online games developer and publisher. Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. Monee is a leading digital payments and financial services provider in Southeast Asia.

Visa (V) doesn’t extend credit but provides the plumbing for financial payments and communications throughout the world. Visa’s financial infrastructure also underpins much of the world’s commerce. The duopoly between Visa and Mastercard is often referred to as one of the best businesses in the world, with insurmountable moats, low operating costs, and plenty of opportunities for unlocking additional value. Visa currently trades at a discount to its archrival MasterCard.

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