HCHDF - Hochschild Mining: Valuation Improving After The Drop

• Hochschild Mining is one of the worst-performing precious metals producers sector-wide, down more than 65% from its Q3 2020 highs.
• The underperformance can be attributed to the company's lack of diversification, rising costs, and the worsening situation in Peru, with the election of a Socialist President.
• While the company did meet FY2021 guidance, costs are expected to increase further in 2022, giving Hochschild much weaker margins than the industry average.
• At a double-digit free cash flow yield, there's no disputing the stock is cheap, but I still see Hochschild as a high-risk, high-reward bet, and I prefer low-risk, high-reward to justify entering new positions.

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