What the fund pros are buying.

It’s useful to check the top holdings of their funds for stock ideas. You might also do so as part of your research on a fund. Today, we look at NexGen Global Resource (nexgenfinancial.ca).

More about the fund

The $10.4-million natural resource fund has been managed by Jonathan Baird of NexGen Financial Inc. since inception in June, 2008. The fund gained 72.4 per cent in 2010 compared with an average of 33 per cent for its peers.

Mr. Baird, a value-oriented investor who focuses on small to mid-sized companies, remains upbeat on the natural resource sector, even though it may experience pullbacks. The intervention by the U.S. Federal Reserve Board (through quantitative easing) and other central banks since 2008 will prove to be inflationary, and create “further volatility in currencies,” he suggested. “The U.S. dollar, I think, is in a long-term bear market, which has proven in the past to be bullish for resources.”

Commodity prices will continue to rise because of increased demand by emerging economies such as China and India amid tight supplies, and that should bode well for resource stocks for another five to six years, he added. Precious metals and oil stocks are key areas of focus in his fund. While the price of gold has tumbled recently, he sees that as a “correction in a long-term bull market.” He expects the price of oil, which closed Tuesday at $90.77 (U.S.) a barrel in New York, to hit the $150-range in about three years. The risk to that scenario is a major world recession, but “that is less likely because of the policies of the central banks,” he said.

What did we find?

Triple-digit gains for eight companies over the past year, although several started out as penny stocks.

Mr. Baird sees more upside forKaminak Gold Corp.(KAM-X3.000.062.04%)his favourite Yukon gold exploration play. “The Yukon is going to be a very active area this year for gold, gold-silver and some base metal exploration,” he said. “I like the management. They have roughly $20-million (Canadian) in the bank so they are well funded, and they have made some discoveries. It may also be a takeover candidate.” The stock could hit $6 a share by year end, he suggested.

Champion Minerals Inc., (CHM-T3.090.3613.19%)an iron ore exploration play in Labrador and Quebec, could be also be a potential takeover target too, he said. “It has already had substantial exploration success. Based on the prospects for adding more iron ore reserves, combined with what they have already discovered, I think it is trading very, very cheaply compared to other iron-ore related companies.” The stock could reach $4 a share by year end, he said.

Mr. Baird also likesTag Oil Ltd. (TAO-X7.300.182.53%)an explorer of conventional and shale oil in New Zealand. “On good chunks of their land, there is actually oil seeping up to the surface, which to me is a good sign,” he said. “The company has a sound balance sheet, capable management and the land is very, very prospective.” It has made some oil discoveries, and will likely produce 1,500 barrels a day by the end of this year, although that could be a low number depending on drilling success, he added. The stock could hit the $10-range by year end, he suggested.