is...probably trying to buy a stock
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SSK...Is there a easy way (all in one place) to find out how Mr. Sheep has performed throughout each of the contests? I'm just curious how the most popular picks have done in the past.
That makes absolutely no sense!
I wasn't going to enter this discussion but now I guess I will. I personally do not short either (even though I have recommended stocks for a long/short fund before) for two reasons: 1) unlimited downside and 2) my investment time horizon is too long. As Hweb said "any skilled trader" I'm neither skilled nor a trader. :) I typically hold investments 1-2 years.
I agree that WoodMac has the best data. I think the big problem though is that companies get too lazy and just assume what WoodMac has is gospel. I do my own research and make my own assumptions. I think there are a lot of examples where good research could easily prove that WoodMac was wrong (they were either too conservative or too aggressive).
I'd definitely take $3,800 zinc though!
Dr airtime
I clicked on the link, but I don't see where WoodMac is calling for $3800 zinc (though I have heard that before). I think the chart is interesting because it shows that zinc inventories bottom this year, for that to happen there would have to be demand destruction because as far as I can see there is no meaningful supply coming on line (Glencore said last week that there is no chance they restart idle capacity).
Yes, that Reuters article is a little less bullish, but you can't argue that inventories are falling. Inventories have fallen about 25% YTD and days of inventory have fallen to just 14.6 days of supply. I expect that inventories will fall to ~10 days of suppy some time in the 3rd quarter and the real move in prices should start then. The following article talks about the decline in Chinese inventories and the effect of smelter shortages.
http://www.stockhouse.com/news/newswire/2017/04/28/analysts-ponder-26-drop-chinese-zinc-inventories
Four years is a long time! As I said in a previous post, if you call 1.5-2 years a trade, then I totally agree. I think Trevali is a double from here.
I don't know a lot about CLB, but I know that anybody that knows the energy market well loves it!
Maybe Einhorn is creating a buying opportunity. I currently own SLB (the other one that everyone loves).
NSU
I've been following Nevsun for a couple of years. I think there are a couple of things going on:
1) The company went from a crazy good balance sheet and a big dividend to a much smaller dividend and spending on the Timok project which is shrinking the cash balance.
2) The copper circuit at the Bisha mine has been having some big problems over the last couple of quarters and is hurting profitability (as in no copper coming out).
3) New CEO probably creates a little risk. Normally new CEOs like to come out and set the bar very low so they can beat it. However, things have been so bad for NSU that I can't figure out what else he could kitchen sink.
Supposedly this Timok project is one of the best copper projects in the world, but I think people are worried about the cash burn rate.
I own a small position in my natural resources account as well as a small one (only ~2%) in another, larger account. I've been thinking about adding some, but I keep running into other ideas that I'm interested in.
I don't see anything wrong with that Barron's article. The article says that the last major purchase. They can define major however they would like. And if they are using the March 2015 purchase as the last major purchase and the stock went down to 1.26 then they're telling the truth. This is just another example of the Cliff's CEO being a whack job.
Base metal stocks are getting killed today. Trevali, Hudbay, and Copper Mountain - 3 of my favorites - are all down ~10%.
I agree! When I did my flip last year with my father n law, we generally found the inspectors to be nice guys. My father n law is a pretty stoic guy but when the last inspector approved what we did he was just plain giddy! That moment was probably my favorite thing to see during the whole flip!
Incredible trade r59! Stock trading in the $22 after hours.
"Mentioned shorting US Steel and CLF"
Sounds familiar
You have to sell the dry bulk hype. The market is crazy with these guys. So glad (aka lucky) I sold a bunch in the $6s and I'm waiting for lower prices to buy back in.
I've been following the company for 6-7 years. The company has sold assets for next to nothing and has unloaded most of the junk that previous management took on (met coal, chrome, etc.), but in the grand scheme of things CLF is still a high cost player. I can't remember what the mix of domestic sales vs international sales but on the international stage they are high cost. I also believe that blast furnace production in the US is in secular decline and CLF will continue to sell their domestic iron ore to a smaller and smaller customer base over time.
I think blast furnace producers and CLF are a great short.
CCJ
It was actually a little worse than expected. Expectations were for (.01) but they were (.07). It doesn't seem worth the stock going down 9%-10% though. Cyclical bottoms are messy. I wasn't able to listen to the replay of the conference call yet because it wasn't available when I tried yesterday, but I plan to listen today.
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/uranium-producer-cameco-posts-loss-on-weak-sales/article34841667/
Added to my CCJ position today in a pretty big way. Now it's my 2nd largest position behind SLB (actually the largest in my natural resources account).
I was wondering the same thing. Is there a board created yet?
I've collapsed these last 3 weeks so I'm out of this one.
KiK...you're too smart for DRYS. DRYS is absolutely scammy. Play one of the better guys like DSX or SBLK. DRYS will just continue to steal from shareholders. I honestly can't believe the CEO is not in jail.
Yeah, I agree. That's not atypical in dry bulk land though.
bbotcs...SLB
Definitely meant to write "sleep well with" not "sleep with" haha.
I'm not in it for a dividend increase, though I guess it would be nice. I think when oil prices are back to $60 again, I think it will be trading in the mid $90s.
Now I wonder if they're watching this board. Andrew just accepted my connection request.
I sent him a connection request several weeks ago but he has not accepted. Here fore I can't access his contact info.
25 connections in common and members of the same two groups but he didn't accept it (I can see that he viewed my profile).
I have not tried him. Do you have contact info?
CLF is a dog and the CEO is a whacko. It's a high cost player in a industry near the top of the current cycle. I think it's a short.
SLB
I just bought some big positions in SLB in a couple of my accounts (8+% in one account and 27% in another account...though this account is much smaller than the first account). Overall, SLB is now my largest holding across all accounts (7.8% of all of my holdings + cash). I think the stock can go to $95 or so. It's not a monster gain, but this is an oil stock that you can sleep well at night with.
Competitive position
SLB dominates the competitive landscape in oil field services. It is a leader in more than 50% of categories that it participates. This dominance driven by strong R&D spending (R&D spending more than top 3 competitors combined). SLB is also gaining share. Because of company’s many issues, WFT’s share has been in play and SLB has benefited.
Management
SLB has a very strong acquisition track record (Acquisitions have historically been well timed including the CAM acquisition). Synergy estimates have typically been exceeded for these acquisitions. SLB margins are also consistently above peers (SLB has been able to expand margin gap between its closest peers). SLB also reacted swiftly to downturn and generated $7.5 billion in free cash flow in the downturn in 2014-2016, more than all 3 competitors combined.
Industry
The oil market has clearly been in a big downturn for the last couple of years. E&P margins have been negative for the last two years. E&P capex was down ~25% in 2015 and 2016. This is the first time E&P spending has declined in back to back years since 80s. As a result of this lack of spending, the reserve replacement ratio was likely below 100% in 2016 after weakness in 2015. For example, Exxon replaced only 85% of its production in 2016.
The pain in the Oil Field Services (OFS) industry has been severe.
Supply is coming out of OFS companies, which is what I'm always looking for in these cyclical industries. Capex/D&A ratio will likely be below 100% for 3rd straight year in 2017. OFS employee count has declined 40% since 2013. According to recent conference calls, SLB and competitors have no spare capacity.
Outlook
Tightness of supply should result in improved pricing in US shale business in 2017-2018. As a result of this tightness, SLB is guiding for 65% incremental margins coming out of the downturn. CAM integration will be important driver and the company is guiding for $600 MM in first two years.
Risks
US shale is the swing capacity in the oil market. The rig count has nearly doubled from trough as prices oil prices rebounded to $60/barrel.
I believe that US shale will continue to put a lid on oil prices and hinder international investment. SLB’s exposure to US shale is lower than their peers. International projects will need to be incentivized for next leg of growth (prices likely need to be $65-$70 in order for industry to see big international projects. In addition, revenue growth might be expensive because underspending by all of the industry players, capex and opex spending will need to increase as equipment is brought back (though SLB invested more relative to competitors so this should be less of a risk for the company.
At $85, I thought that SLB was historically expensive and estimates were pricing in repeat of 2003-2007 scenario. Now, at current prices, I believe that investors are pricing in a much more realistic scenario. This is why I've chosen to invest in this best in class company. This is arguably one of the best run companies in the world.
Rough day today!
NGD getting whacked
CCJ (my biggest position) down 4%
Hudbay (another big one for me) down 5%
Despite being 28% in cash in my natural resources account, I'm still down 3% today. It might be my worst day in 18 months.
AYSI...
I really really want to like AYSI. However, I have a couple of personal rules that I like to stick to:
1) I don't invest in pink sheets.
2) I don't invest unless I talk to the company.
I would have been willing to get past #1 since they do have quarterly filings on the otc website. However, I refuse to ignore both rules.
A couple of weeks ago I stayed up until 11:30 pm so that I could call Sam in Australia and ask him a bunch of questions I had. He answered the phone, and said he was not interested in providing insider information. I seriously thought he was crazy. As a former analyst of ~11 years for a $50 billion investment manager covering the mining and equipment sectors, I think I know what insider information would be, and trust me none of my questions were anything close. He then said I could email him the questions and he'd get back to me. So I stayed up another 45 minutes to write my very long email that would have been much faster to do over the phone. The next day, no response, then the next day and the next day. After two weeks I emailed him again to ask him to please answer my questions. Still no response. Then on Monday night, I again stayed up til 11:00 pm to try to call Sam again. I left a voicemail this time, and I still have no response.
With this kind of investor response, I can only assume the worst. Like every other pink sheet stock, AYSI is a scam. It may not really be a scam (and I hope for your sakes that it's not), but that is always my initial assumption unless I'm proved otherwise.
I'm exactly the kind of investor that AYSI should want to have. I'm a long term shareholder that knows the industry very well. If they can't talk to someone like me, they are not worth investing in IMO.
NGD had a good report today with current operations, but they announced a delay with getting the tailings permit...another setback for Rainy River. The stock is probably going to be down today.
Checkmate...this is my personal opinion (from a guy that really focused on producers and really doesn't have any good idea of how to invest in juniors). I don't think an acquisition is in the best interest of shareholders. Unless the acquisition would somehow improve their odds of developing their graphite mine, I think it would show a lack of focus by management and possibly a negative indication of what they think about the ore body.
I've been consistently intrigued by DNI from your posts, but something about it just doesn't sit right with me.
Value...DSX
I actually hadn't even seen the equity offering from last week. I have mostly just been watching the chart to see when I want to buy back the shares that I sold. I haven't bought any back yet. I agree something in the high $3s would be very enticing (closer to the 200 day).
With that said, the equity offering is very surprising. The company is the only dry bulk company that I know of that hasn't issued equity since 2009. They have been the best allocators of capital in the industry and have really focused on buying ships in the bottom of the cycle. The only thing that I haven't liked about this management team (up to this point) is when they bought back shares in DCIX.
I have an email into my guy at DSX that I used to talk to all of the time.
Bob...thanks for this excellent post last week. I looked at the frac sand guys a couple of years ago, but I don't really like the barriers to entry for the industry. Unlike say, a copper mine which can take as long as two decades), it seems like anyone can just throw up a frack sand mine in about 6 months.
What do you think about the move to regional sands? US Silica has made two regional sand acquisitions in the last couple of years (NBR last year) and claim that regional sands (which are thought to be lower quality or brown sand) have gone from ~16% to 34% (and even said 41% in their NBR acquisition presentation). Northern white is losing share to the cheaper stuff.
SLCA had a presentation at their investor day about regional sands that you can check out here:
http://phx.corporate-ir.net/phoenix.zhtml?c=247793&p=irol-presentations
Zinc...
Teck reported today. Teck owns the Red Dog mine which is the largest zinc mine in the world (based on 2015 production). Teck lowered guidance for Red Dog by 12% (60k tons). 60k tons would be a top 20 zinc mine in the world. It's a big deal and probably a big reason why inventories have been falling rapidly over the last month or two.
From 4th to 6th to 12th the last two weeks. Like I said, I should have frozen DSX!
Now that I'm done with replacing those tiles (which looks really good by the way), I've got a pretty distinct color difference between the new grout and the old grout (they were both originally the same color). Anyone have a good grout cleaning idea, preferably one that doesn't require me to be on my hands and knees with a tooth brush?
Ok...I understood the first paragraph, but I'm pretty sure you made up everything in the 2nd. Haha!
After a pretty horrid day again yesterday DSX had a pretty weak attempt at a bounce today. It seems like it wants to keep going lower. I still haven't bought any shares back.
If anyone else has any thoughts on the technicals I'd be interested in hearing their thoughts.
On another note, has anyone been able to open the Trevali presentations on their website? I wanted to check a couple of things in their presentations, but I haven't been able to open them.
I personally think 48 months is probably too long of a time horizon. I believe that from absolute bottom of the cycle in prices, a 3 year time horizon is the best strategy (48 months from now would be ~2.5 years too long in my opinion). I expect to be fully out of Trevali by year end 2018 at a price of north of C$2.00.
Lone Clone...
I have been around the commodity markets for a while and I would say I'm much better at understanding the larger, producing companies (Trevali isn't large, but it is a multi-mine operation so I put it in this category).
I agree that companies have their core competencies that they typically focus on. Most companies do not do a good job at going from exploration to feasibility to developer to producer well. That is irrelevant to the discussion on Trevali IMO.
I will admit that buying Trevali at this point is a little atypical of my normal style. Typically I focus on buying in the midst of the deepest darkest pain for the industry when analysts are saying that the industry is dead and prices will never improve. A good example of this is the met coal industry. I was buying TECK in the $4s early in 2016 when all the analysts said that met coal prices are never going above $100 again. Now met coal prices are at $300 and I sold the last of my TECK shares in the $26s.
For the zinc market, as I mentioned in my post on Trevali, I believe that prices hit $1.50 before they hit $1.00 again. I think with inventories at just 16 days of consumption, the market is getting very tight. I have not seen any significant new zinc projects are going to come online in the next 1-2 years that will crush the zinc market. Will their be mine restarts? Of course there will be, but I don't think that will be enough to significantly increase inventories in the industry and until prices are high enough to incentivize new zinc projects, this market will continue to do well.
I definitely understand how cyclical these commodities are, but I'm pretty confident that this cycle still has plenty of legs. I'm primarily looking for 1-2 things for this story to blow up: 1) new zinc project announcements and 2) a significnat decline in Chinese demand. If you have anything on either of those two topics, I'd love to hear it. The back and forth can always make us better investors.
It shows up fine for me. I'm not a freebie though.