AI
Friday, July 11, 2014 10:18:52 AM
MCP...target $7...?...
I'm going to think about this one...
Molycorp: Free Fall Halted By Positive Analyst Comments. Will A Short Squeeze Ensue? (MCP)
Molycorp – Inflexion Point?
Posted on July 10, 2014 by Christopher Ecclestone
The reputed statement of Mark Twain to the effect that “Reports of my death have been greatly exaggerated” comes to mind when the oft-repeated reading of the eulogies for Molycorp takes place. Once again we have a funeral scene for Molycorp with a preacher, mourners and some pall-bearers. Over to the side, Soprano-like, with dark glasses and bulky suits are the hedge fund mavens who represent the shorters, hoping that this time that their bullet has found its mark.
The news that has prompted the latest ructions at Molycorp does not emanate from the halls of power in Beijing, where all matters of Rare Earths are really decided, but rather from the canyons of mid-town Manhattan where destinies are decided (so they think) by the great and good of the financing world. In this case the kerfuffle is sourced in the news that the mighty hedge fund, Apollo Global Management LLC, has added to its holdings of Molycorp Inc. bonds, supposedly positioning Leon Black’s investment firm to control the Rare Earth miner/processor in case it seeks to restructure its $1.5 billion of debt. Apollo bought $8.5 million of Molycorp’s $230 million line of 3.25% convertible notes due 2016 in the three months ended March 31 and added to that amount last quarter, according to a story on Bloomberg, which also said that Apollo, as of March 31, held at least 22% of that class of securities.
The fixed income market scuttlebutt was that Apollo is betting holders of the convertible notes won’t receive a full recovery in a default, putting those lenders in control of a restructuring and in line to take over the company’s equity. With Moody’s having cut Molycorp’s credit rating in June to Caa2, the 3.25% convertible notes were last traded at 76.3 cents on the dollar (representing a yield of 18.1%). However, if there was a serious threat of default then we would have expected the bonds to be trading even lower than where they are now, with a much higher yield. While it is junk-like debt at this point it’s not in the shredder but any means!
Apollo is not one of the more aggressive funds around in the distressed debt space and we suspect this is more of a canny bottom-fishing operation than a grab for power.
- See more at: http://investorintel.com/rare-earth-intel/molycorp-inflexion-point/#sthash.XttK91e2.dpuf
"Molycorp Mentioned Positively At Davidson":
http://seekingalpha.com/article/2309575-molycorp-free-fall-halted-by-positive-analyst-comments-will-a-short-squeeze-ensue
After speaking with management, DA Davidson says it remains optimistic that the company's production rates are improving.
Molycorp's average sales price for its product suite is currently below its production costs. Unless rare earth prices rise dramatically, I can't see the long-term prospects of the company changing. For now, I think it would be prudent to take DA Davidson and management at their word and wait for the Q2 earnings report for the details.
I'm going to think about this one...
Molycorp: Free Fall Halted By Positive Analyst Comments. Will A Short Squeeze Ensue? (MCP)
Molycorp – Inflexion Point?
Posted on July 10, 2014 by Christopher Ecclestone
The reputed statement of Mark Twain to the effect that “Reports of my death have been greatly exaggerated” comes to mind when the oft-repeated reading of the eulogies for Molycorp takes place. Once again we have a funeral scene for Molycorp with a preacher, mourners and some pall-bearers. Over to the side, Soprano-like, with dark glasses and bulky suits are the hedge fund mavens who represent the shorters, hoping that this time that their bullet has found its mark.
The news that has prompted the latest ructions at Molycorp does not emanate from the halls of power in Beijing, where all matters of Rare Earths are really decided, but rather from the canyons of mid-town Manhattan where destinies are decided (so they think) by the great and good of the financing world. In this case the kerfuffle is sourced in the news that the mighty hedge fund, Apollo Global Management LLC, has added to its holdings of Molycorp Inc. bonds, supposedly positioning Leon Black’s investment firm to control the Rare Earth miner/processor in case it seeks to restructure its $1.5 billion of debt. Apollo bought $8.5 million of Molycorp’s $230 million line of 3.25% convertible notes due 2016 in the three months ended March 31 and added to that amount last quarter, according to a story on Bloomberg, which also said that Apollo, as of March 31, held at least 22% of that class of securities.
The fixed income market scuttlebutt was that Apollo is betting holders of the convertible notes won’t receive a full recovery in a default, putting those lenders in control of a restructuring and in line to take over the company’s equity. With Moody’s having cut Molycorp’s credit rating in June to Caa2, the 3.25% convertible notes were last traded at 76.3 cents on the dollar (representing a yield of 18.1%). However, if there was a serious threat of default then we would have expected the bonds to be trading even lower than where they are now, with a much higher yield. While it is junk-like debt at this point it’s not in the shredder but any means!
Apollo is not one of the more aggressive funds around in the distressed debt space and we suspect this is more of a canny bottom-fishing operation than a grab for power.
- See more at: http://investorintel.com/rare-earth-intel/molycorp-inflexion-point/#sthash.XttK91e2.dpuf
"Molycorp Mentioned Positively At Davidson":
http://seekingalpha.com/article/2309575-molycorp-free-fall-halted-by-positive-analyst-comments-will-a-short-squeeze-ensue
After speaking with management, DA Davidson says it remains optimistic that the company's production rates are improving.
Molycorp's average sales price for its product suite is currently below its production costs. Unless rare earth prices rise dramatically, I can't see the long-term prospects of the company changing. For now, I think it would be prudent to take DA Davidson and management at their word and wait for the Q2 earnings report for the details.
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