Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
Akaralph,
Most of the losses from the most recent MD&A were a result of non-cash impairment losses on its investment in WestFire which is now Long Run Exploration due to the result of a merger between WestFire and Guide. These adjustments are made regularly on its investments based on the current value and can also result in comprehensive income if the value of the company rises.
It is also important to keep in mind that the history of Sprott is generating cash through the sale of investments and subsidiaries such as the recent sale of Waseca which provided the company with approximately C$111.7 million in cash. Management believes its investments have matured to the point that they will be able to generate enough cash to support the dividend.
I do think they did initiate the dividend in part to support the price of the stock. The company had also been buying back shares regularly at a discount to book which may slow with the implementation of the dividend. Also, the announcement of the dividend sent the shares higher making share buybacks less attractive.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
Pat Shuff,
Just to clarify... The margin account was paid in its entirety with part of the proceeds from the Waseca sale to Twin Butte. You will find this on page four of the MD&A.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
@tsxpro,
I will admit the the size of the dividend was a surprise. It would appear management believes the company's investments are mature enough that it will be able to monetize those investments with positive results on a more regular basis.
In addition, it may have been an effort to close the gap between market value and book value putting some support under the stock. It would appear it did achieve this goal at least in the short-term. The company had been regularly buying back and cancelling stock at discounts to book which seemed to be broadly ignored by the market.
A more pessimistic argument could be made that management believes returning cash to the shareholders is currently its best alternative pointing to lack of potential high return investments in the natural resources sector.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
442,
Thanks for the comment. The asset mix is unusual, but the focus of the company is on all natural resources. The ability of management to be able to move in and out of various natural resources when it is advantageous has been the key to their returns to date. That is why the mix has not really been a concern for me.
As far as the gold, when they made their original purchase of gold bullion, it was purely for investment purposes and also as a store of value over holding cash. Below is a quote from Eric Sprott that would make this seem likely.
" In the sea of financial assets and currencies that are being decimated the world over, the one true safe haven continues to be gold." - Eric Sprott, Markets at a Glance, October 2008
The investment has paid off with a total return of roughly 60% which proved to be a much better alternative to cash. In many ways the statement Eric Sprott made back in 2008 still holds true as central banks continue their magic.
If a potential investment surfaced which required liquidity, I am sure the gold would be sold if management believed higher returns can be found elsewhere. I don't really look at this as a gold investment and agree if you want to own gold then it should be bought as its own investment. I think management just believes it is better than cash while they look to allocate the capital.
I am with you on One Earth Farms. OEF could be the most interesting asset in the mix if they can execute their plan.
PICO Holdings: An Opportunistic Value Investor [View article]
I am very interested to see the third quarter operating results for Northstar. I believe this will be a positive catalyst for the stock over the coming months. In addition, today's announcement that they plan to build a plant in Oklahoma is very encouraging.
The company may also start to benefit from real estate investments it made in the depressed housing market. The water assets appear to be a much more long-term prospect unless a willing buyer comes into the picture.
All of the recent developments including the sale of the Nevada real estate and the sale of the insurance run-off portfolio would seem to be positive for the long-term investor. However, I do share the concern of Robin Heiderscheit regarding stock ownership of management.
Leucadia National Down Sharply After Earnings Release [View article]
Luis,
Good analysis on the difference between Berkshire Hathaway (BRK.A)(BRK.B) and LUK. I think many just assume LUK is like BRK based on just surface information. However, I do think the acquisition of NBP was a little more like a BRK investment in that it is a solid business with good management. Although, as you pointed out, management will most likely be very involved in helping to create additional efficiencies.
For the long-term, I prefer LUK over BRK as Buffet will most likely be succeeded by stock pickers while Cumming and Steinberg will be succeeded by value creators. However, this should not be taken as a knock on the BRK management, it will just be a difference in philosophy going forward.
Leucadia National Down Sharply After Earnings Release [View article]
swaps,
The elevated corporate revenue was caused primarily by the sale of Fortescue common shares resulting in net securities gains. Since most of the shares were sold during prior periods and not during the most recent quarter, corporate revenue dropped. After the second quarter ended, LUK sold its remaining FMG shares so you will see higher corporate revenue in the third quarter. Due to the nature of this revenue category, the number can vary widely from year to year and quarter to quarter. Below is the note from the 10-Q regarding the sale of FMG shares that caused the spike and subsequent drop in corporate revenue.
"Net securities gains for Corporate aggregated $2,526,000 and $529,641,000 for the three months ended June 30, 2012 and 2011, respectively, and $427,462,000 and $531,944,000 for the six months ended June 30, 2012 and 2011, respectively. Net securities gains include gains of $417,887,000 for the six month 2012 period and $527,351,000 for the 2011 periods, resulting from the sale of a portion of the Company’s investment in the common shares of Fortescue. Net securities gains are net of impairment charges of $562,000 and $1,440,000 for the three month 2012 and 2011 periods, respectively, and $2,406,000 and $1,505,000 for the six month 2012 and 2011 periods, respectively. The Company’s decision to sell securities and realize security gains or losses is generally based on its evaluation of an individual security’s value at the time, the prospect for changes in its value in the future and/or the Company’s liquidity needs. The decision could also be influenced by the status of the Company’s tax attributes. The timing of realized security gains or losses is not predictable and does not follow any pattern from year to year."
Leucadia National Down Sharply After Earnings Release [View article]
The litigation against FMG is ongoing and I have not seen a major update. Of course if FMG prevails, it could have a negative impact on future cash flows in the case that new notes are issued by FMG.
Leucadia National Down Sharply After Earnings Release [View article]
Peter,
I agree. It seems to be an over reaction. However, it may have just got caught up in an overall down day in combination with its earnings report. A couple of other sites also noted that LUK fell short of earnings estimates, but I don't think those estimates for LUK make much sense anyway. I also like what I see from NBP and believe it will continue to improve over the long-term, but may have some short-term hurdles if cattle price move higher.
Golden Dividends: Producing Income From Gold Related Investments [View article]
DeepValueLover
I nearly included (NSU) it in my article. It appears to be transitioning from primarily a gold producer to a base metals producer with its Bisha Mine which is in part why I did not include it. However, the base metals look very interesting and could be an additional catalyst for the stock long-term. Although, investors were disappointed by the less than expected gold at Bisha. Thanks for adding it to the conversation.
PICO Holdings: An Opportunistic Value Investor [View article]
Hawk4value,
I obviously cannot say for sure, but I believe they are just divesting some legacy assets in order to reallocate that capital to higher margin opportunities. I think they had squeezed about as much as they could out of the insurance asset and managing that asset is mostly likely becoming a distraction with diminishing returns. Both UCP and Northstar are probably going to require cash as they continue to ramp up. I think this is long-term positive, however short-term book value will most likely take a hit.
That is quite a leap to assume from that statement that I may believe government has no role in society. Of course the government has a role, but there is no doubt that left unchecked it will most certainly overreach. Do you honestly believe that there is not a single government program or agency that can be abolished with minimal impact on society or that the current tax code could not be abolished and a modified revenue source established to provide the government sufficient revenue?
If you understood what I wrote, I do not completely oppose the NAT GAS Act. In fact, given that is our current system, I would side more with the point of view of Boone Pickens as opposed to the Wall Street Journal.
I am not sure what the comment on the Koran really means unless you believe that without the government to protect us that we would be overrun by the enemy. Not likely.
I do appreciate your comment. It is good to debate differences of opinion. In many cases, after the debate I find the divide is not that great.
Is Central Steel & Wire In Play And Tremendously Undervalued? [View article]
Joe,
Excellent points.
As far as the dividend, I certainly would not have been terribly upset if they had maintained the dividend, but as a general rule, I believe dividends should be supported by earnings. That being said, you are right that have plenty of cash to continue a very attractive dividend.
As far as the overcapitalization issue, I would have rather seen an acquisition when the market was in turmoil. It was mentioned by Edelman that management of CSTW saw themselves as a potential acquirer rather than a potential acquiree. I think there are still opportunities that exist. Especially with smaller firms that may be suffering from undercapitalization.
Should You Gamble On Tropicana Entertainment? [View article]
You should be able to access the financials at sec.gov with the link below.
http://1.usa.gov/YeJ2vL
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
Most of the losses from the most recent MD&A were a result of non-cash impairment losses on its investment in WestFire which is now Long Run Exploration due to the result of a merger between WestFire and Guide. These adjustments are made regularly on its investments based on the current value and can also result in comprehensive income if the value of the company rises.
It is also important to keep in mind that the history of Sprott is generating cash through the sale of investments and subsidiaries such as the recent sale of Waseca which provided the company with approximately C$111.7 million in cash. Management believes its investments have matured to the point that they will be able to generate enough cash to support the dividend.
I do think they did initiate the dividend in part to support the price of the stock. The company had also been buying back shares regularly at a discount to book which may slow with the implementation of the dividend. Also, the announcement of the dividend sent the shares higher making share buybacks less attractive.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
Just to clarify... The margin account was paid in its entirety with part of the proceeds from the Waseca sale to Twin Butte. You will find this on page four of the MD&A.
http://bit.ly/13lTxjL
I would agree that Sprott Resource should not really be looked at as a way to hold gold.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
I hope you reach your goal and that Sprott Resource may play a valuable role in that effort.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
I will admit the the size of the dividend was a surprise. It would appear management believes the company's investments are mature enough that it will be able to monetize those investments with positive results on a more regular basis.
In addition, it may have been an effort to close the gap between market value and book value putting some support under the stock. It would appear it did achieve this goal at least in the short-term. The company had been regularly buying back and cancelling stock at discounts to book which seemed to be broadly ignored by the market.
A more pessimistic argument could be made that management believes returning cash to the shareholders is currently its best alternative pointing to lack of potential high return investments in the natural resources sector.
Natural Resources Investor Sprott Resource Corp. Is Now A Big-Time Dividend Play [View article]
Thanks for the comment. The asset mix is unusual, but the focus of the company is on all natural resources. The ability of management to be able to move in and out of various natural resources when it is advantageous has been the key to their returns to date. That is why the mix has not really been a concern for me.
As far as the gold, when they made their original purchase of gold bullion, it was purely for investment purposes and also as a store of value over holding cash. Below is a quote from Eric Sprott that would make this seem likely.
" In the sea of financial assets and currencies that are being decimated the world over, the one true safe haven continues to be gold." - Eric Sprott, Markets at a Glance, October 2008
The investment has paid off with a total return of roughly 60% which proved to be a much better alternative to cash. In many ways the statement Eric Sprott made back in 2008 still holds true as central banks continue their magic.
If a potential investment surfaced which required liquidity, I am sure the gold would be sold if management believed higher returns can be found elsewhere. I don't really look at this as a gold investment and agree if you want to own gold then it should be bought as its own investment. I think management just believes it is better than cash while they look to allocate the capital.
I am with you on One Earth Farms. OEF could be the most interesting asset in the mix if they can execute their plan.
PICO Holdings: An Opportunistic Value Investor [View article]
The company may also start to benefit from real estate investments it made in the depressed housing market. The water assets appear to be a much more long-term prospect unless a willing buyer comes into the picture.
All of the recent developments including the sale of the Nevada real estate and the sale of the insurance run-off portfolio would seem to be positive for the long-term investor. However, I do share the concern of Robin Heiderscheit regarding stock ownership of management.
Leucadia National Down Sharply After Earnings Release [View article]
Good analysis on the difference between Berkshire Hathaway (BRK.A)(BRK.B) and LUK. I think many just assume LUK is like BRK based on just surface information. However, I do think the acquisition of NBP was a little more like a BRK investment in that it is a solid business with good management. Although, as you pointed out, management will most likely be very involved in helping to create additional efficiencies.
For the long-term, I prefer LUK over BRK as Buffet will most likely be succeeded by stock pickers while Cumming and Steinberg will be succeeded by value creators. However, this should not be taken as a knock on the BRK management, it will just be a difference in philosophy going forward.
Leucadia National Down Sharply After Earnings Release [View article]
The elevated corporate revenue was caused primarily by the sale of Fortescue common shares resulting in net securities gains. Since most of the shares were sold during prior periods and not during the most recent quarter, corporate revenue dropped. After the second quarter ended, LUK sold its remaining FMG shares so you will see higher corporate revenue in the third quarter. Due to the nature of this revenue category, the number can vary widely from year to year and quarter to quarter. Below is the note from the 10-Q regarding the sale of FMG shares that caused the spike and subsequent drop in corporate revenue.
"Net securities gains for Corporate aggregated $2,526,000 and $529,641,000 for the three months ended June 30, 2012 and 2011, respectively, and $427,462,000 and $531,944,000 for the six months ended June 30, 2012 and 2011, respectively. Net securities gains include gains of $417,887,000 for the six month 2012 period and $527,351,000 for the 2011 periods, resulting from the sale of a portion of the Company’s investment in the common shares of Fortescue. Net securities gains are net of impairment charges of $562,000 and $1,440,000 for the three month 2012 and 2011 periods, respectively, and $2,406,000 and $1,505,000 for the six month 2012 and 2011 periods, respectively. The Company’s decision to sell securities and realize security gains or losses is generally based on its evaluation of an individual security’s value at the time, the prospect for changes in its value in the future and/or the Company’s liquidity needs. The decision could also be influenced by the status of the Company’s tax attributes. The timing of realized security gains or losses is not predictable and does not follow any pattern from year to year."
Leucadia National Down Sharply After Earnings Release [View article]
Leucadia National Down Sharply After Earnings Release [View article]
I agree. It seems to be an over reaction. However, it may have just got caught up in an overall down day in combination with its earnings report. A couple of other sites also noted that LUK fell short of earnings estimates, but I don't think those estimates for LUK make much sense anyway. I also like what I see from NBP and believe it will continue to improve over the long-term, but may have some short-term hurdles if cattle price move higher.
Golden Dividends: Producing Income From Gold Related Investments [View article]
I nearly included (NSU) it in my article. It appears to be transitioning from primarily a gold producer to a base metals producer with its Bisha Mine which is in part why I did not include it. However, the base metals look very interesting and could be an additional catalyst for the stock long-term. Although, investors were disappointed by the less than expected gold at Bisha. Thanks for adding it to the conversation.
PICO Holdings: An Opportunistic Value Investor [View article]
I obviously cannot say for sure, but I believe they are just divesting some legacy assets in order to reallocate that capital to higher margin opportunities. I think they had squeezed about as much as they could out of the insurance asset and managing that asset is mostly likely becoming a distraction with diminishing returns. Both UCP and Northstar are probably going to require cash as they continue to ramp up. I think this is long-term positive, however short-term book value will most likely take a hit.
Another Setback For Natural Gas? [View article]
That is quite a leap to assume from that statement that I may believe government has no role in society. Of course the government has a role, but there is no doubt that left unchecked it will most certainly overreach. Do you honestly believe that there is not a single government program or agency that can be abolished with minimal impact on society or that the current tax code could not be abolished and a modified revenue source established to provide the government sufficient revenue?
If you understood what I wrote, I do not completely oppose the NAT GAS Act. In fact, given that is our current system, I would side more with the point of view of Boone Pickens as opposed to the Wall Street Journal.
I am not sure what the comment on the Koran really means unless you believe that without the government to protect us that we would be overrun by the enemy. Not likely.
I do appreciate your comment. It is good to debate differences of opinion. In many cases, after the debate I find the divide is not that great.
Is Central Steel & Wire In Play And Tremendously Undervalued? [View article]
Excellent points.
As far as the dividend, I certainly would not have been terribly upset if they had maintained the dividend, but as a general rule, I believe dividends should be supported by earnings. That being said, you are right that have plenty of cash to continue a very attractive dividend.
As far as the overcapitalization issue, I would have rather seen an acquisition when the market was in turmoil. It was mentioned by Edelman that management of CSTW saw themselves as a potential acquirer rather than a potential acquiree. I think there are still opportunities that exist. Especially with smaller firms that may be suffering from undercapitalization.