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James Emerson  

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  • Leap Wireless: Watch Out Below [View article]
    LEAP is the stock symbol for Leap Wireless
    Aug 7, 2011. 04:52 PM | Likes Like |Link to Comment
  • My Ideal Dividend Portfolio: Mostly REITs Coupled With High-Yielding Blue Chip Stocks [View article]
    You should take a look at the preferred stocks of property REITs. While there is mark to market risk, most have a huge cushion of common equity beneath them in the capital structure. For example CDR pr A has a strip yield of 9%. The issue is currently callable so there is no price appreciation potential. Instead of buying a leveraged company like an mREIT, you can buy a less risky company and lever the position yourself by buying on margin. Use two to one leverage, and you have a 17% yield. The leverage and interest rate sensitivity will be less than the mREITs. You can hedge the interest rate risk by using ETF options.
    Aug 5, 2011. 10:49 AM | Likes Like |Link to Comment
  • Still a Short: Rebutting Tanzanian Royalty Exploration's CEO [View article]
    Jul 28, 2011. 04:49 PM | Likes Like |Link to Comment
  • Gold Mining Boom: Tanzanian Royalty Has Limited Downside, Relative Obscurity [View article]
    Believe what you like. I would posit that there really isn't much of a short effort in the stock. Last time I check it was around 5%. Compare that number to the level of short interest in some of the heavily shorted stocks which have a short interest as a percentage of the float of over 20%. It is peculiar that the company focuses so much on perceived pressure from short sellers. A decent percentage of the short position can probably be attributed to hedging activity related to options. According to SEC filings, the largest shareholder appears to have hedged a portion of its position with in the money $9 and $10 strike puts and out of the money $3 strike puts.

    @ Mr. Patel if there is limited downside why would anyone buy $3 strike puts on a $6 stock ?

    The effect from short selling is transitory. Further, at the 5% level, long interest outweighs short interest 19:1. The decline in the stock from the mid $7 range may be attributable to the recent capital raise. As an aside, that offering validated my point that the company did not have sufficient capital to develop a mine. Selling shares does not happen in a vacuum particularly for a relatively thinly traded "obscure" (Mr. Patel's characterization not mine) stock. If the underlying value is there, the stock price should recover from the temporary change in supply and demand dynamics. My thesis is that the stock does not have an underlying value that can reasonably justify the market capitalization. No commentator has yet presented any credible evidence to the contrary. Most, like you and this piece which is wholly devoid of analysis, simply extol the virtues of Mr. Sinclair.
    Jul 21, 2011. 09:43 PM | Likes Like |Link to Comment
  • Gold Mining Boom: Tanzanian Royalty Has Limited Downside, Relative Obscurity [View article]
    Where are you getting your cash number? Also your resource number does not reflect that TRX only has a 55% interest in the Buckreef project.
    Jul 19, 2011. 11:05 AM | Likes Like |Link to Comment
  • Gold Mining Boom: Tanzanian Royalty Has Limited Downside, Relative Obscurity [View article]
    Mr. Patel,
    What is your basis for the assertion that this stock has a limited downside? The company had assets as of May 31, 2011 totaling approximately $45 million and just raised around $23 million in a recent share offering yet the market capitalization is about $630 million. The company trades at a price to book ratio of over 9. The ratio is even higher if you look at price to tangible book.

    How do you reconcile or explain the difference? What value do you ascribe to Buckreef? The company paid $3 million for a 55% interest. Prior to the Buckreef acquistion, the stock traded at a similar price to book ratio. Further according to the recently released iterim financial statements, the company has not spent any money at Buckreef on Camp, field supplies and travel, exploration and field overhead, Geological consulting and field wages, Geophysical and geochemical or Trenching and drilling. I challenge you to make a rational argument for a value greater than the $3 million paid in the competitive auction. All of the technical data was available to the 37 auction participants. So my question is which of the other nine project provides enough value to support the stock price?
    Jul 19, 2011. 10:30 AM | 1 Like Like |Link to Comment
  • Still a Short: Rebutting Tanzanian Royalty Exploration's CEO [View article]
    You ought to look at the formula carefully. Consider that the potential gold mining operation will happen over the course of several years.
    Jul 18, 2011. 04:26 PM | Likes Like |Link to Comment
  • Sirius XM: Why Some Are Closing Out Short Positions Now [View article]
    There are two basic components of risk for every stock, market risk and stock specific risk. If you think SIRI is a great stock and are concerned about a market decline, you could hedge the market risk. That is easy enough to accomplish by buying S&P puts or shorting an S&P or NASDAQ ETF.
    Jul 14, 2011. 12:04 PM | 1 Like Like |Link to Comment
  • Sirius XM: Why Some Are Closing Out Short Positions Now [View article]
    Maybe just maybe, the short interest declined because the stock was down over 15%. Readers should differentiate between the different types of investors/traders. Just like on the long side, there are fundamental shorts and there are momentum shorts. Most momentum traders don't do fundamental research, they just follow trends. Moreover, they don't care whether the trend is up or down, just whether there is a trend. The stock failed to break through the approximately $1.90 level and the down trend ended. Any decent momentum trader would have covered as the stock reversed. It appears that the core fundamental short has stayed in the trade. I would expect the short interest to increase when the stock starts to trend down again.

    For all the villification of short sellers, a short seller is the only market participant that has to buy the stock at some point. I would not necessarily look at low short interest as a bullish indicator. High short interest is pent up demand for a stock.
    Jul 14, 2011. 12:04 PM | 2 Likes Like |Link to Comment
  • Still a Short: Rebutting Tanzanian Royalty Exploration's CEO [View article]
    Every exploration project has value. That expected value is determined by the probability weighted sum of the potential outcomes. There are basically two potential outcomes for an exploration company. The company will either find a resource or the not. Assign a probability P that the company finds the resource. The probability that the company does not find a resource is 1-P. Based on the historical performance of the company, I believe that the P in this case is low. As a company gathers data, that probability will change. The valuation is simple ,the expected value = [(P * the net present value of the estimated resources) +((1-P)*0)] Obviously estimating P is an art. I think that investors should evaluate an investment using a range of probabilities. Estimating the net present value of the potential reources is dependent on the data. For the Buckreef project there is the data from Gallery Gold/IAMGold that can be used calculate the NPV for the other projects there is less data. By using a range of probabilities, an investor can determine the potential distribution of outcomes and corresponding stock prices. From a financial perspective, I would only buy the stock of a company when the price of the stock is less than or equal to the mean of the distribution.
    Jun 27, 2011. 07:51 PM | 1 Like Like |Link to Comment
  • Tanzanian Royalty Exploration: A Gold Company in a Sweet Spot [View article]
    The reason I retort with that question is that both Mr. Sinclair and Mr. Gibson are implying that the value of the company's mineral resources at Buckreef supports an approximately $600 million dollar market cap. Neither Mr. Sinclair nor Mr. Gibson are so bold as to put actual numbers on their valuations of Buckreef. Tanzanian Royalty paid a mere $3 million or 3 cents per share for the project in December. To date all the company has announced is that they have reviewed the old technical data and that they intend to launch a feasibility study. Buying the stock for over $6 in the public markets is a very expensive way to gain exposure to an asset for which the company paid $0.03/share.

    1. The appropriate way to value a development stage company is a probability weighted assessment of present value of future cash flows. The mineral resources at Buckreef consist of 303,000 measured ounces, 101,000 indicated ounces, and 590,000 inferred ounces. The classifications are listed in order of decreasing certainty from a geologic and economic perspective. Therefore I would assign a probability of less than one that the gold both exists and can be economically extracted. As reference, I would assign a probability of 1 (100%) to the geologic certainty of a proven reserve in an extraction industry and I would assign a range of probabilities of one to one half (100% to 50%) to the geologic certainty of probable reserves. Both those probability assessments ignore economic certainty which is dependent on the relationship between the price of gold and the extraction costs. Measured resources are a lower level of geologic and economic certainty than probable reserves.

    2. I don't believe it is possible. Tanzanian announced a 30 month time frame to complete a feasibility study on Buckreef. According to the interim financial statements, the company has approximately $10 million in cash. The company spends around $2.5 million per year on corporate overhead. Cash available for exploration and development for the two years would be approximately $5 million which is in line with historic costs. At the end of the period, there would be essentially no cash available for capex for equipment or for production. Additionally, the JV agreement with STAMICO has not yet been finalized so the actual cash Tanzanian Royalty Exploration would be required to contribute to the project is unknown.

    3. On the interim financial statements, the company discloses a material weakness in internal controls. The statements that I relied upon have been audited.

    4. To the best of my knowledge, the company does not disclose any gold mineral resources at any other sites. The capitalized costs are sunk costs and do not represent anything of tangible value and therefore do not affect the value of the mineral properties. True, the company has issued technical reports indicating the possibility of mineralization. However, I think based on current disclosures that the probability of the projects containing commercial viable gold reourcesis is so low that the value is de minimis. That assessment of value would change if the company could establish a higher level of certainty.
    Jun 21, 2011. 02:50 PM | 1 Like Like |Link to Comment
  • Tanzanian Royalty Exploration: A Gold Company in a Sweet Spot [View article]
    I have three simple questions which should be easy to answer if you have done the asset analysis. First what is your estimate of the net present value of mineral resources at Buckreef? Second what are your underlying assumptions, i.e. discount rate, price of gold, capex, variable cost of production, start date of commercial production, production per year, the probability that each of the identified resources classifications (measured, inferred and implied) is commercial viable? Finally, how is it that Buckreef is worth signiifcantly more than the $3,000,000 that the company paid for it in a competive bidding process in December?
    Jun 21, 2011. 11:33 AM | 1 Like Like |Link to Comment
  • Sirius XM: Heading for a Forward Multiple Contraction [View article]
    I am looking at support levels on the chart to determine the $1.60 level.
    Jun 13, 2011. 10:05 PM | Likes Like |Link to Comment
  • Tanzanian Royalty Exploration: Fool's Gold [View article]
    I am flattered by the attention and the insults. I wonder what Mr. Sinclair thinks the value of the company is? Many companies provide a detailed analysis to refute criticisms based on valutation.
    Instead of insulting me, making idle threats and questioning my motives, why doesn't Mr. SInclair provide simple estimate of the value of the company's assets. He is claiming that the market capitalization is more indicator of value than an accounting based analysis. To attempt to reconcile the difference an investor would need to mark the assets of the company to market. To do that all an investor needs to know is the present value of proven reserves less extraction costs. I have used precise language due to the difference between proven reserves, probable reserves, measured resources, indicated resources and inferred resources. An analysis of anything less than proven reserves would require an investor to assign some discount factor to reflect the fact that there is uncertainty.

    So Mr. SInclair what is your internal estimate for the present value of proven reserves less extraction costs?

    According to your press release the highest level of certainty ascribed to Buckreef is 303,000 measure ounces using a 0.5 g/ton cutoff grade. Why don't you provide an estimate of the extraction costs?

    Just for clarity, the following is a description in the company's form 20-F of what mineral resources are.

    The estimated quantity and grade of mineralization that is of potential economic merit. A resource estimate does not require specific mining, metallurgical, environmental, price and cost data, but the nature and continuity or mineralization must be understood. Mineral resources are sub-divided in order of increasing geological confidence into “inferred”, “indicated”, and “measured” categories. An inferred mineral resource has a lower level of confidence than that applied to an indicated mineral resource. An indicated mineral resource has a higher level of confidence than an inferred mineral resource, but has a lower level of confidence than a measured mineral resource. A mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth's crust in such form and quantity and of such grade or quality that it has reasonable prospects for economic extraction.

    This is the disclosure for US investors on company press releases. Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission limits disclosure for U.S. reporting purposes to mineral deposits that a company can economically and legally extract or produce. We use certain terms on this news release, such as “reserves”, “resources”, “geologic resources”, “proven”, “probable”, "measured", "indicated", or "inferred" which may not be consistent with the reserve definitions established by the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No. 001-32500. You can review and obtain copies of these filings from the SEC's website at
    Jun 10, 2011. 11:07 PM | 2 Likes Like |Link to Comment
  • Tanzanian Royalty Exploration: Fool's Gold [View article]
    Funny how a guy who has written 5 comments on SeekingAlpha most of them highly intelligent (sarcasm intended) picks this stock as his cause.
    Jun 10, 2011. 10:51 PM | 1 Like Like |Link to Comment