It is surprising that the stock has levitated this long, but popular stocks can retain their overbought value for fustratingly lengthy periods. And for all the reasons you mention in your article, as well as some of the reasons I mentioned in my article, Groupon is overvalued.
A friend of mine was recently on a trip in South America. The timing was bad as it was rainy season, however, family was visiting so it made sense to go on a little vacation. While at the empty resort, trying to stay dry, they ran into a couple who were surprised by the poor conditions of their vacation. Their vacation was cheap for a reason. The hotel was selling hard to move room inventory, through a Groupon discount. The hotel has now produced a poor experience for its customer, who will never return and the customer will probably think twice before thinking they are getting a bargain for nothing.
Loncor: A Junior Gold Miner Poised For Huge Gains [View article]
Loncor announced impressive drill results from its regional exploration program today with a 37.97 meter intersection of 2.66 g/t gold - all oxide which is relatively easy to mine. The drilling, down 91 meters folllows the trend of surface trench samples of 42 meters. So this oxide mineralization runs from surface to at least 100 meters and is open at depth.
Loncor: A Junior Gold Miner Poised For Huge Gains [View article]
Good comment Barry. It might also be noted that BAA and LON share some directors. When LON goes to production, BAA may be the logical candidate with their strength in the region if Newmont, which owns 17.8% of Loncor does not acquire the company.
Newmont Mining: An Attractive Buy For Medium To Long-Term [View article]
I also like the juniors as the discount to net asset value ('NAV') is far higher than the discount on the senior producers (juniors are trading around 30% of their NAV) whereas seniors have captured the majority of their NAV. If you like the discounts offered by the junior space and believe Newmont invests only in juniors with enormous future potential, look into Loncor Resources (TSX:LN)(AMEX:LON). Newmont owns 17.8% and has a rare technical services agreement with Loncor. Interesting company with very high grade gold intercepts.
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
Time4pizza. Groupon's model is to claim a percentage from the merchant's revenue - I believe a very healthy cut right now, but this is falling according to the evidence of their most recent gross margin performance. Its a very expensive model for the merchant. First the merchant sells their goods at a discount to entice the new customer in, then they give a healthy percentage of that discounted revenue over to Groupon. That seems like a recipe for disaster on the merchant's part.
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
Deja Vu. I had not considered the put options, as I am more of a straight equity guy, but I will look into them as they may be a great way to leverage this stock on the way down.
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
fxfx. Thanks for the comments on your use. I personally have never used or encountered the coupons as a consumer but your experience is absolutely the downfall many shop owners will probably experience in the short term. This is an old local industry (discount coupons) that functioned quite well on a small scale of bringing local customers to a local business. Now Groupon's volume can overwhelm the little guy and as you say, lead to bad service and bad branding.
Profitable Trading Spreads From African Gold Mining [View article]
Hi Daniel. Your right. Loncor could be huge. So they have intersected 3 veins now at Makapella. The first two veins are averaging 2 m and 4 m in width with exceptional grades that look to be averaging around 10 g/t. That is an enormous grade. So they could be looking at an inferred resource in the spring in the 1.5 to 2 million oz range of gold. That would be fantastic. Now we are calculating the market value of that gold in the $100/oz range as it will be an in-situ resource and they will have to invest a couple hundred million in a mine to mine it and process it. However, at 10 g/t it will be an extremely profitable mining operation. Perhaps a 1 year payback. And when they start mining the gold it will start assuming a value closer to $1,500 per oz.
This is just the start to Loncor. Remember they have 140 km of banded iron formation (BIF) along the Ngayu Greenstone belt. They have only drilled less than 40 holes in the ground with some very high grades including 64 g/t. We believe they will have 5 drills turning in January so news flow should increase. The chances of finding many more deposits along this belt are very high.
Goldcorp's Greenstone Gateway To Gold [View article]
Great article Tom. And very interesting insight S. E. Wells. I am going to look into this further. Very encouraging for those of us investing in Greenstone belts.
Profitable Trading Spreads From African Gold Mining [View article]
Fair enough Chancer. However, they have made some important management changes proving the board is willing to make tough decisions. I understand investor frustration as they have run into their share of production issues. You may be right, this looks like a 'prove it' story.
Newmont Mining: A Long-Term Gold Stock With a Strong Dividend Yield [View article]
One issue related to gold company under-performance versus the price of gold has been the price of oil. Oil can account for a very significant percentage of operating costs. (I have heard percentages as high as 40% of cash operating costs). If you build an excel income statement and P/E valuation chart on the large producing gold companies, and then strip out the cost component of oil, multiply your capitalized value of the oil (ie: P/NAV) and add this back to the value of the gold companies, I think you will see that gold companies have been gaining value faster than their share prices indicate. A substantial portion of the gains have been flowing to the oil producers in value terms. Now that oil is falling, and gold bullion continues to climb, we should see more of this value migrate to gold stocks.
Newmont Mining: A Long-Term Gold Stock With a Strong Dividend Yield [View article]
David. I agree this gold-price-linked dividend is just another progressive feature presented by Newmont's board. This looks to be a very investor friendly company.
The Case for Africa in Your Portfolio [View article]
Newmont Mining recently released its quarterly and 1/2 year results. Newmont mines gold and copper in North America, South America, Asia Pacific, Australia and Africa. Africa was the only region generating growing production in the quarter and 1H. Africa represented the lowest cash costs by a significant margin.
The Case for Africa in Your Portfolio [View article]
Excellent article Robert. In addition to "following the rising tide of population, GDP and income growth that Africa represents", astute investors may also look at some of the leading indicators that can guide their investments decisions. Specifically, we are looking at education, electrification rates and cell phone adoption, all areas where we are witnessing some surprising progress. The Republic of Congo, Mauritius and Cameroon for example have all produced dramatic increases in primary school enrollment up from just over 20% in 2000 to 50% on average in 2008 according to the African Development Bank April 2011 report. Burkina Faso reports approximately 75% enrollment in secondary school. This bodes very well for increased tertiary school enrollments which, according to the African Development Bank generates a 0.9 correlation with increases in the middle class status. Infrastructure development, including hydroelectric development generates a 0.8 correlation with increases in middle class.
According to the World Trade Organization1, a 1% increase in mobile phone penetration results in approximately a 0.5% increase in real GDP in Africa. So when TeleGeography announced on June 21, 2011 that Airtel DRC has grown its cellular subscriber base by 40% in 18 months from 3.5 million subscribers to 5 million in June ‘11, we viewed this as a strong leading indicator of the continued progress for the economy of the DR Congo. Airtel maintains an estimated 60% of the DR Congo market which suggests an overall cell phone penetration rate of approximately 10% of the population. According to TeleGeography, Airtel has invested $400 million since December 2010 to expand its network with 49 new transmission towers. This continued economic development increases our confidence in the DR Congo and in our investments in our client companies Banro Corportion (TSX:BAA)(AMEX:BAA) and Loncor Resources (TSX-V:LN)(AMEX:LON).
Groupon's Lose-Lose Scenario [View article]
A friend of mine was recently on a trip in South America. The timing was bad as it was rainy season, however, family was visiting so it made sense to go on a little vacation. While at the empty resort, trying to stay dry, they ran into a couple who were surprised by the poor conditions of their vacation. Their vacation was cheap for a reason. The hotel was selling hard to move room inventory, through a Groupon discount. The hotel has now produced a poor experience for its customer, who will never return and the customer will probably think twice before thinking they are getting a bargain for nothing.
Loncor: A Junior Gold Miner Poised For Huge Gains [View article]
Loncor: A Junior Gold Miner Poised For Huge Gains [View article]
Newmont Mining: An Attractive Buy For Medium To Long-Term [View article]
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
How Groupon Generated 6,352% Returns For Private Shareholders [View article]
Profitable Trading Spreads From African Gold Mining [View article]
This is just the start to Loncor. Remember they have 140 km of banded iron formation (BIF) along the Ngayu Greenstone belt. They have only drilled less than 40 holes in the ground with some very high grades including 64 g/t. We believe they will have 5 drills turning in January so news flow should increase. The chances of finding many more deposits along this belt are very high.
Goldcorp's Greenstone Gateway To Gold [View article]
Profitable Trading Spreads From African Gold Mining [View article]
It Is Time To Swap Your Gold Bars For Gold Equities Like Banro Corporation [View article]
Newmont Mining: A Long-Term Gold Stock With a Strong Dividend Yield [View article]
Newmont Mining: A Long-Term Gold Stock With a Strong Dividend Yield [View article]
The Case for Africa in Your Portfolio [View article]
The Case for Africa in Your Portfolio [View article]
According to the World Trade Organization1, a 1% increase in mobile phone penetration results in approximately a 0.5% increase in real GDP in Africa. So when TeleGeography announced on June 21, 2011 that Airtel DRC has grown its cellular subscriber base by 40% in 18 months from 3.5 million subscribers to 5 million in June ‘11, we viewed this as a strong leading indicator of the continued progress for the economy of the DR Congo. Airtel maintains an estimated 60% of the DR Congo market which suggests an overall cell phone penetration rate of approximately 10% of the population. According to TeleGeography, Airtel has invested $400 million since December 2010 to expand its network with 49 new transmission towers.
This continued economic development increases our confidence in the DR Congo and in our investments in our client companies Banro Corportion (TSX:BAA)(AMEX:BAA) and Loncor Resources (TSX-V:LN)(AMEX:LON).
1 World Trade Organization November 2006 Report.
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Michael R. Cooper, CFA
Cooper Financial Research
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Toronto, Ontario
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