Seeking Alpha

Michael Parmar

View as an RSS Feed
View Michael Parmar's Comments BY TICKER:
Latest  |  Highest rated
  • Kenmare Resources: A Speculative Call On The Ilmenite Price [View article]
    As per my last point, KMR has received a take over offer.

    Share price > + 20% since this article and my comments were published.
    Jun 27 04:59 PM | Likes Like |Link to Comment
  • Kenmare Resources: A Speculative Call On The Ilmenite Price [View article]
    Good article, a few additional points to note:

    1. KMR has covenants tying its cash use. Hard to establish FCF but you have done a great job stripping the company to the bare bones underpinning its enterprise value

    2. Across the Indian Ocean on the Australian western continent almost matching the Latitude of the Moma mine there is purportedly a big prospect of illmenite - not sure the state of this development. In current market conditions unlikely to have received funding but also unlikely to better Africa mining costs.

    3. Some KMR competitors earlier in the year shut down production temporarily, not sure if they restarted as yet,

    4. KMR keeps producing, investors should track its shipments which are reported every half year on the KMR website. The relationship to sales (top line revenue) from these shipments contains an additional level of opaqueness given the nature and structure of some of the contracts based on prepayments, mid payments, balancing payments, sometimes with CFD components.

    Overall this is an underrated company, good operations management (not sure about strategic management, as maybe the expansion was arguably not justified in hindsight).

    Nevertheless I am watching it closely and have a small position in there (currently underwater).

    I am taking a long view because the punchline is as you say: this is a "go to" supplier.

    Share register last time I checked (6-9 months ago) had a number of big investors with large positions (e.g Blackrock, Nordic bank).

    As you say, low share price, heavily indebted. Any small prospect of improving operating margins will swing the share price from its multi-year current lows, any deterioration will lower it further.

    And then there is the issue of such a low share price attracting a return from a potential takeover for anyone that can refinance the debt at a better rate than KMR
    Jun 12 07:39 PM | Likes Like |Link to Comment
  • Why 'Too Big To Fail' Banks Remain A Disaster Waiting To Happen [View article]
    Great Article. People like Lenny on websites like seeking alpha help us to keep an eye on things that could make a big difference to all our lives.

    Jason B, ratings agencies only publish "opinions". go watch "inside job"
    May 4 05:47 AM | Likes Like |Link to Comment
  • Zinc And Aluminum Exploited By Middleman Vigs [View article]
    LME progress, in the right direction. But a long way to go before implementation and reduction of bottlenecks.

    I liked the comment in the Reuters article " bottlenecks are just traders moving stock from one warehouse to another in response to incentives"....
    Nov 11 06:32 AM | Likes Like |Link to Comment
  • Zinc And Aluminum Exploited By Middleman Vigs [View article]
    Great article
    Nov 6 08:53 PM | Likes Like |Link to Comment
  • The Default Has Already Begun [View article]
    Why US default is not mega catastrophe:

    1. US default = risk of failure to pay US govt bond holders either interest or principal. If these are missed there is a technical default, for bad management reasons, not a US govt solvency problem.

    Politicians could fail to raise the debt ceiling with a message that future payments will be met and bad debt/missed payments made good with interest. As Felix said, it could actually be good for bondholders in the long run.

    2. US$ is world reserve currency and not directly linked to default: there is no "running out of reserves" given US Fed can print more. Fed can always expand its bond purchase programme to counter rising yields.

    3. This contrasts with countries like Greece, Ireland, Portugal, Asia Financial Crisis and so on which linked Govt insolvency with falling foreign currency reserves via capital flight ( Within EU, despite a single Euro the current system still requires countries to balance their books with each other and the system that supports any imbalances in currency holdings is Target 2).
    Oct 15 01:21 PM | 1 Like Like |Link to Comment
  • Daily State Of The Markets: It's Time To Let Price Be Your Guide [View article]
    David, what do your trend indicators and models say?

    You might want to add this one if you don't have something like it already
    Aug 19 08:36 PM | Likes Like |Link to Comment
  • Is Now The Time To Double Down In REIT Town? [View article]
    here is the link
    Aug 19 07:06 PM | Likes Like |Link to Comment
  • Is Now The Time To Double Down In REIT Town? [View article]
    Water Buffalo - and Brad - I would recommend reading Peter Tanenbaum's article about too many houses - its up on the top 10 list now - as he covers articulately the points I was trying to make about income, debt, affordability and the effect of interest rate rises.

    What he describes will affect REIT performance
    Aug 19 07:03 PM | Likes Like |Link to Comment
  • Is Now The Time To Double Down In REIT Town? [View article]
    If it was only about present rental income, REIT values wouldn't have crashed by up to 70% in the market through this recession.

    Buying into REITS as you say is like buying into property. It's a long term investment. And as such, you make it with the view that should you need to exit for unfortunate reasons, you wont have to get rid of it at a loss.
    Aug 19 04:11 PM | 1 Like Like |Link to Comment
  • Is Now The Time To Double Down In REIT Town? [View article]
    Christophe, I take your point about differences in how REITS are financed. But I would hold off for the time being/this quarter at least.

    To analyse REITS you also need to look at their property portfolio and the impact of interest rates on demand and capital values.

    For example, the affordability of housing declines rapidly when interest rates rise: a $400,000 20 year mortgage with monthly payments at 3% implies approximately $1000 per month. If those rates rise to 5% the monthly payment rises by 66% to $1.67K. That accounts for more than the current growth in Real Personal Disposable incomes: property affordability looks set to decline/correct in the short term.

    The same will happen to companies and govt agencies buying or leasing office/industrial.comm... properties - demand in current circumstances will correct to the downside. There are exceptions of course to some areas or customers.

    Bank lending practices since the last recession have altered dramatically with much tighter LTV offered to REIT customers.

    Equity REITS are not going to be immune to this. Even if an equity REIT has a portfolio with customers locked in for a number of years so that FFO appears secure, their valuations and risk still gets affected by underlying property values and the demand and supply of the underlying real estate, though of course they are the less risky type of REIT.

    Interest rates at 5% to final customers? Banks will do that in the blink of an eye, its out of the Fed's hands....
    Take for example, large companies. Right now everyone is talking about S&P500 Q2 earnings growth so companies aren't doing that badly, things are looking up etc.

    But once the bank earnings growth is stripped out, actual earnings for Main Street FELL. And it is at a high level historically, as the companies that survived the recession did so on the basis of impressive efficiency gains and low interest rates. As rates go up their earnings will be affected.

    I'm not saying there is a crash coming, I think we are on the mend in th economy, I'm just saying interest rates, like oil prices going up, affects everyone, everywhere and puts holes in people's spending power.

    And I am saying that many people, companies and govt departments haven't planned forward to higher interest rates even in a couple of years time and they are about to get a rude awakening on their bottom line as interest rates drift or even spike upwards.

    This time around banks are not going to accommodate with easy money, their balance sheets are far from repaired.
    Aug 19 03:56 PM | 2 Likes Like |Link to Comment
  • Buy The Dip Or Short The Market? AAII Bears Have Some Answers [View article]
    Thanks for the comment investinginvestor.

    Professional investors are behind much of the net equity outflows, Buffet, Soros, Paulson, all cashing in on a number of SP500 stalwarts.

    I think people will be surprised on Wednesday when they see the fed minutes and the amount of taper talk.

    Jeff in his "Weighing the week ahead" suggested that the fall in bullish sentiment was bullish - Not at its current level.
    Aug 19 11:05 AM | 1 Like Like |Link to Comment
  • Almost $20B flees bond funds in August so far [View news story]
    Rising rates / bond sell off includes capital exit from US. One aspect of current fed QE was to redirect it away from this flow;I covered this . way back in Feb.
    Aug 19 08:43 AM | Likes Like |Link to Comment
  • Is Now The Time To Double Down In REIT Town? [View article]
    IMHO It is far too early to be getting back into REITS - interest rate rise has some way to go and valuations some way to fall.

    The sell off/correction hasn't bottomed yet.
    Aug 19 08:06 AM | 6 Likes Like |Link to Comment
  • Buy The Dip Or Short The Market? AAII Bears Have Some Answers [View article]
    I will
    Aug 19 03:46 AM | 1 Like Like |Link to Comment