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In 2011 Peter Epstein, CFA, left a $3 billion hedge fund where he was a senior analyst to help increase awareness of a number of small cap companies in which he's invested in. Please see: epsteinresearch.com On TWITTER: @peterepstein2 Mr. Epstein formed MockingJay, Inc., a consultancy for... More
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  • SoMedia Networks, Ready For Lift Off, Tipping Point Ahead?

    The following interview of George Fleming of SoMedia Networks (VID.V) & (SMDWF) was conducted by phone and email in the week ended April 12th. Subsequently, SoMedia announced the launch of a full service YouTube Video Ad production platform for Google Partners. As of April 16th, Peter Epstein has no prior or existing relationship with any company mentioned herein. Prospective investors should conduct their own due diligence including consulting with their own investment advisors. A good place to start is at SoMedia's Investment Center, where one can find an informative video by President & COO Ben Pickering.

    Please tell readers, in a single paragraph, what exactly SoMedia does?

    SoMedia provides access to professional, full-service video production everywhere in North America. Through the use of cloud-based platforms and sophisticated crowdsourcing management systems, SoMedia has solved the challenges of scale, volume and reach in video production. We enable digital agencies, online marketers and large advertising and marketing platforms to seamlessly offer access to video production to their clients, with guaranteed quality and consistency, no matter where they are located. [Note: Please click here for Sample Video Ads]

    New online technologies come and go. Sometimes being a first mover backfires. What makes you think that SoMedia can compete with the likes of Google & Yahoo?

    The companies you mentioned are getting more serious about video ads but none are focused on production. Companies like Google/YouTube, Facebook and Yahoo! are focused on monetizing video ad content, not creating it. Partnering with SoMedia enables them to offer affordable and accessible video ad creation to their advertising clients, which fuels their business.

    Some might still fear that competition is too big a risk. Is SoMedia viable as a standalone company if giant(s) enter the space?

    Video production has existed for a long time as a fragmented market of small production companies and a few larger agencies / studios. SoMedia is disrupting this space and will put a lot of the independents out of business as we consolidate market share. The total addressable market is in the billions of dollars and certainly large enough for SoMedia to thrive as a standalone company. There are no big players that seem likely to enter the space and if they wanted to do so it would likely be through partnership or acquisition. We have a big head start and the validation of industry leaders.

    What would a new entrant need to accomplish to unseat or under-price SoMedia?

    SoMedia has invested significant resources in developing not only its large, vetted network of videographers, editors and creatives, but more importantly in the technology to manage this distributed workforce across large volumes of projects. Significant capital, know-how and time would be involved in replicating what we have developed. Moreover, we have integrated with 20+ leading SaaS platforms as the only scalable video production solution available to their clients, and we have developed a large reseller channel to aggregate demand plus developed an ad production platform for Google partners. A new entrant would not easily be able to recreate this critical foundation.

    SoMedia is enjoying positive buzz, its stock price is up and it has been written about in flattering articles & interviews. What are the key risks?

    The risk is simply being able to continue to execute on the opportunity and to access the capital necessary to do so. Video marketing and advertising is rapidly evolving and we need to continue to keep pace and deliver unique solutions to marketers.

    Do you envision a tipping point in video ads this year? Next year? Has it already happened?

    Calling a tipping point is like trying to call a market top or bottom. We are definitely on the upswing in terms of demand for video and the need for a scalable solution to production challenges as the use of video continues to accelerate. A number of articles such as this one support the idea that the tipping point is near if not already upon us.

    What needs to happen to make SoMedia a HUGE success? What would that look like in terms of business metrics / growth / market penetration?

    Becoming the go to source of video ad production or marketing video production for agencies and internet marketers and by partnering with large video ad networks and content marketing platforms. By continuing to grow our base of resellers we are on our way while accelerating the rate of repeat video purchases by these resellers is on ongoing effort that is accelerating on its own as video marketing and advertising adoption speeds up. The biggest immediate opportunity in front of us is to capitalize on integrations with the 20 leading SaaS platforms we've already completed and begin initiating content marketing and demand generation programs - so beginning to look at customer / partner acquisition through these platforms can provide huge upside.

    Does SoMedia need additional equity capital this year? If so, might that be the last raise required before achieving self-sufficiency?

    SoMedia will continue to raise capital when its attractive to do so. As the first mover in a new category that is growing rapidly our shareholders expect us to capture as much market share as possible and grow the potential of the company.

    Might there be a benefit derived from making acquisitions of select private companies?

    Yes there are opportunities for us to make acquisitions that broaden the breadth of video content production we can provide or to expand to add video marketing solutions together with video production

    Are you're healthy margins destined to slip? Perhaps due to increased infrastructure, competition or higher SG&A?

    We have healthy gross margins on a per video basis and we actually have room to bring our costs down further by potentially offshoring editing, so we don't foresee gross margin deterioration. SG&A expenses affect operating / net margins, but over time, as revenue accelerates, our SG&A as a % of revenue will decline and we forecast a healthy net margin as well. At this point the company must invest in sales in marketing to grow the business and capitalize on the market opportunity.

    Is there a way in which SoMedia could be sued? Most Independent contractors probably do not carry insurance of their own.

    Although there is never any certainty we have developed layers of contracts and agreements between clients and between creative designed to protect us. We don't do any work without these agreements being signed first.

    In other interviews, SoMedia has been compared to Uber. Is there a comparison you can make other than Uber?

    The Uber comparison is a good one to explain how we leverage technology and act as the interface for end users to access a distributed network of service providers. Another comparison drawn in the Cantech interview was to WordPress, the website development platform. This is an apt comparison in terms of how we are disrupting the market for video production in the same way WordPress did for website development by making it no longer a requirement to have highly specialized skills (html, etc.) in order to build a website. Likewise we have made the traditionally complex and expensive process of creating video something that is now accessible to businesses of all sizes and budgets.

    Are there misconceptions about SoMedia that you would like to address?

    While our business is all about scalable solutions for video production, SoMedia is a lot more than the world's largest video production company. To enable scalable video production it requires a sophisticated SaaS front end tied to an advanced crowd sourced management system we call Crowdsource Workforce Management. We also provide sophisticated tools - video players and analytics - to assist with online video marketing and we have developed integrated solutions for video production and deployment to the largest online marketing and advertising platforms.

    For more information on SoMedia, (VID.V) & (SMDWF) please click here for a corporatefact-sheet

    Thank you Mr. Fleming for your time.

    Apr 16 9:23 AM | Link | Comment!
  • CEO.CA Founder Tommy Humphreys Perspectives On Life

    The following interview with CEO.CA Founder and over eater, over achiever, Tommy Humphreys was done in a top secret manner and location to avoid any front running. To be sure, it has been released after market hours. I can't even begin to tell you how many emails and phone calls I get each week asking me about, "the real' Tommy Humphreys. Peter Epstein, CFA, MBA (the interviewer), has no prior or existing relationship with Tommy, except that Tommy greatly helped Mr. Epstein in building epsteinresearch.com. Little did Tommy know that this piece would end up resembling a roast.

    The tone of the interview is entirely the interviewer's fault as he thought this piece should be overtly promotional-like the man himself! Natural Resource investors desperately need some jocularity, so please read on. Tommy bravely answered each and every question I threw at him.

    Do to time constraints, I regret to inform readers that there was no opportunity to mention Tommy's newest venture, chat.ceo.ca. Check it out at the following link. chat.ceo.ca

    Tommy, how long have you been operating website(s)? Are you comfortable naming some or all of the websites that you're behind?

    I've been making websites since 1995, when I was 9 years old. I used an alias then, "Ctrl-Alt-Delete" and my first web page was dedicated to the Eagles song - Hotel California. (with lyrics!). Today, I am mostly focused on CEO.CA, my primary business.

    Please tell readers how / why you got into this line of work?

    I was addicted to tech as a kid and can remember tripping out about CD Burners in 1996. When I later graduated high school, I realized baby boomers had all the money, and I wanted to tap into that. Web sites were something they needed, so I set out to learn everything I could about building them.

    Is Tommy Humphreys all natural resources all the time?

    In 2010, I made a conscious decision to focus my internet marketing business on the natural resources sector. I had spent a few years being a generalist web designer, and wanted to focus on a sector that had equity upside in addition to consulting opportunities. As you know, there's a lot of mining and energy startups in Canada. Long term, I am very optimistic for commodities.

    Are you at liberty to explain the arrangement you made with well known natural resource expert Lawrence Roulston?

    Yes. Mr. Roulston had been running Resource Opportunities since 1998, and it was beginning to conflict with his new mining private equity firm. I had wanted to get into the newsletter business for a while so we jumped into bed pretty quickly together, working out a three year deal for me to take over the letter. Almost a year later, I have decided to concentrate on CEO.CA and chat.ceo.ca, and have appointed James Kwantes, an objective and passionate mining reporter with Vancouver Sun, to be the new Resource Opportunities editor. Both Lawrence and I are helping James with due diligence and ideas, but he has the final say now.

    Is there another person(s) that helps you with your online empire?

    Tons of people help me. Three exceptional Vancouver-based web developers. Several editors and writers, plus dozens of friends and mentors provide ideas and inspiration, yourself included. Although what have you done for me lately? Oh right, this.

     

    IMG_9935Mobile screenshot from chat.ceo.ca - real-time insights and chat with top CEOs and investors

     

    I recently saw a curse word on your fairly new platform Chat.ceo.ca, Obviously, I can't repeat it. Do you have the ability to permanently banish cursers?

    Drone strikes.

    Is anyone making a decent living doing what we do? It feels like minimum wage, although it adds up at 16 hours per day!

    Blogging about the resources sector? Bob Moriarty of 321Gold.com is loaded, but he has some gifts that make him a millionaire blogger: duration, he's been at it since gold was $250 an ounce, and he's visited hundreds of projects, so he knows a thing or two. Plus he understands the internet and the importance of creating a simple product. He's also super witty, opinionated and experienced. And he can sell the shit {I apologize for the language} out of banners.

    Timothy Sykes, as well, I think does bear raids on pump and dumps but through internet marketing has built up a huge franchise selling his educational products. Although his marketing is over the top, Sykes is relentless and not afraid of anything, which makes him a good entrepreneur. Selling newsletters seems to be the most scalable business model, rather than selling advertising. However selling newsletters requires efficiencies of scale. You need a big list and several disciplines to monetize, not to mention a big ad budget. It's one thing to make great content, it's another to make people money, and a whole other unrelated skill set to make a viable business around those things.

    Speaking of Chat.ceo.ca, without revealing names, describe the typical, "chatter" and perhaps hint at the big fish that have signed up?

    There are some influential bankers, brokers, analysts, geologists, fund managers, web developers and wealthy individuals using Chat.ceo.ca, and some turds as well. We discuss real-time investment news with a focus on junior mining and discovery. Every day there are a few insights shared, ranging from summaries of investment research to personal opinions about exploration stocks, that make me keep coming back. The search results are also beginning to provide valuable context on Canadian stocks.

    Are you happy with the level of discourse on Chat.ceo.ca? Are there any hacks and pump & dump artists?

    There's a high quality user base now, and of course the site gets better the more quality people are using it. That's why I hustle from 4:45am each day to post relevant, valuable stuff in the chat, and am funding the development personally. I want to connect with other resource investors on my internet devices, and no tool lets me do that like Chat.ceo.ca, despite the fact that we're only four months into the development. Stay tuned for more useful features and quality content.

    The world wants to know, needs to know, demands to know, are women allowed on Chat.ceo.ca ?

    That's a great question, I get asked that a lot. Of course. Haven't you seen my mom in there?

    Many who know you are well aware of how hard you work. Do you have time for anything but work?

    If you want to achieve much, you have to run. In my case, talk. But I do always have time for burgers.

    Where do you see yourself in 5 years? 10 years? 50 years? 100 years?

    CEO.CA platform useful to 500k+ people. Proud of and enjoying the content I'm making. An early backer of several major discoveries, ideally gold in Canada. To build an important two way business financial information channel, and participate in some mining and energy discoveries… That would be nice on a professional front. Personally, I look forward to having a family and losing my freshman 50…{is that pounds or kilos?}

    You're clearly a handsome young man. Is there a special lady, or man in your life?

    Coming up on two years with Chelsea (Chig for short). She's a marketing co-ordinator with a childcare company and we have lived together for about four months now. That's going really well, so thanks for asking.

    Here's a tough question for you… Can you name any competitor website(s) that you are impressed with?

    Keith Schaefer of Oil and Gas Investments Bulletin has an ugly web site but it's a workhorse and he measures everything. There's no ego marketing in Keith's program, it's all results-based and I respect his program. He could definitely do better with design, but unless the numbers say it's a priority for Keith, he couldn't be bothered to pretty it up.

    Stockwatch.com as well, I would be lost without.

    What advice would you give to newbies looking to enter our line of work?

    People climbing the ladder are cutthroat. Expect a lot of pushback. Accept it as valuable feedback. Finally, share your stuff in Chat.ceo.ca, there are some good people paying attention.

    Thank you for your time and cooperation Tommy… release him, he's free to go now.

    Apr 10 9:30 AM | Link | Comment!
  • Ucore Rare Metals' CEO Interview Thinks His Stock Is Too Cheap

    The following interview of Ucore Rare Metals' (UCU.v) &(OTCQX:UURAF) Jim McKenzie, President, CEO & Chairman was conducted by phone & by email over the course of several days ending March 31st. The opinions and facts contained within this article/interview are entirely that of Ucore's senior management. The management team is excited about recent developments that they feel are worthy of attention. Please continue reading to find out more.

    On March 2nd, Ucore (UCU.V) & announced it had successfully separated individual rare earths at a high purity level. Many were excited, some were skeptical. Can you explain the skepticism?

    Any time a new and potentially disruptive technology is introduced, the initial reaction is often denial. Separating the lanthanide suite of metals, without the use of expensive and environmentally invasive Solvent Extraction methodologies, is the holy grail of the REE sector. The MRT technology has a long pedigree in the metals processing industry. As pundits and investors in the REE space come to understand the technology and its attributes they will accept it very quickly. In hindsight, MRT's applicability in the REE sector will seem like an obvious solution. Readers should understand that the MRT technology is already deployed commercially in 40 locations globally, just not for the purpose of separating rare earths….yet.

    Your deposit is in Alaska, do you expect to be able mine year round? Will infrastructure and manpower be a significant challenge?

    Our location at the southern most tip of the Alaskan panhandle has a temperate climate. The weather is in the same system as Vancouver with lots of rain and little snow. The Bokan Mountain project and Kendrick Bay port will operate year round. Key to our story is that our deposit is on a previously mined property. Thus, a road network and other infrastructure is already in place. Our site is less than 1 km from a deep water port facility.

    Please describe, in layman's terms, how the MRT process works and why Ucore thinks it could be a game-changer?

    The secret sauce in the MRT process is the high selectivity of the IBC designed ligands. The 'Superligs' (IBC engineered molecule) are designed to use chemical attributes of the target elements to ensure the 'selection and capture' process is accurate and complete. The process by definition puts the complexity of the separation process into the upfront engineering and design of the ligand. Because the ligand works so well, the system does not need heat or pressure, making it incredibly fast and clean.

    The pregnant leach solution "PLS" is run through columns that contain Superligs. The Superligs are ligands tethered to solid beads that form a filter in the column. As the PLS is flowed through the column, the target element is trapped and held by the Superlig. Importantly, only the target element is trapped, giving us +99% purity and all of the target element is captured, giving us +99% recovery.

    The chemicals used in the system from start to finish are innocuous. There is usually a trade off between % purity and % recovery in any separation process. However, the unprecedented selectivity factor resident in IBC's technology has delivered performance metrics previously unavailable in the REE sector. The nature of the process, fast, small, clean and accurate contributes directly to the technology's cost effectiveness.

    Think of it this way, if one had a barrel of M&M's, using the MRT technology would be like capturing (or recovering) virtually all of a single color M&M. Amazingly, it would pull out 99+ / 100 of that colored M&M. By comparison, solvent extraction, like that used in China, has closer to an 85% recovery. The difference between 85% and 99%+ recovery is staggering as our superior recovery is a pure margin boost.

    I read that Ucore owns the global rights for MRT in metals recycling & tailings processing. Could you generate cash flow before the Bokan Mountain project begins?

    That is correct and there is tremendous interest from mining and processing parties globally. We are currently focused on progressing the Bokan project but we have capacity to do some development work in collaboration with the owners of other compelling projects. Largely ignored by the investment community is that we will have the ability to remediate and even create new revenue streams from tailings ponds and waste dumps. Make no mistake, we remain laser focused on Bokan, but we feel that use of MRT technology in other applications could result in significant nearer-term cash flow. Ucore shareholders could benefit from spin-off opportunities.

    How does Ucore's Bokan Mountain project compare in size and importance to existing and emerging global peers?

    Bokan Mountain is very much a 'right-sized' project. We have drilled enough of a resource to give us a compelling 43% IRR with an 11-year mine life according to our PEA. The products that we will produce will supply the critical requirements of American industry. There is tremendous 'blue-sky potential' to grow our resource but our engineers believe that our cash is better spent on advancing our project to production.

    Which key Rare Earth Elements will Ucore produce? Which will be the greatest contributors to project economics?

    We feel our products are exactly what the U.S. market requires, 90% of our revenue will come from CREO's. CREO's are a term coined by Jack Lifton for Critical Rare Earth Oxides, Dysprosium, Terbium, Yttrium and Neodymium.

    Can you explain the US $145M that Ucore is slated to receive? Who it is from and what form it will take?

    We are confident we can overcome the most daunting hurdle, financing our CAPEX. With 70% already covered by the State of Alaska through the Alaska Industrial Development & Export Authority "AIDEA" we have tremendous interest from other financiers to partner with Ucore and the State to expand the risk profile of the proposed bond issue to cover the full CAPEX requirement of $221M.

    Another advantage is the method in which the loan will be deployed. The State issues a bond and uses the proceeds to build our surface infrastructure. AIDEA then leases the infrastructure back to Ucore. This turns the $145 M expense in year -1, and 0 into an operating expense spread over up to twenty years. This is a huge asset to the feasibility of the project. The payback period will be shortened and the IRR will increase dramatically.

    What are some of the most important uses of your main Rare Earths?

    Quite simply our ore basket has been referred to as a virtual permanent magnet recipe. The demand for permanent magnets is forecasted to grow by 8-11% CAGR until 2020. This will create a serious supply deficit as the Chinese Heavy Rare Earth Elements "HREE" resources are depleted. We are already seeing signs of Chinese 'Resource Nationalism' where end users in China are getting access to HREEs at the expense of Rest of World (ROW) customers.

    Permanent magnets are largely responsible for miniaturization. They are often referred to as 'The Magic Metals' because of their unique properties including incredible strength to weight ratios. They are very important in all high tech, green tech, and military systems industries.. Specific products are EV/HEV automobiles, wind turbines, smartphones, missile systems, drones….

    Where do you expect to ship your products? Who are the logical end-users?

    Direct shipping will be to metal, alloy or magnet manufacturers unless of course those production systems come to us. Alaska is very interested in creating industrial clusters where industry verticals can be developed. There is developing technology in the U.S. for metal making and the manufacture of permanent magnets that could well complete a secure domestic supply of permanent magnets for American industry.

    What are the catalysts to watch for this year?

    We have a number of key catalysts this year. First, a resource upgrade with potential expansion. Next we have our Pilot Plant development. The Pilot Plant will demonstrate to strategic investors, skeptics and shareholders alike that the MRT technology scales up from lab to Pilot scale as expected. Then, a Plan of Operations filing, "POO" filed shortly kicks off the final permitting process. That should take 12-18 months. By the first half of 2016, a Feasibility Statement should be completed. Finally, winning MRT processing clients. Contracts could come later this year, or in 2016.

    Will you need to raise additional capital this year?

    We have a multi-million dollar treasury and have reduced our cash burn dramatically now that our major technical projects have been completed. Part of our ongoing function is to effectively manage our capitalization on the road to production. As of September 30th, 2014, we had 4.7mm in cash. We are comfortable for the time being, but if the need arises, we might have to issue more shares, hopefully at a higher stock price.

    Where does Ucore stand regarding partnerships, JVs, strategic investors, off-take agreements, etc?

    We have a number of JV opportunities under development. The only one I can discuss is with IBC as previously mentioned. We have been in ongoing off-take discussions with major American, European and Japanese parties over the last two years. These discussions are protected under non-disclosure agreements. We are well supported by our shareholders including Canadian and European resource funds and key local business leaders in South East Alaska. Ucore's management team and Board are also significantly invested.

    Please comment on the current prices of Ucore's Rare Earths, where prices have been and where they might be headed.

    As we predicted, there's increased pressure on HREE pricing in China. Huge stockpiles were created during the crisis in 2010-12. These stockpiles are starting to be depleted. With growing demand for permanent magnets in concert with declining supply of HREEs from China, we have seen a steady increase in Magnet material prices since November, 2014. As GDP growth in the U.S. and China recovers we expect these pricing metrics to continue to improve.

    What is your view on China's role in the Rare Earths sector today? How do you see China's evolving over time?

    China is working hard to get their Rare Earths industry under control. The 13th, 5 year economic plan begins in 2016. A pillar of this plan will be to address environmental issues. This will require the implementation of improved mining and processing techniques as well as significant work on remediation. This will increase the overall production costs of REE operations. China was early in recognizing the importance of REE's in the modern world. They have a distinct advantage in production and processing because of their experience.

    They will continue to dominate the market and attract downstream producers due to their resource advantage. On the HREE side however, the Chinese recognize that they will require more magnet input materials than they can possibly produce. In my view, China would already be a net importer of HREE except there is no significant production outside the country. We are starting to see Chinese investment in HREE projects outside of China such as in Northern Minerals, in Australia. That took the only HREE resource, at a similar development stage to Ucore, off the market.

    Are there any misconceptions about Ucore that you would like to address?

    We have always had our naysayers but we continue to deliver. We have the right product, in the right place and it looks more and more like our timing is right as well. The quality of our ore and the tremendous logistical advantages of our jurisdiction are enhanced by the financial support from the State of Alaska. We cannot overstate the importance of the support we receive from Alaska and their funding arm AIDEA. Our new partnership with IBC giving us access to MRT will unlock tremendous value in the Bokan project. Not only will it lower our costs but it will enable us to sell pure oxides that have a 40% revenue uplift compared to our competitors that contemplate selling a 'mixed mineral concentrate.' This technology will also enable us to consider adding scandium, niobium, tantalum, and halfnium to our value basket.

    Apr 02 7:44 AM | Link | Comment!
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