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  • Hollow Men, Hollow Markets, Hollow World [View article]
    Around the time that Conrad and Eliot were deducing the existential horrors of the modern age, Jay Gould described Wall Street as an uncontrollable ocean that required careful navigation. While the methods of deceit and misdirection have evolved, the conditions you describe were similar to those that inspired the investment theses of Benjamin Graham and Warren Buffett.
    Apr 2, 2014. 10:23 AM | 4 Likes Like |Link to Comment
  • Warren Factions: The Growing Bull Camp [View article]
    I think EGY has some properties in the North Dakota/Montana region although your point still stands.

    In addition, you may be thinking of their New Mexico assets. I haven't looked into those too much, as their focus is on the Wyoming CBM properties for now and I think rightly so.
    Feb 28, 2014. 11:11 AM | Likes Like |Link to Comment
  • Warren Factions: The Growing Bull Camp [View article]
    Thanks for your comment, Zvi. I tend to think new management is an improvement, especially CFO Stewart Skelly, who almost immediately trimmed expenses and debt as detailed above.

    WRES does have some very attractive assets, so it's certainly possible that someone would try to acquire them. However, I am going off the assumption that higher natural gas prices and better than expected earnings numbers are driving share growth. The fundamentals seem to back up what's going on right now, but if the stock keeps shooting up so quickly we might have to reevaluate.
    Feb 27, 2014. 06:22 PM | Likes Like |Link to Comment
  • Chesapeake Energy: Net Debt Gutting Shareholder Value [View article]
    CHK is in a similar bind as many of the major gold miners, who are still slogging through debt they accumulated at the height of the gold boom. Companies like Barrick have similarly struggled to reduce debt levels while trying to unload underperforming assets.

    Essentially, by buying CHK you're betting that the firm has learned its lesson and will reduce debt as soon as higher gas prices generate better cash flows.
    Feb 5, 2014. 01:32 PM | 4 Likes Like |Link to Comment
  • Bankers Petroleum: Massive Resource, Steep Production Growth, Strong Upcoming Catalysts, Significant Undervaluation [View article]
    Good, overlooked company and great analysis. Also bullish on BNK Petroleum, which was spun off from Bankers, though focused more on natural gas.
    Feb 5, 2014. 01:16 PM | Likes Like |Link to Comment
  • A Rare Anomaly In The Gold Market [View article]
    Excellent point. There can also be significant shifts in project economics after the mineral property is aquired.
    Jul 2, 2013. 11:10 AM | Likes Like |Link to Comment
  • A Rare Anomaly In The Gold Market [View article]
    Focusing on the majors in this analysis makes sense, but the article fails to account for the fact that many of these big producers got in trouble even before the gold price tanked, because they couldn't keep their capex down and diluted shareholder value in the process of going after boondoggle projects. A rally in gold will obviously help matters, but many of these equities will continue to trade at a discount until their management teams inspire confidence in their commitment to creating shareholder value.

    I don't think you're wrong in your conclusion, but disillusionment among gold bandwagoners is only part of the story.
    Jul 2, 2013. 10:48 AM | Likes Like |Link to Comment
  • The Real Assets/Equities Disconnect [View article]
    This was a one-off test with gold and copper (with the explanation given above). We are not trying to cherry-pick variables to "prove" under or overvaluation of the markets or metal prices, but rather trying to explain the disconnect as in our last piece, which was primarily copper-focused.
    Apr 8, 2013. 12:28 PM | Likes Like |Link to Comment
  • These Mining Stocks Are Too Cheap To Ignore [View article]
    FCX's energy plan is difficult to fathom, but its inability to find mining acquisitions is much more explainable. Copper head grades are plummeting globally and the gold mining M&A space is competitive to a detriment, even with majors like Barrick pledging restraint. Molybdenum and other light rare earths are subject to extreme volatility as long as the Chinese are holding all the cards, so better to let some junior take the risk before stepping in. That could take some time.
    Mar 11, 2013. 06:52 PM | 1 Like Like |Link to Comment
  • Copper Or The S&P 500: Which Is Wrong? [View article]
    I haven't looked at that one so closely. My uninformed guess would be some combination of fears that the commodities supercycle is over and the bullishness on equities coming from QE rather than industrial growth. That would explain the copper divergence as well.

    Of course there are other variables in shipping that make the BDI highly sensitive to volatility, so maybe the uncertainty is more of an explanatory variable than general pessimism on price levels. But I'd have to look at that more in-depth before making a more definitive case for either one.
    Feb 20, 2013. 05:18 PM | 2 Likes Like |Link to Comment
  • Copper Or The S&P 500: Which Is Wrong? [View article]
    Nothing against technical or momentum trading, but I write from a fundamental valuation perspective. To each his own.
    Feb 15, 2013. 12:48 PM | Likes Like |Link to Comment
  • Copper Or The S&P 500: Which Is Wrong? [View article]
    Copper has long been considered a proxy for global growth. This is both intuitive and backed up by historical data that I didn't consider material to what I was doing here. Within that framework I was looking at a significant breakdown of a relationship within the last few years for the purposes of examining short-term spreads. This is why I looked at daily prices rather than monthly. Long-term price forecasting would require a longer sample period.

    From a qualitative standpoint, the relationship has broken down because of concerns over China's economic slowdown. I believe, for reasons stated in the article, that the market overreacted to a certain degree to these concerns.
    Feb 14, 2013. 05:34 PM | Likes Like |Link to Comment
  • Copper Or The S&P 500: Which Is Wrong? [View article]
    Good question, Mike. I have used these variables in the past (though generally shorter-term treasuries than 20+) , but this was specifically focused on the correlation of the equity market and copper prices, especially considering my general feeling that the market over-reacted to China's slowdown last year.
    I am working on a project involving copper/gold spreads that will include some of these more macro variables, and hopefully I will be able to post about it here early next week.
    Feb 14, 2013. 04:10 PM | Likes Like |Link to Comment
  • Copper Or The S&P 500: Which Is Wrong? [View article]
    Emerging market demand ex-China in addition to supply deficits (BMO analyst Jessica Fung just predicted 36,000 ton shortfall this year) should push prices even higher. I think that's what we're seeing in a lot of commodities, except in cases of supply gluts (like shale gas).
    Feb 14, 2013. 11:16 AM | Likes Like |Link to Comment
  • Kevin Puil: $4/lb Copper Is On Its Way [View article]
    First Quantum has some very promising property in Zambia after getting their mining license revoked in the DRC back in 2010. Zambia has great average ore grades of 2-3% in copper and is a much more favorable business environment than the DRC, in spite of recent royalty increases.
    Feb 6, 2013. 08:45 PM | Likes Like |Link to Comment