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After slumping 13% Friday on disclosure of a SEC investigation, Molycorp (MCP -9%) continues...
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Monday, November 12, 2012, 10:18 AM ETAfter slumping 13% Friday on disclosure of a SEC investigation, Molycorp (MCP -9%) continues lower today. Dahlman Rose also notes MCP reported a $150M increase in capital expenditures; the firm sees 2013 as a transitional year, where cash management and project execution will be crucial in unlocking the value of Mountain Pass without the need for additional capital.
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Regards.
Furthermore, if you look at what MCP management has been doing over the last 18 months, they have been on the offense rather than on the defense. They have scooped up asset after asset that will help them greatly expand their strategic positioning within their markets. Does this look like someone that are busy mis-stating and lying to shareholders? What management is doing is to prepare for the eventual upturn and take the stock back up. They are buying assets at a great discount using the liquidity they have.
You guys blogging negative out there are either part of the ambulance gang trying to pile onto to this company or are just momentum short selling traders wanting a quick hit. It is a free country and you guys can say whatever you want but give me a break, name me some facts, guys. Name me specifics of where the problem lies and how management intentionally defrauded the public and materially concocted misstatements to entice each and every shareholder to hold on to their stock or added position and how management misstated other than piling on comments which are entirely meaningless in law or in fact. The standard for giving benefit of doubt to managment judgments in our courts of law in this country are very high meaning there's a lot of elbow room for management to make decisions and make pronouncements. Despite the usual Enron caveats that ambulance chasing lawyers like to throw out on the blogosphere to scare shareholders, the real legal standard for management to be guilty of SEC level fraud is so high that it would literally have to be mis-stating cash levels to even come close to having a meaningful impact to the company's operations. Even if management due to public embarassment has to change, that doesn't mean the assets are worthless.
I am long and will remain long and perhaps add on to the position. On Friday, 23+ million shares were traded, ask yourselves this, for every share sold these last two days, there's a purchaser. Who bought 23 million shares or more? In case you guys have short term memory loss, Molymet is a 13% strategic owner of MCP and that was at $31 per share basis this year. I am sure they are having a board meeting now of considering purchasing the rest... Just wait till the new buyers that took advantage of this price drop show up. I wouldn't be surprised at all if a strategic buyer is enjoying all this. Just look at the Titanium Metals deal announced this morning. This is a great time to scoop up this great asset at a distressed pricing level. The assets of the company are great, they have a new plant coming up with state of the art technology with huge revenue upside potential, the economy is turning up despite of all the turbulence and they even have $400 million plus in liquidity with only a $150 million cap ex draw to wrap up Mountain Pass anticipated.
Show me the material facts short sellers.... show me or cover.
We've been rare earth ambulance chasers since December 18, 2010. At that time we said the following:
"When the price gets high enough, the other producers will be able to make a profit at a time when China would have exhausted it's cheaply available access to "rare" earth minerals. Wherever that "rare" earth mineral is located on this planet, it will come online and into production fairly quickly at the right price.
"Additionally, folks will find that "rare" earth isn't so rare when the need for such materials is diminished due to switching to different more easily accessible resources due to the price of such "rare" minerals rising." (source: http://seekingalpha.co...)
Since those remarks, MCP is down -81% but not before doubling in price. There is a lot of give and take in investing. Your optimism should be rewarded, but it may take a while depending on the price you pay and how quickly you take profits.
However, history has not been kind to all the bandwaggoning of the rare earth and should be avoided as a long term investment concept.
Best regards.