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John Polomny
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John Polomny is an individual investor and speculator seeking unique, overlooked, and well researched opportunities and speculations from all over the world.
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  • 2012 Review And What I Am Doing In 2013 7 comments
    Dec 23, 2012 2:10 PM | about stocks: URA, URPTF, MAUXF, CALVF, CTPNF, YMAIF, MNGGF, VCVOF

    I know many readers of mine followed me over to SA from my previous newsletter days. My intention is to update readers on what I did during 2012 and update current positions. I will also lay out what I am expecting and doing in 2013.

    Vietnam Opportunity Fund

    This is a closed end fund that invests in the Vietnamese Stock Market and private equity deals in Vietnam. The website is here if you want to check it out. I am a big long term believer in the ascendancy of Asia this century and what I like about this fund is the net asset value of the fund is around $2.40 per share and the fund sells for around $1.75. You are getting the opportunity to buy $1.00 for around $.65 in a growing economy with many tailwinds. The management of the fund realizes the discount to NAV and has been buying in shares.

    Mart Resources

    This is the oil producer in Nigeria that was my stock of the year pick for 2012 and returned well over 100%. It started paying a pretty decent dividend this year, however I have trimmed back my position. The company has had problems with pipeline thefts and recent flooding in its area of operations. Nevertheless the company has excellent upside as it has not fully drilled off its acreage. This one is risky but I still hold some shares.

    Caledonia Mining

    This is the gold miner in Zimbabwe. The company has done a great job in bringing back its Blanket mine and the company has really delivered on the operations front. If the company was operating anywhere else it would be worth multiples of where it is now. The company continues to expand production and is the lowest cost operators in Africa. Cashflow has been impressive and the management intends on initiating a dividend early next year. This is another one with quite a bit of upside but it is risky with political risk being the biggest headwind. Zimbabwe is talking about having elections next year so expect the rhetoric about black empowerment and possibly nationalization to rear its head again. Mugabe could die at anytime and that would certainly be both chaotic but also possibly loosen things up. The company has the gold price as a tailwind and any decent political outcome could launch the shares.

    Cortex Business Solutions

    This is my 2013 stock of the year. I just wrote about it recently and you can read about it here.

    Mongolia Growth Group

    Irrespective of all the negative news that has recently come out about the political situation in Mongolia I am still extremely positive on the country. The economy continues to grow double digit and the Oyu Tolgoi mine is commissioning now with the concentrator ready to be dedicated on 12/27/12. This is going to be a major economic driver next year (A billion plus pounds of copper and 650k of gold per year). Plus we need to keep in mind there are quite a few other projects happening in Mongolia. I am a long term investor in Mongolia and I continue to accumulate shares in Mongolia Growth Group which continues to build book value and has several real estate redevelopment opportunities that could add multiples onto the share price.

    Mongolia Stock Market

    I am back in buying shares. I think the market has either bottomed or is near a bottom and I am scaling into some positions. I like the following companies Remicon (cement), APU (beverages), BDSEC (largest brokerage firm), E-Tran Logistics (Logistic services and expediting), Tavan Tolgoi (also known as little TT, met coal producer). Of course I have a longer term perspective so even if I don't catch the exact bottom I think I will do well buying in now.

    Myanmar

    Seems to be the flavor of the month and really no way to play it right now for smaller investors. I do have a small position in Yoma (real estate) but I bought it a while back and it is now likely overvalued. I will be watching an writing this up as soon as any vehicles for investing in Myanmar become available.

    Uranium

    I think 2013 is going to be a great year for uranium. The bottom is in and several catalysts exist to propel it much higher. The new Japanese government has said they will be turning the country's reactors back on over the next few years. We knew this already as they have no other choice. As an aside this is more proof positive that renewables just are not scalable at this time. The country has a trade deficit due to all the fossil fuels it is importing and unless they lower their energy costs the high cost of energy could cause the entire economy to implode. The Chinese have lifted their post Fukashima moratorium on new nuke builds. The Megatons to Megawatts program with Russia ends this year and Putin has already said it will not be renewed. The major point is that the uranium spot price is $44.75 and the long term price is $60-65. Hardly any miners can make money at this price even with demand exceeding production. The price needs to rise to around $80-85 in order for sufficient capital to be attracted to the uranium mining sector to erase the supply/demand deficit. As always the cure for low prices is low prices. I am buying Uranium Participation Fund and the Uranium ETF.

    I will also be writing about some more opportunities in Africa and Southeast Asia. That is where the growth and the action is. I continue to see the western welfare states stuck in their multi year decline. Yes there are pockets of opportunity i.e. shale oil and gas but it will take decades to unwind the fiscal messes and entitlement mindset in the populations of the west. Why swim upstream when the rest of the world has better opportunities and some places are growing double digits. I appreciate all the readers and thank you for another year of readership. I wish you all a Happy Christmas and safe and profitable New Year.

    Disclosure: I am long OTCPK:MAUXF, OTCPK:URPTF, URA, OTCQX:CALVF, CTXZF.PK, OTCPK:YMAIF, OTCPK:MNGGF, OTCPK:VCVOF.

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Comments (7)
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  • MarginOfSaftety
    , contributor
    Comments (9) | Send Message
     
    Hi John,

     

    I am one of your former subscribers. Appreciate the info you keep posting on seeking alpha. Best wishes for 2013!
    12 Jan 2013, 10:17 AM Reply Like
  • John Polomny
    , contributor
    Comments (499) | Send Message
     
    Author’s reply » Thank you for continuing to read my writing and I am grateful for the support.
    12 Jan 2013, 11:14 AM Reply Like
  • FIFOkid
    , contributor
    Comments (186) | Send Message
     
    John I also enjoy your reading and will always appreciate what you have done for Caledonia Mining. At least the fundies fit the parameters what I prefer to find in an investment.

     

    As for the pick in 2013 why not Khan Resources? The judgment comes due in November. You probably have a strong opinion on that situation that would be interesting to hear your perspective.

     

    It seems with exception to Mart what really worked well for resource companies in 2012 was special situations due to political related situations. Avion, Centamin Calvalley (2011 that was unlocked in 2012) etc
    12 Jan 2013, 12:41 PM Reply Like
  • John Polomny
    , contributor
    Comments (499) | Send Message
     
    Author’s reply » It is interesting you mention Khan Resources. I have dealt with Russians and Ukrainians before and anywhere they are involved I usually go the other way. Sergey Kiriyenko is the head of Rosatom and Atomenergoprom and I have been watching him slowly consolidate power and control over nuclear fuel and uranium resources in former Soviet satellites. This Khan saga seems like it is part of this. However I am not as up to speed fully on it so maybe I am wrong. I do know that Kiriyenko is a Putin crony and I also know that he has stated that Russia wants to have a level of dominance in nuclear power like they do in oil. Take that for its worth.

     

    The Centamin situation is pretty interesting as the share price got shelled recently due to some issues the company had with the Fuel minister cutting off diesel to the plant and the customs service refusing an export license for Centamin's gold which caused a working capital crisis and necessitated a short shutdown at the mine. Nevertheless it appears the right palms were greased and some ministers changed out and now everything is back on schedule. Meet the new boss, same as the old boss I guess. I like Centamin and picked up shares when it got nuked and it has recovered nicely. The thing with these kind of companies operating in these areas is that you have to approach it with your eyes wide open and leave your western concepts of fair and just at the door. These places are mostly run by corrupt people looking to get themselves set up financially. Why else are they politicians to help the people, dont make me laugh. So in order to do business you have to play by the rules as they are are not the way you want them to be. If you can handle the occasional ass whopping and buy when others panic you can do nicely. That is my view, but I am a cynic so take that into account.
    13 Jan 2013, 10:49 AM Reply Like
  • FIFOkid
    , contributor
    Comments (186) | Send Message
     
    My inferred question with Khan is do you think they will collect their judgments against the gov't of Mongolia and ARMZ? I think their case is very strong and has won in the lower court. Lots of money at stake considering the paltry market cap of the company. I always thought Mongolia was and is still tied to the Soviet Union/Russia and they need to break that connection to be considered a better environment for investment. You might have more insight on these changes.

     

    Its odd that you mentioned Centamin that probably was the easiest non risk money I ever made. There was a window of 1 1/2 hours where the resolution regarding the diesel supplies was made public in the Egyptian press but the stock did not move higher on the PR. Bought a bunch at 43 sold at 69 and rebought my free cost shares the day after from the forced selling volume due to the index deletion at 60.

     

    Apparently the recent follow through price action on the stock is related to the signature on file with the petroleum and mine ministries. The judgment rendered from the court case in October was actually won on the technicality of no signature of the concession in question because the company came to court ill prepared.
    14 Jan 2013, 11:17 AM Reply Like
  • John Polomny
    , contributor
    Comments (499) | Send Message
     
    Author’s reply » "My inferred question with Khan is do you think they will collect their judgments against the gov't of Mongolia and ARMZ?"

     

    No I do not think they will collect any judgement or if they do it will be watered down. The Russians only comply with the law when it is to their advantage. Khan basically is getting robbed but that By the way I saw yesterday that Uranium One is going to be absorbed fully by ARMZ. More validation of my Russian uranium fuel consolidation theory?
    15 Jan 2013, 09:56 AM Reply Like
  • Warrenyo
    , contributor
    Comment (1) | Send Message
     
    2013 is gone . Its April 2014 and I've just come across your instablog and I am interested in Myanmar .Please send me a link if you have any further reads. Thank you.
    10 Apr, 04:41 PM Reply Like
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