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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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Rangeley Capital on Harvest
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Rangeley Capital Best Investment Ideas
  • Just A Few ?s For… Douglas Friedman 7 comments
    Nov 6, 2013 10:45 AM | about stocks: GOOG

    Douglas Friedman,

    How do you find ideas that are not already priced in?

    This question immediately made me think of Paul Samuelson's quote regarding Renaissance Technologies in the book, The Quants, where it reads, "The MIT economist and Novel laureate had long held that it was impossible to beat the market. He qualified that statement by saying that if anyone could do it, they would hide away and not tell anyone about their secret." Unfortunately for me, I have no such secret so I'm happy to share a source I frequently use. I look at every SC-TO filing that comes out. Originally, I looked at these fillings specifically for odd-lot opportunities, but have since discovered they are a great source of opportunities outside of just this and frequently lead one to companies re-purchasing significant shares, companies going private, potentially inefficient blank check company transactions and more. Form 10 filings are also a great source for ideas (filed for spins); here is a link that shows all the Form 10 filings.

    Outside of specific filings I always look at, I have the habit of using Google Trends for any type of consumer, technology or retail related stock. I find this can simplistically help understand the public interest in the company's product. However, with mobile apps becoming more dominate every day, this is becoming less useful.

    What is a subject or discipline from outside of investing that you've found useful to your investment philosophy and craft?

    Given the frequent noise and volatility in investing a "discipline" that I believe helps me in my investing is my family and friends. Specifically, family and friends help me keep perspective on the frequent noise in the market. As much as I enjoy researching ideas, there is the direct tradeoff between time on ideas and time spent with family and friends. As a result, I am forced to consider what is worth spending my time on, which I believe helps me stay above a lot of the news.

    If you could be rid of one topic on SA, what would you pick?

    There are plenty of topics that do not interest me on SA, but that is specific to my personal preferences and investing style. I am sure others find the articles I dislike particularly interesting and as such think they are all deserving of a place on the website. The one type of article that I cannot stand though is pump and dump articles. Obviously this is not an easy thing to monitor, but is something that frustrates me.

    If you could hear more from one other investor on SA, who would it be? (I'm asking the questions here, so am ineligible as an answer).

    Can I choose Rob or Rich to hear more from them? Outside of the Rangeley crew, I enjoy reading Andrew Shapiro's articles and I enjoyed Ruerd Heeg's summary article the other day.

    Doug, thanks for your answers and thanks for your creative and deeply researched investment ideas. I hope that we have a long and lucrative future of collaboration.

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Comments (7)
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  • Mack Wheaton
    , contributor
    Comments (166) | Send Message
     
    Chris, one more question for Doug: Any updated thoughts on Allana, specifically now that licensing is secured and a significant vein of kainitite potash (SOP) has been identified? Looking forward to a follow up article.
    12 Nov 2013, 10:12 PM Reply Like
  • Douglas Friedman
    , contributor
    Comments (12) | Send Message
     
    Hey Mack,

     

    Some thoughts below on the events and developments since the last article for you.

     

    Best,
    Doug

     

    Mining License:
    - It took longer then ideal to attain, but has been passed
    - License is for both the Allana Package and the Nova Package
    - Looks like income tax will be 25% with 5 year tax vacation
    - Potential that tax holiday gets extended

     

    Macro Landscape:
    - Obviously this has significantly deteriorated in the MOP market, not the case for SOP
    - At the end of the day, I believe this is a play for Russia to acquire Belaruskali. This is not something I am banking on and there is no clear time-line here. The closest example to this was the natural gas pipelines in 2011 between Russia and Belarus.

     

    LMM Board:
    - Diana stepping down from the board has certainly weighed on the stock.
    - The party line is that she was promoted to head 2 other groups at LMM and simply doesn't have the time. This does not seem logical.
    - There are a few other possibilities here.
    - As they own >14% of the Company despite not having a Board member their filing requirements do not change so there is no benefit there. Besides with ~38mm shares there is no way they could liquidate even if they wanted to.
    - Another possibility is that Diana / LMM was conflicted with one of the strategics and therefore had to step-down.
    - At this point there is simply no way to know.

     

    Nova 43-101 Package:
    - This has also put pressure on the stock from Nova shareholders dumping their shares into the market.
    - Between the original acquisition and the Nova resources they had ~41mm shares that were released from escrow.
    - As you noted in your question the SOP on the Nova land package is certainly interesting / exciting especially given the shallow depth.
    - However, the reality is that this provides upside in the case of an acquisition or production down the road, but is not something that can be monetized in the short-term. The current financing / feasibility is geared towards the original package and that is what will be targeted. Once that is up and running, this provides further upside, but is not particularly useful in the short-term.

     

    Financing:
    - There are no major updates here.
    - Have been numerous leaked articles around ICL and development banks, but those are just that - leaked articles and cannot be relied upon.
    -

     

    In Summary:
    - The macro landscape has been painful and the market is basically in a "show me" state.
    - Still think there are multiples of upside, but will happen in legs.
    - Financing should get underway in the next month or two, which will hopefully get things moving in the right direction.
    - In addition there is always the possibility of a take-out by Yara, ICL or others.
    14 Nov 2013, 11:22 PM Reply Like
  • happyshorter
    , contributor
    Comments (964) | Send Message
     
    Thank you for this clear update of the overall picture.
    Well done.

     

    You wrote about Diana:
    "- Another possibility is that Diana / LMM was conflicted with one of the strategics and therefore had to step-down.
    This was my interpretation.

     

    Do you think there are any chances that Allana would be admitted to the AIM market of the London Stock Exchange as they applied for recently?
    And what would be the consequences?
    Could we see dilution?
    15 Nov 2013, 03:04 AM Reply Like
  • Mack Wheaton
    , contributor
    Comments (166) | Send Message
     
    Thanks Doug for the detailed and insightful response, if by chance your dad is Doug also, tell him best regards from Dave S in Lehigh Valley, PA a business associate of his in years past.
    27 Nov 2013, 09:26 AM Reply Like
  • Douglas Friedman
    , contributor
    Comments (12) | Send Message
     
    I see no reason why they wouldn't be admitted to the exchange. If they are admitted that in and of itself will not cause dilution. However, I would not be surprised if the equity participants in the financing prefer the AIM securities over the Toronto Venture exchange or the US pink sheet so the dilution from the financing would likely flow there.
    15 Nov 2013, 04:38 PM Reply Like
  • cambodine
    , contributor
    Comments (64) | Send Message
     
    Thanks for the insights Doug. I agree that if not for the sector disfavour and Nova share exits we'd be trading much higher now, assuming that's what you were inferring. Poor timing as we are in a critical financing stage unfortunately but I believe Allana management are trying to wait out some of the market noise in order to realize more reasonable valuations presently. I'm also suspecting the AIM listing is equity related too, and I've been told an African listing is planned further down the road, likely Johannesburg I'm thinking, where there is abundant Africa wide capital looking for viable projects.
    27 Nov 2013, 11:48 AM Reply Like
  • happyshorter
    , contributor
    Comments (964) | Send Message
     
    Any idea who bought this HUGE block today (well Wednesday) between 13:17:21 and 13:19:02 (TSX) at 0.34 (52 weeks min). Over 2,000,000 shares single block.
    (Data from StockWatch.com)

     

    I was the first trade after that (but not could not get it lower then 0.355) 13:20:06
    But I did not think the stock would recover on the same day.

     

    I think that this is a good sign, unless this is some one who wants to resell very fast (From the same broker 37,500 were sold 3 minutes after at 0.355) for a quick gain.

     

    This happened twice in the past months
    The first time, the stock jumped from 0.42 to 0.65, in the next 2 or 3 days,
    The second time, it jumped from 0.40 to 52
    But those were big volumes on news,not a single buyer like today.

     

    Load up!
    28 Nov 2013, 12:56 AM Reply Like
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