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After slumping 13% Friday on disclosure of a SEC investigation, Molycorp (MCP -9%) continues...

After 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.
Comments (10)
  • What a Mess we are in with MCP .... :-(
    12 Nov 2012, 11:06 AM Reply Like
  • Agreed. Going to ride it out? Going to zero?
    12 Nov 2012, 12:12 PM Reply Like
  • MCP looks like it has a $3.50 downside target...for now.

     

    Regards.
    12 Nov 2012, 12:29 PM Reply Like
  • what about the SEC investigation into their financials going back to August this was not revealed until now.
    12 Nov 2012, 12:12 PM Reply Like
  • In 2010, it started at about 13 US $ before the" mad Rare Earth" Bubble, it's even below now .... :-( again.
    12 Nov 2012, 12:40 PM Reply Like
  • this is a long term investment...it will be great in Q1
    12 Nov 2012, 01:54 PM Reply Like
  • Every time a stock goes in the tank because of bad economics, all kinds of ambulance chasers and short sellers show up and try to vulture off the carcass. In this case, the rare earth minerals business collapsed due to worldwide recession. It is not a surprise that these ambulance chasers are coming in with class action and calling the SEC to drum up their case. On the other hand, that doesn't mean there's anything to this whatsoever other than the business is bad. On the other hand, the company just this summer did a large public offering and it would be routine that the investment bank underwriting team has completely scoped the operations and the pending litigations and has satisfied itself that the books are clean enough to do the offering. Additionally, if there were misstatements made, unless it is material and egregious and with intent to defraud, legal costs and other potential payouts will be easily covered under Directors and Officers insurance. Given the so called "possible misstatement" is from summer/fall of last year, the timing suggests that the damage to the company's stock price due to the collapsing market for rare earth minerals has already taken place and so even if the ambulance chasers can claim some material inaccurate statement on the part of management, I cannot imagine it will be material enough to cause a collapse of this company such as been bantered about on this blogosphere in the last 2 days. For MCP to go into some dire situation due to this claim is highly unlikely.

     

    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.

     

    
    12 Nov 2012, 02:39 PM Reply Like
  • Hang in there Y'all I think it will work out with the sec. Agreed, it will pop nicely in 2013 q1
    12 Nov 2012, 03:04 PM Reply Like
  • Greetings Revalen,

     

    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.
    12 Nov 2012, 03:07 PM Reply Like
  • This kind of price action reminds me of a few storied stocks from the past, i.e... Bre-X, Sino-Forest, Enron....hurry someone call Muddy Waters!
    13 Nov 2012, 12:31 AM Reply Like
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