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  • Presidential Election Year Bear Markets And 2016  [View article]
    I agree every presidential election when the incumbent is not or unlikely to be re-elected amounted to a bear market in the latter half of the presidency. This has worked 100% of the time since the Johnson administration. Couple this with the statistic of the world central banking balance sheet reserves in a 800 billion decline since August of 2014 indicates we are in a deflationary environment that appears to beginning to spiral out of control with lost confidence in the declining market.
    Feb 9, 2016. 05:29 PM | Likes Like |Link to Comment
  • Kurdistan operators get payments for oil exports  [View news story]
    A big fundamental shift today in the February payment. The KRG finally started to pay down its arrearages in the latest payment. Hopefully, with this windfall it can begin to perform some open market purchases of its below par debt.
    Feb 5, 2016. 04:08 PM | 2 Likes Like |Link to Comment
  • John B. Sanfilippo & Son beats by $0.14, beats on revenue  [View news story]
    Oh well I should have paid attention to the bulls here. I certainly got this one wrong thinking it was another cyclical opportunity and cashed out way too early in the mid 20s albeit made a 200% profit over the course of the year I held this. I never expected a major expansion of the P/S ratio past historical levels with persistent commodity price weakness at the wholesale level and consistent introduction of value added higher margin products offered.
    Jan 29, 2016. 11:05 PM | Likes Like |Link to Comment
  • Nevsun Resources: Value Trap To Unlock In 2016  [View article]
    Doc great article but remember Nevsun so far has been persistently plagued by receiving a 5- 10% penalty for its Cu pricing all during the supergene phase which has been a nagging problem for it and so far never been addressed by management or asked by any institution in a conference call. I thought if there was a galena issue in the ore at the smelter it would be present during the sulfide phase.

    Also it has shown a big miss in recoveries last quarter of 6% below feasibility study expectations. I think at the current price assuming they receive around 1.85-1.90 /lb (when Cu is $2.00 spot) they match all in costs at 3.5%Cu equivalent which is pretty close to your assumption and is around the average grade of the Bisha pit during the zinc phase.

    Tough to say if this is the year for NSU given headwinds of the federal reserve shrinking its balance sheet not being historically kind to stocks and has been deflationary but I think it will be a year of potential opportunity as our political regime shifts again. I think subsequent years will be kinder to NSU and admittedly it is one of the best houses in a really bad neighborhood and has staying power to weather a mining cycle and I think zinc has highest probability to show a high percentage recovery going forward and its bear market has been of longer duration compared to other metals and it will be more probable they use their excess cash wisely and make a good purchase(s).


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    Jan 29, 2016. 10:22 PM | 2 Likes Like |Link to Comment
  • How To Properly Use Cost Reporting In The Mining Industry  [View article]
    Thank you for finally writing an article on the issues of the revised standard accounting pitfalls of the mining sector where revisions should be extended to the 43-101 feasibility study which is also a terribly misleading report even with its supposed 15% variance factored in.

    I also appreciate your guidelines of a base model in screening firms for potential projects.

    Unfortunately, in the current financial condition of the resource sectors it will take many company failures for your proposal of a more conservative accounting standard. Recently the federal reserve governors are suggesting the resource sectors assets should be not marked to market anymore to protect the big companies from default and hide problems much like the crooked banking system during the toxic mortgage crisis.
    Jan 29, 2016. 04:02 PM | Likes Like |Link to Comment
  • Oil Is In A Bull Market  [View article]
    Strictly looking at the historical data of the magnitude of past crude oil price corrections always topping at approximately 75% off of a price cycle I would agree with your assessment that the bottom at $26 is in. At this point it would take a major macroeconomic selling event (which I can not rule out ) that forces liquidity of any asset at any price for us to surpass recent lows.
    Jan 25, 2016. 04:37 PM | 1 Like Like |Link to Comment
  • Many Energy Companies Seem A Bit Foolish  [View article]
    This is never discussed besides the production growth issue to maintain the E&P sector is many times faced with unpredictable depletion rates and most investors are totally left in the dark regarding reservoir quality of individual fields/wells which is a big reason why capex expenditures usually have to continue at a brisk pace. Even in times where there is flat pricing if production falls quickly the company would then even be challenged to fund a large debt obligation.

    I agree of the challenge finding the ultimate nearly riskless play with enough upside potential. It appears for the next cycle is going to require you to carry more risk and precise timing since my favorite go to boat anchor stock in this kind of situation(Dragon Oil) was recently purchased by the government of Dubai.

    A debt free balance sheet would be my first screen but in this environment the few debt free companies that remain even those who produce lower cost conventional production really don't have a bullet proof asset base that can weather operating costs at this price.
    Jan 15, 2016. 07:55 PM | Likes Like |Link to Comment
  • Freeport-McMoRan: No Strategic Alternatives Now  [View article]
    You have remember the current FOMC reverse repo program is shrinking the money pool allocated to equities for the investment banks which is the catalyst for the general selling.

    With regard to metals inventories do you think it really reflects the published data? I was quite surprised Glencore was able to pull out of thin air a nine month supply of zinc and add it to the LME when it was performing some housekeeping to its balance sheet a few months ago.
    Jan 13, 2016. 04:36 PM | 1 Like Like |Link to Comment
  • Yellen's Myth (Part 1)  [View article]
    I think the nervous breakdown by usually dovish Yellen had something to do with their irrational change of course in policy intentions with her conscience knowing the recovery is still on very tenuous footing. I figure the current Fed's logic is this is about the best economic conditions it will get to do the inevitable purge of its excesses before the next political administration which seems to be on cue with what has been done looking at the past 50 years of historical data.

    The treasury repos that are currently happening in the marketplace (475B auctioned to banks on Thurs) will be the catalyst to eventually send the markets lower. BTW the abrupt shrinking of the Fed's balance sheet has been a 100% accurate 1-5 month leading indicator historically.
    Jan 1, 2016. 10:36 PM | 2 Likes Like |Link to Comment
  • John B. Sanfilippo Nut Exactly What It Used To Be  [View article]
    I also sold out too early given the earnings momentum haven't shown much improvement since the year after the shortage year.

    I still believe the sector has benefited immensely from a shortage which allowed them to massively raise prices which in subsequent years followed by low commodity prices with a reluctance to lower selling prices which resulted into a stable earnings and selling prices and as a result rewarded with a major PE expansion. TSN and MGPI also capitalized on this.
    Dec 24, 2015. 02:44 PM | Likes Like |Link to Comment
  • Cloud Peak Energy: Prospects Might Have Changed For The Better  [View article]
    According to the S&P report on the bond ratings page 3 of 8 these particular 2019 and 2024 notes are unsecured. I have already barked up this tree after the strong Q3 report and looked into these bonds into great detail given CLD's current cost advantages to competitors. Another negative concern is the recently imposed reclamation bonding liability set on the industry in response to ANR's default.
    Dec 21, 2015. 01:48 PM | Likes Like |Link to Comment
  • Nevsun Continues to Intersect High Grade Mineralization at Harena  [View article]

    90% of the ore additions at Harena appear to be underground with most of it likely requiring mainly longhole sublevel stoping underground mining methods with operating costs averaging around $25-35 per ton with that underground mining method vs about $3 for open pit. So that ore grade is really nothing special at the current price deck.

    The good thing the firm has quite a bit of time remaining processing lower cost open pit ore (10 years) and sports the best balance sheet in the sector.

    While I think a small initial purchase here is fine to consider from pressure due to year end tax selling standpoint and taking a very long term view don't be surprised if more negative momentum develops from the sector's weakness and risk from the time cycle for the general market coupled with the short term company's deteriorating operating performance taking place as the Cu ore grades will continue to fall sequentially each quarter while the firm struggles with its recovery rate and concentrate penalties from the current ore over the next 3 quarters as the firm transitions to zinc.

    Dec 1, 2015. 03:25 PM | 1 Like Like |Link to Comment
  • The Market Does Not Realize MGP Ingredients Is A Liquor Company  [View article]
    The company operates 2 segments related to food (liquor and wheat products) under a stabile to rising revenues and margins and has one segment of fuel grade ethanol accounted under the equity method. Hence why the stock has done well.

    The big risk to the stock is in how it historically managed its commodity costs and the reason why the stock was stuck during the summer on strong results while the weather pattern in the midwest became drier. The recent push to new highs I believe has been related to the the recent heavy rains in its region where it procures commodities.
    Dec 1, 2015. 12:52 PM | Likes Like |Link to Comment
  • Ivanhoe Mines Moves Its Projects Forward, Multiple Catalysts Are Just Around The Corner  [View article]
    I prefer to invest in resource companies when the risk of dilution is zero. While I think the company is very much improved with its Zijin arrangement Kamoa's IRR from its last FS was disappointing to my standards at the price deck they used thanks to the punitive VAT in the DRC.

    Kipushi most likely will be the largest producing zinc mine in the world during its operation and while in production ironically could have a negative effect on zinc's potential price especially if the recent shut in mines reopen. I know if I were a zinc producer I would consider hedging a large portion of my zinc production if a supply price bubble forms and if Kipushi becomes operational.
    Nov 27, 2015. 06:54 PM | Likes Like |Link to Comment
  • Nevsun Resources - High Long-Term Potential With Limited Downside  [View article]
    My only beef with your article is the expectation for Cu and Zn prices will have to be awfully high on the order slightly north of 3.20/1.60 respectively for the company have a shot at a 50 cent per annum earnings clip based upon Bisha production alone.

    At the current 2.10/.70 pricing the firm likely will be near break even. Given the Cu eq ore grade will only average around a 3.5% grade.
    Nov 17, 2015. 01:20 PM | Likes Like |Link to Comment
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