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gausmus

gausmus
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  • A Sense of Optimism for Steel Stocks [View article]
    Hot rolled steel is ticking at $880/short ton stateside, up from $620-ish a couple of months ago. Iron Ore is completely bull. X has a much better ore position than most. Steel producers are like oil refiners - playing the spread between product and ore (or product and scrap). X is truly integrated, which at this time is a real +.
    Feb 17 01:59 PM | Likes Like |Link to Comment
  • Expecting Australian Coal Mines to Remain Under Water for Months [View article]
    Yes, cost of steel production is going up. BUT - the availability of materials is not uniformly distributed. Asian mills are more dependent on Australian mines. To manage their material shortages, I am expecting these mills to increase prices to shoo their customers away for a little while. Those customers still need steel, and who has it? The mills that have the intact raw material supply chains. The thesis is that N.American mills (but not all mills) would benefit.
    Jan 19 09:55 AM | Likes Like |Link to Comment
  • Expecting Australian Coal Mines to Remain Under Water for Months [View article]
    Tracking your investment thesis to its logical end, one should short Asian/European steelmills and go long North America/S. America. Also, one should go long scrap exporters. Lack of coking coal = lack of coke = lack of pig iron = reduced steelmake.

    Scrap (a fungible substitute for pig iron) should become more valuable. Ergo, a firm like Schnieder Steel (SCHN) should get perky. If anything, they're selling off after a nice rally. Hmm...

    Steelmakers with undamaged supply chains (SA, NA) should see the orders come their way. AKS, NUE come to mind. AKS is not looking so hot. NUE a bit better, but no reaction to this news.

    So, I guess I'm not totally buying the "Australia is knocked out" thesis. I'm sure that met coal producers will talk their book, but the steel market just doesn't seem to moving in sympathy where it should be moving.
    Jan 17 09:58 AM | 2 Likes Like |Link to Comment
  • Calculating Mesabi Trust's Q4 Distribution [View article]
    Nice work dissecting an investment that has had a ton of momentum and two tons of opacity. Feel a lot better about it now. Nice work
    Dec 20 03:48 PM | 1 Like Like |Link to Comment
  • Deficit Commission: How Mortgage Deductibility Affects Housing Prices [View article]
    Do we really think residential home buyers operate in this left-brained logical way? Really? C'mon. I'll agree that the math works. But many factors permeate consumer purchases.
    Dec 13 11:44 AM | 3 Likes Like |Link to Comment
  • U.S. Steel Breaks Out [View article]
    Ditto on CLF. Very well managed, and as it is in a global commodity business, I view them (and MSB, and HGT, and BPT) as hedges against a devaluing US $.
    Dec 10 02:12 PM | Likes Like |Link to Comment
  • U.S. Steel Breaks Out [View article]
    A technical view on the equity, and a nice breakout pattern, to be sure. Questioning the impact of met coal markets and ore markets on domestic producers. Met coal, from what I read, has gone bonkers - net domestic availablity of met coal is down 50%, largely due to increased exports to China. Met coal producers have a strong hand at the bargaining table. Meaning: The margins for AKS, X, and domestic operations of MT are likely to take a squeezing. Your views on this please...
    Dec 9 05:45 PM | Likes Like |Link to Comment
  • Asian Growth Encourages Tata Steel to Go Shopping [View article]
    I'll respectfully disagree with Ben. Ben's right about the overall operating costs, of course. But invest in new capacity? When almost every integrated steelmaker trades at a discount to book value? Any management that would make a decision that instantaneously turns dollars into quarters (or rupees into whatever is smaller) should get fired and be sent to bed without their supper.

    Tata's management is doing the right thing. This industry needs MORE consolidation.
    Nov 29 10:20 AM | 1 Like Like |Link to Comment
  • Nucor Corporation: Nerves of Steel Required Now; Rewards Later [View article]
    It's been said before, but it bears repeating: NUE's great strength (vs. MT, X, etc) is the innate hedge in it's income statement. A scrap based NUE is a hedged NUE, as steel scrap and hot rolled sheet steel are correlated to a large degree. Also, the pay structure at NUE (smaller base, BIGGER bonus) adds to the hedge against cyclicality.

    That said, I seriously question the decision by NUE to enter into the Virgin Iron Units biz by dint of its announced DRI facilities. Iron ore is an oigliopoly. This decision tends to fix NUE's costs. DiAmico is a super smart guy, but I really question this decision.
    Nov 22 09:27 AM | 2 Likes Like |Link to Comment
  • 'Stranguflation' in the U.S. Economy [View article]
    Before we buy bullets and move to our fortified cabin in Idaho, one must give consideration that: a) all of this makes our manufacturing base stronger, as the "local" value add is cheaper to everyone else - (ArcelorMittal USA will do better than ArcelorMittal Europe) and b) China will be in a nine line bind. Their admittedly mercantilist strategies are approaching endgame.

    Not a comfortable world - just a self correcting one.
    Oct 28 02:20 PM | Likes Like |Link to Comment
  • Six Dividend Champions With Higher Yields (But Also Higher Payout Ratios) [View article]
    Mr. Fish:

    I'm a bit concerned about your use of Div Payout as a screen, that is, your desire to see high payout ratios.

    Let's face it - management HATES to cut dividends. Usually, is will adversely affect stock price, the institutional investors will give management what for, etc. So - it logically follows that companies with CONSERVATIVE payout ratios are better. The div is a quasi-fixed obligation, and having some cushion is a good thing. Business is risky, earnings variances are not normally distributed, and all of that. I feel a lot better about the surety of a 50% claim on a revenue stream than a 85% claim.

    Other than that - really good stuff!
    Oct 7 10:43 AM | 5 Likes Like |Link to Comment
  • A Natural Gas Stock With a High Dividend, Revisited [View article]
    Right stock, wrong reasons.
    1) As an IRA investment (a'la markbosje) it makes a lot of sense. Just keep stacking the $ in there. Tax comment raised by others certainly is a point of consideration for high income investors.
    2) The comparison of gasoline and natural gas is misleading. The U.S. has undergone a fundamental shift in it's perceived natural gas resource base. The trust has to make sense to you, dear investor, with a $4 to $5/MMBtu price deck for the for foreseeable future. There's just no reason to expect convergence between NG and any other fossil fuel. Markets are largely unique given the differing properties of each fuel.
    3) To me, investment in a royalty trust (SJT, MSB, HGT, etc) is akin to investment in a high yielding bond. The investor profile should be a person seeking lower risk, has a tax advantage (IRA, writeoffs elsewhere), and a GOOD understanding of commodities. Even though these royalty trusts trade like equities, they really aren't equities. They take a first position in the revenue stream, not a residual one.
    Sep 27 09:23 AM | 6 Likes Like |Link to Comment
  • Better Than Big Oil: Infrastructure Investing at Its Best [View article]
    My objection to the supermajor names you show is not the same as yours. My concern is: Do they reinvest capital and earn market clearing returns on it, given that they are "locked out" of most of the world's oil prospects?

    Cynical me. I think the answer is NO. They don't really earn their keep on incremental investment. Which is why I'm attracted to BPT, SJT, and other royalty trusts. So much of what you buy when you buy an oil company (or Iron Ore company, etc.) is that they are a proxy for the commodity - you like to be long oil, coal, ore, whatever. I like the exposure. I love the yield. HATE the overinvestment. Frankly, the royalty trust route creates a situation where management can't screw it up by overinvesting.

    Look, I'm not saying that the management of XOM are bad folk. They are a bureaucracy, and they seek to self perpetuate. They have spreadsheets, financial models, etc. saying that they are doing the right thing. Fish gotta swim. OilCo's gotta invest. An investor needs protection from that, unless you go smaller in the petro world and pick up a name that isn't anchored by it's huge PDP reserve base.
    Sep 2 12:26 PM | Likes Like |Link to Comment
  • Why Natural Gas Storage Numbers Are Misleading [View article]
    A great article and it does much to explain the summer/winter spread. Storage, after all, is only worth what the spread says its worth, at least in the tactical time frame. The curve shape (as opposed to price level which seems to preoccupy many of the posts) is flat flat flat, as everyone knows. The author is just closing the loop by saying, albiet in an oblique way, "hey, there's a lot more storage available to the market, there's supply and demand for that as well, ergo the value of storage has dropped." The market is saying that we really don't need to build anymore storage, if we but care to listen to it.
    Sep 1 10:52 AM | Likes Like |Link to Comment
  • The Shift From Stocks to Bonds Continues [View article]
    Hate to sound like a broken record, but oil and gas royalty trusts play into this theme very well. Yields are >> than present bond yields, and you get the commodity price appreciation kicker. I'll keep these cards and keep playing, thank you. HGT, SJT, BPT
    Aug 24 09:12 AM | 2 Likes Like |Link to Comment
COMMENTS STATS
94 Comments
144 Likes