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"Risk comes from not knowing what you're doing" Warren Buffett I look and sift the world for such misplaced bets. When I occasionally find one, I first exploit it for profit. Then, I write about it for anyone else interested in such ideas. Twitter: @unemon1 Scribd:... More
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  • A Simple - Almost Risk Free - Long Term Play - Arbitrage Opportunity On MECHEL

    Mechel is involved in four business segments which include mining, steel, ferroalloy and power. The Company unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power.

    Stocks of the Company (Mechel OAO) are traded in the U.S. under the Symbol MTL and in Russia under the Symbol MTLR.

    MTLR is currently trading at 39.10 RUB on the MICEX --> = 1.11 USD/Share

    MTL is currently trading at 2.01 USD/Share in the U.S.

    U.S. traded Shares of Mechel are Trading at a premium of approximately 81.08%.

    The premium is not caused by a lower liquidity on the Russian Market. In fact, MTLR volume over the past 30 days has bee 5.53m shares as opposed to a MTL average volume of only 1.932m shares.

    One was to profit, would be to short MTL and buy MTRL. However, this is not my favorite play here! If you want to play the possible Coal recovery story without incurring substantial risk, I would go for the following play:

    1. Long MTLR

    2. Long Puts on MTL with a Price Strike of USD 2 and a January 2016 expiration date.

    You pay USD 1.11 to go long MTLR ... + ... USD 0.80 to go long the PUT ------> Total Cost = USD 1.91

    This strategy costs less than directly buying MTL .... and offers you a 100% capital protections (+ a 5% gain) ... in the case Mechel were to go Bankrupt before 2016.

    Only risks you would still be exposed are... FX ... and ... the scenario under which Prices of MTL commons were not to converge

    Disclosure: I am long MTL.

    Additional disclosure: MTL, MTLR, Puts

    Apr 04 10:46 AM | Link | 6 Comments
  • The Real Story Behind LLEN Investigation mIght Help Explaining Some Of The Company's Moves (I.e. The Ironrige Deal)


    From the supplemental briefing in support of the motion too detain the defendant, Dickson Lee, pending Trial:

    "... In April 2013, after the deposition, the United States Attorney's Office formally informed Dickson Lee's counsel that Lee and the company were targets of a criminal investigation ... "

    Hopefully, now ... all the Defrauded U.S. Investors might have an answer to the Ironridge Deal (Deal explained in this Geoinvesting

    On July 2, 2013, Ironridge Global IV, Ltd filed a lawsuit in the Los Angeles Superior Court against LLEN seeking to collect debts Ironridge purchased from LLEN's creditors.

    On August 4, 2013, Dickson Lee sold $800,000 of debt LLEN owed him to Ironridge. Dickson joined two other creditors who had assigned their debts to Ironridge to collect in Court."

    Well, knowing he (Lee) and LLEN were target of a Criminal Investigation ... I imagine Lee entered into this deal to get his $800,000 back ... and send them ... over to Taiwan.

    Since Dickson Lee was informed of the Criminal Investigation, Lee started to transfer all his assets to various Asian Countries (leaving his U.S. bank account balance to about $300).

    Case 2:14-cr-00024-RAJ / Document 9 :

    "In addition to his personal ties, Lee has transferred substantial financial assets to Taiwan and China, providing him with the means and further incentive to flee and never return. The government has obtained and reviewed banking information for Lee's main personal bank account held at East West Bank for the year 2013. The government's analysis revealed that throughout 2013, Lee transferred more than $200,000 to various accounts located in Taiwan, Hong Kong, and China so that by December 2013, the account's balance was left at less than $300. Due to the sensitive nature of the banking documents, relevant excerpts will be provided to the Court for review at the time of hearing."

    I ADVISE ALL LEEN Defrauded Investors to have a look at the "supplemental briefing in support of the motion too detain the defendant, Dickson Lee, pending Trial" :

    Apr 02 3:00 PM | Link | 7 Comments
  • Endeavour International Corporation (NYSE: END), Is Someone Accumulating Big Time?

    -Some notes-


    Not going to analyze the Company. Had everything been OK with the Co? ... then it would be a $10++ stock. Problems are mainly linked to leverage. You can get an overview by reading the 10-K:


    I have been following END for quite a while. What caught my attention was the very suspicious Call Options volume over the past 6 weeks.

    The second development that caught caught my attention is the recent (Mar 21, 2014). announcement that James H. Browning has been appointed to a serve as a Director on the company's Board of Directors.

    1. The interesting Option Activity (To be honest, it remembers me of the Action I noticed in EMKR last year. A couple of months later,an activist investor disclosed a position).

    Interesting is the fact the Put Open Interest did not mimic the Call Open Interest Increase (Put OI remained below 40,000 contracts).

    The spike in Call OI is also unlikely to be related to a Short Position hedging strategy. As a Matter of Fact the Short interest, during the month of period in which the Call OI jump occurred ... increased only by 1.89 million shares.

    Most of the Call OI increase is due to at 40,000 contracts trade occurred on March 3, 2014 at 14.15. (Back then END was still trading at 5.12). PPS started to collapse 2 days after ... once investors had been informed at the CC ... about a problem occurred at a production site. It has been addressed by now.

    One of the main issues with END is the high level of leverage (& tight liquidity) However, according to the Company ... recent financing transactions should guarantee smooth operations.

    2. James H. Browning has been appointed to a serve as a Director on the company's Board of Directors.

    Amongst others, he is the Non Executive Chairman of Rignet Inc since May 2012. (btw: KKR acquired a Stake in Rignet Inc ... Aug 2013)

    I am not sure ... Mr. Browning would risk his reputation by joining END ... if he thought ... leverage was going to kill the Company.

    As I said .... just a few notes ... on why I am long END

    Disclosure: I am long END.

    Mar 27 11:33 AM | Link | Comment!
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