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  • First Majestic Silver reports record 2013 production, eyes 2014 gains [View news story]
    Despite company strengths, price movements currently being largely correlated with silver/gold prices.
    Jan 20 09:41 AM | Likes Like |Link to Comment
  • Freeport-McMoRan: Acquisitions Will Increase Profitability [View article]
    On the contrary in the short term (up to Q4 EPS), I expect Freeport-McMoran's profitability to be impacted primarily by the potential shutdown of its Indonesian mine for up to 3 months, and the special payouts and acquisition related costs. In the medium to long term I expect EPS to improve with the aquisitions' cash flow paying down debt, production in Indonesia coming back on line, and cyclical changes in commodity pricing.

    I believe FCX is a company that provides an attractive valuation at present levels, considering its leadership's committment in providing shareholder returns via dividends and special dividends, its diversification in North American gas and oil plays with the acquisition of Plains Exploration, and McMoran, trading around a P/E of 10, with a price to book at 1.67, and a current ratio of over 3. As of today FCX closed near 30.85 with its 52 week low near 27.24 and high 43.65. However diminishing cash flow from last year's production and this year's metal pricing and with lower forecasted copper prices (Goldman's prediction) in the short term, I think share price will go lower than it all ready has especially factored with a possibility of the 3 month duration shutdown of Grasburg that will impact FCX's production this quarter and next.

    FCX's acquisitions provide diversification and much needed cash flow, but I believe we will not see this reflected until late this year or Q1 next year. And with the halt of the Grasburg mine possibly for the next three months I see downside for FCX stockprice for the near term, but I am optimistic for this diversified mining and oil and gas company for multiple expansion from its oil and gas business, as well as rebounds in its mining business. With cash flow from its oil and gas business FCX will better able to weather fluctuations in its metal prices and maintain a steady cash flow which equals stability for its dividend, and its stockprice to have a higher muliple, thus rewarding shareholders over the long term.

    An analysis of the value added with the acquisitions is much needed I think.

    My price target for FCX is $40 next year. I bought FCX stock today, and also FCX protection puts to cover near term downside of the stock.
    Jun 5 12:05 AM | 2 Likes Like |Link to Comment
  • CVR Partners: The Recent Secondary May Be A Buying Opportunity [View article]
    Bought back at 24.00. Expecting higher distributions rest of the year. Turn around complete. Excellant entry point. I wonder if Icahn and the CVI board are looking to make additional M&As for CVI. Icahn has all ready proven to provide CVI shareholders excellant ROI over the last year especially the last 6 months. Maybe he is now just tapering out his position and others bailing before he does?
    Jun 5 12:04 AM | Likes Like |Link to Comment
  • CVR Refining: A 20% Yield Backed By Increasing Margins [View article]
    One strategy of buying and selling around refining MLPs I use (NTI, CVRR, CLMT) and HFC is looking in specific instances in the short term where regularly scheduled down time for plant cleaning, expansions, upgrades are occurring. For companies that have limited assets like CVRR with 2 refineries and NTI it could weigh on earnings and the distribution for the quarters that it occurred. Same thing goes for any unexpected shutdown for any reason. These instances dramatically affect share price during this time no matter if it was well publicized or not. One reason why I think HFC is stagnant right now is it is currently turning around two of its plants, and likely the next quarterly report will reflect that. NTI the same. CVRR right now is in the clear for the rest of the year and should be bought now me thinks. Of course each company may hedge and stockpile going into planned shutdown and turnarounds, but unexpected events occur. For MLPs that rely on few assets like just 2 refineries like CVRR, a fire shutting one of the refineries down unexpectedly for a month could weigh on that quarters profit and cash flow for distributions, and drastically effect share price as well. HFC has the most refineries out of the three with a smaller quarterly dividend, but each (CVRR, NTI, HFC) presents their own specific levels of risk. This is only one of the factors I look at when gauging these high yield MLPs that are doing well right now.


    Long CVRR, NTI
    Jun 5 12:02 AM | 1 Like Like |Link to Comment
  • Silver Wheaton: A Buy Even With Lower Realized Prices And A Billion Dollar Debt [View article]
    Great article!

    I very much like the business model of this company, and the management making prudent investments. I think that is the key going forward with this company, as they certainly have in the past.

    Just wondering what the impact if any with Barrick Gold's Pascua Lama mine development being delayed possibly for up to one year?

    Going through SLW investments and doing a risk factor analysis by geolocation may be prudent as scary as it might seem, nationalization of mines and government regulations seem to be popping up as a concern in LA recently.

    Long SLW
    Jun 4 11:59 PM | Likes Like |Link to Comment
  • Take Profits In Refining Or Ride It Out With Dividends? [View article]
    The one thing that I really learned besides to try to drown out all the noise is to do my research (due diligence) and look at the facts. One place that I encourage folks to look at if they own shares or thinking about investing in a publicly traded company is to read the company's quarterly transcipts. For the most part you can get up to speed on a company's financials (compared to the previous year or year quarter), earnings, and most importantly, what thier guidance is for next quarter or projected for the year. Also other tidbits of information are in these reports too, like for instance the state of the market, thier competition, and a host of other information that can enlighten your investment decision. So CVRR reported what distributions they expected for the year, in fact they expected that they would be even higher than what they anticipated. CVRR is an MLP which must distribute at least 80% of thier earnings to partners. That is why they have such a high distribution (owning shares in CVRR makes you a limited partner). What is also important is that the transcript mentioned that they had HEDGED the spread at least for this year...So I expect as long as there is no production shortfalls or unforeseen costs that the projected distribution this year is safe. CVRR just recently went public so we are still awaiting the announcement date of thier first distribution. Many of th refiners as noted in the previous replies stated that the EPA sulphur regulation would have little or negligible effect upon them. CVRR reported the same, saying it would cost them as little as 20 million.

    CVR Partners LP (UAN) is another partnership whose master partner is CVR Energy Inc. (CVI) like CVRR is. I mention UAN because of the lowered distribution this past quarter. By reading the quarterly transcripts for the past two quarters thier is a reasonable logical explanation. Every 2 years they have to shut down the plant for 2 weeks. It just so happened that in the 4th quarter was that time, which effected total earnings and thus thier distribution. The company outlined this fact and gave guidance that the distributions would resume at normal levels. They also in the past quarter talked about how they were expanding facilities and production. CVR partners (UAN) is a unique fertilizer producer in the United States. They are tapped into the growing market (ie transportation) for a product that they produce (not just fertilizer). This product is called DEF or diesel exaust fluid. All tractors in the industry manufactured after 2009 require it. It is an EPA emmissions standard. It is cheap to produce, and the margins are significant. Ask transportation companies or truck drivers how much they are spending on DEF every year. In the fertilizer segment, 95% of urea based fertilizer to the US is imported. UAN holds a significant market share in this type at home. Anyway, for these reasons I'm bullish on UAN, not to include the ever increasing demand in agriculture at home and abroad for fertilizer, in times of draught (last year) or in the future. UAN also has a diverse and strategic logistics and distribution advantage due to thier location.

    Hedging of natural gas on the other hand has played out for company's like Encanta (ECA), and Apache (APA). The consistent low price of NG I believe has caught up to them as thier hedges had worn thin. As I was reading last year on ECA and APA they usually hedge from 1-3 years out prices. It is not surprising then we see APA looking to drill more oil and partner with Chevron (CVX) on thier LNG export project (Kitimat). I think Chevron is showing leadership amongst the integrated oil and gas large caps for the future (that is the exporting of LNG). However I like Cheniere as they are ahead of the curve, but the consistent stock offerings is diluting the value and ownership of the company. I believe the rewards outweigh the risks, especially if we see the competion of trains 1 and 2 and LNG flowing. I believe CQP and LNG stock price could be double at that point, maintain a consistent distribution, and be solid for the next 20 years (how long their export contacts are). The risks of CQP and LNG are its large capital expenditures, and debt without result ecxept using the forward secured contract money and investment to pay distribution and build infrastructure. It stands to reason that results from completion and commencment of exportation of LNG from trains 1 and 2 will catalyze significant investment into the company for the other 4 trains, and its Houston project. Significant reports this year of construction delays, increased expenses may hurt the company (stock price and ownership as it is forced to price attractive senior debt and stock offerings) as it continues to pay out and service its debt.

    All of these company's I'm buying on dips, other than ECA, APA, and CVI. I'd rather own CVX rather APA, and I have enough exposure with UAN and CVRR that I don't need to buy CVI, except maybe in a qualified account.

    Disclosure: Long CVRR, UAN, CQP, APA
    Apr 18 03:21 AM | 3 Likes Like |Link to Comment