Probably 4.85 2nd. I bought more later on. I was getting too enthusiastic for the name - especially after what a 25% 3 day move? Sold small position in HSOL too -.01.
Moved 300% of port back in UNG 6.54 just now which is quite a bit lower than where I sold it. Looks to be at support, so I'll put in a very tight .03-.04 stop loss.
Overall, just not feeling it today. Should probably take the day off once UNG is stopped out:)
PEIX - TOF, my angle would involve the economic feasibility of ethanol as a motor fuel, back out the subsidies and historically it's not competitive with oil, right?
Of course that doesn't mean PEIX can't rally, in fact it seems fundamentals often have no relationship to price. ;)
Too many setups to list. I'll say it again, I've never seen a market setting up like this. Who gives a rats ass if the indexes move up- its all about the individual stocks in your port.
Solars ready to rip:
TAN, SOL, HSOL, CSIQ, FSLR
Shippers EXM, DRYS
COAL Anything- ANR, PCX, ACI
FINANCIALS most everything, but not as bit as the sectors above.
My biggest concern today is that the best looking ones are not marginable. That's a big problem in this environment for me.
Drinks on Team today- RDN gonna break for good one of these days. Tons of insider buying in low 2's to support it and book 400% above current price. Lots of these types of plays out there.
A rare blip up in poly prices. After 22 straight weeks of week-on-week price declines, polysilicon spot prices have increased for two weeks in a row. Spot poly prices were reported to have increased from $23.8/kg to $25.1/kg (10-year low levels) in the last two weeks by PV Energy Trend, and from $27.9/kg to $29.5/kg by PV Insights (see chart). We have argued that stocks will be coincident with poly and panel prices – so this could cause a positive reaction for stocks near term. Typically, increasing poly prices are associated with periods of improving solar demand. As well, there have been some reports out of Asia of slightly higher solar cell & paste demand (Giga Solar comments) in the last two weeks.
It looks like I, single handedly, caused PEIX to rally to $1.20 today so as to simply hit my buy stop at $1.20 (high of the day) and then sell off. :)
I knew that something like that could happen, and so I placed an order only for a part of the shares I wanted to buy (3000). Just now, I picked up 2000 more shares at $1.12.
You guys watching the SPY? Bullish if it closes above 128.38 but a little scary going into tomorrow's unemployment numbers.
Hard to tell what it does. If they are good then the market could sell off knowing the chances of QE47 are lower. Or it could be seen as good news and we go higher. Or, we could ignore all of it and stick with our story.
AEN is berry good to me. KOG is berry good to me. LTS on deck. Bought PEIX this AM. Reloaded some DANG. Sure wish NLS would get out of it's own way...
Craig- What would prompt Landry to go long? A clear move up on high volume? And at what point would he enter- at the close on that high-volume day, or on the first pullback in the days following?
CC - Just curious...you said that PEIX hadn't triggered a buy a few days ago when it was at $1.11. This morning it was under that and you pulled the trigger. What caused you to change your mind?
I was doing my usual introspective psychoanalysis trying to come up with a reason for my bearish stance. What came to mind was my decision in May to switch the port to buy-and-hold- which preceded a multi-month drop in the indexes. Not saying it will happen again- but in the spirit of karmic deja vu, I kind of feel that way right now- moving the entire port into buy-and-hold in hopes of a double-digit gain in 2012.
2nd - Just trade the market man. You're good at it. by the way, i'm still researching those shippers. Man I tell you what some of them are gonna be monster winners.
That's what I'm trying to do- trade the market. And my sixth sense tells me to tread carefully here. We could easily sell off on the news tomorrow, as Craig points out. Or we could spike up- if we spike up, do I want to go all-in at Friday's close? No way, Jose. I would wait for the markets to pull back, probably to some kind of support area.
And if we're starting a new bull run here, then the safest play is catching the wave post-confirmation, and riding the middle 70-80% of the move. Not as exciting as catching the bottom, but worth a cigar nonetheless.
Trips to the DR's take about 2 hrs between commute etc...one day when he's misbehaving and understands what these things mean, I will have to explain to my son how much he costs us between college and these DRs visits....guilt trips work right Mark?
basically i was explaining how we went to a doctor today for the little dude and i let my oversized position in PEIX ride b/c i completely forgot about the visit until 5 minutes before. the 2 hr visit cost us about $20k.
He doesn't watch volume other than to determine if there is sufficient liquidity to easily get in or out of individual positions, so it wouldn't be a factor overall.
He is looking for broad based follow through on strength. (To many that would include volume).
Here's today's newsletter. "Got Random Thoughts:
After all was said and done, a lot more was said than done on Wednesday. The indices ended up in flatsville.
So, nothing has changed just yet. The market still remains stuck in a sideways trend. And, if it does resume its rally, it's still going to have a mountain of overhead supply to get through.
There are some interesting inter-market technical analysis things that could be playing out. I'll flesh these out in more detail later today in the chart show. Call in sick.
With a flat day, the rest is just a cut and paste:
As usual, take things one day at a time. As I preach, follow through will be key. And so far, we're not seeing any.
I do think 2012 will be a good year for the trend follower. We're just going to have to be patient for a little while longer.
Futures are soft pre-market."
He will be looking at the intraday action today. We gapped lower then moved up to close to the previous breakout high, then gave some back. We'll have to see how we close today. But as he mentions, we still have several months of overhead to get through. I suspect some issues may negate that on an individual basis. Oil for example, may move higher on Iranian news, but that might hurt the overall market. I'll know more this evening.
We have two potential trades, one short, a bed and bath retailer (guess?) retailer and one long, a financial (I mentioned it this AM 'on deck').
Just a reminder: He is cautious in the service and waits for perfect set-ups as he dealing with OPM. He may have his own trades on for "S &G's" as he would say. I'm sorry to say I missed today's chart show or I would know more. Now I have to wait until about 4:30....
also i closed all positions...my parents are in town and i need a clear head. 100% cash. i cashed in PEIX at $1.12ish avg and FAS at $70.2. unfortunately i sold my BAC / RDN freaking yesterday in exchange for PEIX and FAS
Dudes, while you are preoccupied with the POS stocks like DANG or PEIX that have a negative EPS, take a look at the SORL chart -- it looks just like that with a 10X potential, except that SORL is expected to earn $0.98 per share in 2012 (according to http://www.reuters.com/finance/stocks/financialHighlights?symbol=SORL.OQ), has a book value per share of $7.91 (according to http://finance.yahoo.com/q/ks?s=SORL+Key+Statistics) and is trading now at $2.50! I just bought 1000 more shares at $2.50 and placed a GTC buy limit order for 20 June $2.50 calls on SORL at $0.50.
TOF, PEIX: I let greed get the better of me. FYI I only entered a small position of 3000 shares (don't bet the farm as Dave would say) and like you I got stuck, but only a few hundo. That's what I get for trying to front run the entry. That will teach me to not follow my own rules. I should have bought BAC instead....but that would have been dumb luck.
Thanks to DANG, KOG and AEN I'm still up on the day.
Midway Gold Corp (AMEX:MDW) Midway put out two press releases last week. One regards the 4 million ounce Spring Valley project (a gold porphyry) in which it retains a net 25% carried interest; the other its 100% owned Tonopah project (renamed from the “Midway Project” to avoid confusion with the company name), which has a small 34,000 ounce resource delineated on it so far. At Spring Valley, the salient points of the update was emphasis on the continued growth in the resource with step outs (i.e. beyond what is in the NI 43-101 so far) continuing to hit mineralization, and that its JV partner, Barrick, is committing to advancing the project up the pipeline... and spending more dollars. The company reports, “widely spaced reconnaissance drilling south of the current resource continues to encounter gold over an area 1.5 km long by 0.5 km wide” - with results that include 27 meters of 0.79 gpt and 32 meters of 0.86 gpt in two separate holes as well as higher grade intercepts that included 6.1 meters of 6.86 g/t (including 1.5 metres of 21.91 g/t), 6.1 metres of 4.97 g/t (including 1.5 metres of 18.89 g/t) gold and 10.7 metres of 1.44 g/t (including 1.5 metres of 8.95 g/t) gold in three other drill holes. The Spring Valley Resource has the potential to grow to at least a 5-10 million ounce resource! Our guess is that Barrick will ultimately buy Midway’s interest – we are just not sure if it will buy the whole company or only the remaining interest in that specific asset, and what price it is willing to pay. At the US$100 per ounce average the majors have been paying for junior assets in the past two years, which happens to correspond roughly with the average amount that the market is attributing to junior assets these days, Midway’s interest in Spring Valley is worth $100 million, and is open to the upside. That’s potentially a $1 per share dividend. Is the rest of the company worth the remaining $1.60? We think it is. Management is creating an attractive value proposition that might well lure Barrick into taking it all. It is developing its other assets in Nevada, including its most advanced asset, its 1.13 million ounce Pan project, which just went through a feasibility whose results were also just recently reported. The study concludes that the economics are robust at $1200 gold, and proposes an open pit with a low strip ratio (<2:1)...with project capital estimated at about $100 million, annual production of 81,000 ounces of gold at cash operating costs of roughly $585 per ounce, and a 5% discount rate, the study returns a net present value in the $123 million range ($290 million at a $1725 gold price assumption). Our valuation on this project came in at $158 million using a higher discount rate, a $1450 gold price assumption, lower output numbers, and slightly lower cost assumptions. Given the success of the feasibility study we’ve raised our valuation to $200 million. This gives the company a solid valuation floor at around $300 million, or $2.65 per share, before taking account of its other less advanced assets, some of which will compliment the Pan project well. .
My intermediate share price target on the stock is $3.50, which entails a slight premium for attribution to those other assets and its management team. Its second news release last week highlights the potential of its other Nevada assets. At its 100% Tonopah project in Nye County, Midway drilled almost 4,000 meters of core in order to identify the true widths and orientation of the vein system there that has only been partially tested by reverse circulation drilling. Assays were released from the first 11 holes in the “discovery zone”, which consists of a series of near vertical subparallel gold veins averaging widths of almost 2 meters, and spaced less than 5 meters apart. The drill holes targeted depths of around 100 meters and returned terrific numbers, including very high grade intervals over 1/2 meter lengths, such as 335 grams per tonne (more than 10 ounces) over 0.4 meters and 1.5 meters of 78 g/t (more than 2 ounces) within a zone of about 46 meters grading 7.7 g/t...as well as 88 g/t over 0.5 meters and 17 g/t over 2.7 meters in different holes, plus a number of longer intercepts ranging from 30 up to 47 meters and grading from 1.13 up to 2.7 g/t. Our advice to Barrick is not to wait long before buying out this whole company.
I think it's so cheap because the whole auto parts sector went down the drain in anticipation that all people in China will switch to bicycles. Compare the 1-year charts of CAAS and SORL -- they look almost identical. Incidentally, CAAS took off in the last couple of days from the double bottom in made in December. The 1-month charts of DANG and CAAS have very high correlations, suggesting that all Chinese stocks are trading together now. This leads me to believe that a breakout in SORL is imminent.
Thanks David. I am going to take a look at their SEC filings tonight. According to their YAHOO FINANCE page, they've made money each of the last 3 years and the North American Auto part companies have come back well since 2009 and not fallen off like this.
Would be nice if they paid a dividend to give more confidence in their financials.
I own SSW - it is more of a ship finance company and has not fallen off nearly as much as the true shipping companies, but it does tend to do well when the shippers rise. It is far safer than most shippers though, pays a good dividend, and are in the process of buying back a bunch of shares at $15.
I've also looked at the shipping companies and have OSG on my list of potential buys. I like safer companies and this seemed to be the best. It still pays a good dividend and they say they are managing their finances well and also expect to take advantage of this downturn to grow. It may not have the most upside, but is probably less financial risk than some of them.
I was smiling today as I thought you had a hefty RDN position. No worries. Should be tons of opps to come. EXM, DRYS. Keep researching the shippers. S+S in '12. Shipping and Solars.
I love FRO to death, but I won't touch it anymore. I can't figure out how the new holding company is going to work out. Nobody seems to know. Some are saying that the new "FRO 2012" has something like 4 vessels.
jesse yeah i saw something about the org structure chg. ok i'll cross that one off the list.
i was thinking go with best balance sheet but then i think abt thecasinos from mar 09 and the ones with crazy debt (lvs particularly) were the best gainers...i think we could be at mar 09 levels in several sectors...
EEM 3 day tight flag. Probably will see a worldwide market surge tomorrow.
Lots of tight flags in various sectors-
Shippers- SEA Solars- TAN Coal- KOL Oil- OIH
They should all go.
One of my resolutions is to do a sector down analysis this year- and only invest in sectors that are going to move.
Something like DANG has a lot going for it. The internet holders etf looks poised to run, China looks poised to bounce tremendously this year, and AMZN looks ready to make a major retracement.
2nd says "And if we're starting a new bull run here, then the safest play is catching the wave post-confirmation, and riding the middle 70-80% of the move. Not as exciting as catching the bottom, but worth a cigar nonetheless. "
I'm with 2nd
jesse, thx for the email. Makes me want to go out to Jan13 and buy calls.
SORL is very cheap and financials look fine (assuming they are true). P/E of 2.5, P/B of .3; only long term debt is a lease obligation from a lease buyback of some equipment. Stocks has spent most of it's life at double current price.
Piper Jaffrey had really good things to say about their plant, technology, capabilities, etc., but knocked it down based on an unknown auditor and unusual ownership structure.
I'm tempted to take a small position to start and see where it goes.
Exited that Danged position at the open. Just not feeling it today.
ReplyDeleteDANG- Out at 5.10xx for lunch money.
ReplyDeleteYour basis was 4.79, no? That's still a decent gain.
ReplyDeleteWow...look at FXE. Not good.
ReplyDeleteMark - MITK holding it's own today
DANG is a good play on its next big down day...that's what I'm waiting for. I think it most likely has bottomed for a trade.
ReplyDeleteFYI BAC is basically even...that tells me this selloff is temporary.
Also PEIX looks strong today. If we get a turnaround in the market that one could get silly.
Probably 4.85 2nd. I bought more later on. I was getting too enthusiastic for the name - especially after what a 25% 3 day move? Sold small position in HSOL too -.01.
ReplyDeleteMoved 300% of port back in UNG 6.54 just now which is quite a bit lower than where I sold it. Looks to be at support, so I'll put in a very tight .03-.04 stop loss.
Overall, just not feeling it today. Should probably take the day off once UNG is stopped out:)
Volume in PEIX is already 1/2 of what it was yesterday.
ReplyDeleteVolume in PEIX is almost equal to yesterday already. Wow.
ReplyDeleteDollar is back to 81+, meaning concern over Europe is back in focus...
ReplyDeleteI understand futes were down 100pts at one point last night.
Not convinced we're going down though...
Wow DANG
ReplyDeleteDANG is now rockin'n'rollin...
ReplyDeletePEIX - TOF, my angle would involve the economic feasibility of ethanol as a motor fuel, back out the subsidies and historically it's not competitive with oil, right?
ReplyDeleteOf course that doesn't mean PEIX can't rally, in fact it seems fundamentals often have no relationship to price. ;)
dudes all of the crappy beaten down stocks are rallying quite a bit from the lows today...
ReplyDeletePEIX
DANG
RDN
MTG
GNW
5.31....take that you fucking fat Morgan Lady!
ReplyDeleteDANG!
Man, that Dang guy is a bad influence.
Nice sprinkling of peixy dust....
Nice work, Craig.
ReplyDeleteSIRI = breakout.
ReplyDeleteYeah, with my luck it will close at 5.50!
ReplyDeleteRDN looking really good.
ReplyDeleteToo many setups to list. I'll say it again, I've never seen a market setting up like this. Who gives a rats ass if the indexes move up- its all about the individual stocks in your port.
ReplyDeleteSolars ready to rip:
TAN, SOL, HSOL, CSIQ, FSLR
Shippers
EXM, DRYS
COAL
Anything- ANR, PCX, ACI
FINANCIALS
most everything, but not as bit as the sectors above.
My biggest concern today is that the best looking ones are not marginable. That's a big problem in this environment for me.
Drinks on Team today- RDN gonna break for good one of these days. Tons of insider buying in low 2's to support it and book 400% above current price. Lots of these types of plays out there.
ReplyDeleteAgain, RDN not marginable for me!
Looks like some rotation into financials.
ReplyDeleteBAC is above 6.
Out of school talk....LTS
Interesting action in PM's like PHYS, esp in view of the USD. SLW is holding too.
Marginal strength in TLT, maybe this AM was just a shakedown.
dude-s the financials are absolutely on fire.
ReplyDeletei agree with Jesse that the next play is probably the shippers...those are highly leveraged to an economic recovery no?
Guys, it takes some real firepower to move something like BAC over 4%.
ReplyDeleteWow most of the shippers are selling way below book.
ReplyDeleteThe play is probably to just pick a handful of them and buy. A couple of them could easily triple in a few weeks.
Moved parked funds from UNG to HSOL based on the chart. All in position.
ReplyDeleteHSOL
$1.08
52 wk hi- $9.78 15 month hi- $13.50
market cap $90 million
sales- $1 billion
book value- $9.69/sh
enterprise value- $4.10/sh
cash/share - $3.20
50% owned by $30 billion Korean Conglomerate Hanwha Group
fwiw, and it probably isn't worth much given the very bullish action we continue to see-
ReplyDeleteI think we sell off. Hard. Soon. When least expected.
Per CSFB Equity Research yesterday:
ReplyDeleteA rare blip up in poly prices. After 22 straight weeks of week-on-week price
declines, polysilicon spot prices have increased for two weeks in a row. Spot
poly prices were reported to have increased from $23.8/kg to $25.1/kg (10-year
low levels) in the last two weeks by PV Energy Trend, and from $27.9/kg to
$29.5/kg by PV Insights (see chart). We have argued that stocks will be
coincident with poly and panel prices – so this could cause a positive reaction
for stocks near term. Typically, increasing poly prices are associated with
periods of improving solar demand. As well, there have been some reports out
of Asia of slightly higher solar cell & paste demand (Giga Solar comments) in
the last two weeks.
It looks like I, single handedly, caused PEIX to rally to $1.20 today so as to simply hit my buy stop at $1.20 (high of the day) and then sell off. :)
ReplyDeleteI knew that something like that could happen, and so I placed an order only for a part of the shares I wanted to buy (3000). Just now, I picked up 2000 more shares at $1.12.
Can you do that again David? LOL
ReplyDeleteBAC - Wow, that's impressive...
ReplyDeleteYou guys watching the SPY?
ReplyDeleteBullish if it closes above 128.38 but a little scary going into tomorrow's unemployment numbers.
Hard to tell what it does. If they are good then the market could sell off knowing the chances of QE47 are lower. Or it could be seen as good news and we go higher.
Or, we could ignore all of it and stick with our story.
AEN is berry good to me.
KOG is berry good to me.
LTS on deck.
Bought PEIX this AM.
Reloaded some DANG.
Sure wish NLS would get out of it's own way...
Wonder what the USD is doing? Maybe a decoupling?
Craig- What would prompt Landry to go long? A clear move up on high volume? And at what point would he enter- at the close on that high-volume day, or on the first pullback in the days following?
ReplyDeleteCC - Just curious...you said that PEIX hadn't triggered a buy a few days ago when it was at $1.11. This morning it was under that and you pulled the trigger. What caused you to change your mind?
ReplyDeleteI was doing my usual introspective psychoanalysis trying to come up with a reason for my bearish stance. What came to mind was my decision in May to switch the port to buy-and-hold- which preceded a multi-month drop in the indexes. Not saying it will happen again- but in the spirit of karmic deja vu, I kind of feel that way right now- moving the entire port into buy-and-hold in hopes of a double-digit gain in 2012.
ReplyDelete2nd - Just trade the market man. You're good at it. by the way, i'm still researching those shippers. Man I tell you what some of them are gonna be monster winners.
ReplyDeleteThat's what I'm trying to do- trade the market. And my sixth sense tells me to tread carefully here. We could easily sell off on the news tomorrow, as Craig points out. Or we could spike up- if we spike up, do I want to go all-in at Friday's close? No way, Jose. I would wait for the markets to pull back, probably to some kind of support area.
ReplyDeleteAnd if we're starting a new bull run here, then the safest play is catching the wave post-confirmation, and riding the middle 70-80% of the move. Not as exciting as catching the bottom, but worth a cigar nonetheless.
ReplyDeleteTrips to the DR's take about 2 hrs between commute etc...one day when he's misbehaving and understands what these things mean, I will have to explain to my son how much he costs us between college and these DRs visits....guilt trips work right Mark?
ReplyDeletedamn my previous post got deleted!
ReplyDeletebasically i was explaining how we went to a doctor today for the little dude and i let my oversized position in PEIX ride b/c i completely forgot about the visit until 5 minutes before. the 2 hr visit cost us about $20k.
He doesn't watch volume other than to determine if there is sufficient liquidity to easily get in or out of individual positions, so it wouldn't be a factor overall.
ReplyDeleteHe is looking for broad based follow through on strength. (To many that would include volume).
Here's today's newsletter.
"Got Random Thoughts:
After all was said and done, a lot more was said than done on Wednesday. The indices ended up in flatsville.
So, nothing has changed just yet. The market still remains stuck in a sideways trend. And, if it does resume its rally, it's still
going to have a mountain of overhead supply to get through.
There are some interesting inter-market technical analysis things that could be playing out. I'll flesh these out in more detail
later today in the chart show. Call in sick.
With a flat day, the rest is just a cut and paste:
As usual, take things one day at a time. As I preach, follow through will be key. And so far, we're not seeing any.
I do think 2012 will be a good year for the trend follower. We're just going to have to be patient for a little while longer.
Futures are soft pre-market."
He will be looking at the intraday action today. We gapped lower then moved up to close to the previous breakout high, then gave some back. We'll have to see how we close today.
But as he mentions, we still have several months of overhead to get through.
I suspect some issues may negate that on an individual basis. Oil for example, may move higher on Iranian news, but that might hurt the overall market.
I'll know more this evening.
We have two potential trades, one short, a bed and bath retailer (guess?) retailer and one long, a financial (I mentioned it this AM 'on deck').
Just a reminder: He is cautious in the service and waits for perfect set-ups as he dealing with OPM. He may have his own trades on for "S &G's" as he would say. I'm sorry to say I missed today's chart show or I would know more.
Now I have to wait until about 4:30....
also i closed all positions...my parents are in town and i need a clear head. 100% cash. i cashed in PEIX at $1.12ish avg and FAS at $70.2. unfortunately i sold my BAC / RDN freaking yesterday in exchange for PEIX and FAS
ReplyDeleteugh.
holy sh*t FTK. dammit.
ReplyDeleteDudes, while you are preoccupied with the POS stocks like DANG or PEIX that have a negative EPS, take a look at the SORL chart -- it looks just like that with a 10X potential, except that SORL is expected to earn $0.98 per share in 2012 (according to http://www.reuters.com/finance/stocks/financialHighlights?symbol=SORL.OQ), has a book value per share of $7.91 (according to http://finance.yahoo.com/q/ks?s=SORL+Key+Statistics) and is trading now at $2.50! I just bought 1000 more shares at $2.50 and placed a GTC buy limit order for 20 June $2.50 calls on SORL at $0.50.
ReplyDeleteTOF, PEIX: I let greed get the better of me. FYI I only entered a small position of 3000 shares (don't bet the farm as Dave would say) and like you I got stuck, but only a few hundo. That's what I get for trying to front run the entry. That will teach me to not follow my own rules.
ReplyDeleteI should have bought BAC instead....but that would have been dumb luck.
Thanks to DANG, KOG and AEN I'm still up on the day.
Holy cow! While I was blabbing away on the blog my JVA position took off and made my day!
ReplyDeleteNow I'm much better.
I'll just be patient with PEIX now that I can afford it.
David, do you know why SORL is so cheap? Is it just because it is a China stock or is it something more than that?
ReplyDeleteMDW update by Ed Bugos, FYI, long t3d
ReplyDeleteMidway Gold Corp (AMEX:MDW)
Midway put out two press releases last week. One regards the 4 million ounce Spring Valley project (a gold porphyry) in which it retains a net 25% carried interest; the other its 100% owned Tonopah project (renamed from the “Midway Project” to avoid confusion with the company name), which has a small 34,000 ounce resource delineated on it so far. At Spring Valley, the salient points of the update was emphasis on the continued growth in the resource with step outs (i.e. beyond what is in the NI 43-101 so far) continuing to hit mineralization, and that its JV partner, Barrick, is committing to advancing the project up the pipeline... and spending more dollars. The company reports, “widely spaced reconnaissance drilling south of the current resource continues to encounter gold over an area 1.5 km long by 0.5 km wide” - with results that include 27 meters of 0.79 gpt and 32 meters of 0.86 gpt in two separate holes as well as higher grade intercepts that included 6.1 meters of 6.86 g/t (including 1.5 metres of 21.91 g/t), 6.1 metres of 4.97 g/t (including 1.5 metres of 18.89 g/t) gold and 10.7 metres of 1.44 g/t (including 1.5 metres of 8.95 g/t) gold in three other drill holes.
The Spring Valley Resource has the potential to grow to at least a 5-10 million ounce resource! Our guess is that Barrick will ultimately buy Midway’s interest – we are just not sure if it will buy the whole company or only the remaining interest in that specific asset, and what price it is willing to pay. At the US$100 per ounce average the majors have been paying for junior assets in the past two years, which happens to correspond roughly with the average amount that the market is attributing to junior assets these days, Midway’s interest in Spring Valley is worth $100 million, and is open to the upside.
That’s potentially a $1 per share dividend. Is the rest of the company worth the remaining $1.60? We think it is.
Management is creating an attractive value proposition that might well lure Barrick into taking it all. It is developing its other assets in Nevada, including its most advanced asset, its 1.13 million ounce Pan project, which just went through a feasibility whose results were also just recently reported. The study concludes that the economics are robust at $1200 gold, and proposes an open pit with a low strip ratio (<2:1)...with project capital estimated at about $100 million, annual production of 81,000 ounces of gold at cash operating costs of roughly $585 per ounce, and a 5% discount rate, the study returns a net present value in the $123 million range ($290 million at a $1725 gold price assumption). Our valuation on this project came in at $158 million using a higher discount rate, a $1450 gold price assumption, lower output numbers, and slightly lower cost assumptions. Given the success of the feasibility study we’ve raised our valuation to $200 million.
This gives the company a solid valuation floor at around $300 million, or $2.65 per share, before taking account of its other less advanced assets, some of which will compliment the Pan project well. .
Continued:
ReplyDeleteMy intermediate share price target on the stock is $3.50, which entails a slight premium for attribution to those other assets and its management team.
Its second news release last week highlights the potential of its other Nevada assets.
At its 100% Tonopah project in Nye County, Midway drilled almost 4,000 meters of core in order to identify the true widths and orientation of the vein system there that has only been partially tested by reverse circulation drilling.
Assays were released from the first 11 holes in the “discovery zone”, which consists of a series of near vertical subparallel gold veins averaging widths of almost 2 meters, and spaced less than 5 meters apart. The drill holes targeted depths of around 100 meters and returned terrific numbers, including very high grade intervals over 1/2 meter lengths, such as 335 grams per tonne (more than 10 ounces) over 0.4 meters and 1.5 meters of 78 g/t (more than 2 ounces) within a zone of about 46 meters grading 7.7 g/t...as well as 88 g/t over 0.5 meters and 17 g/t over 2.7 meters in different holes, plus a number of longer intercepts ranging from 30 up to 47 meters and grading from 1.13 up to 2.7 g/t.
Our advice to Barrick is not to wait long before buying out this whole company.
I think it's so cheap because the whole auto parts sector went down the drain in anticipation that all people in China will switch to bicycles. Compare the 1-year charts of CAAS and SORL -- they look almost identical. Incidentally, CAAS took off in the last couple of days from the double bottom in made in December. The 1-month charts of DANG and CAAS have very high correlations, suggesting that all Chinese stocks are trading together now. This leads me to believe that a breakout in SORL is imminent.
ReplyDeleteThanks David. I am going to take a look at their SEC filings tonight. According to their YAHOO FINANCE page, they've made money each of the last 3 years and the North American Auto part companies have come back well since 2009 and not fallen off like this.
ReplyDeleteWould be nice if they paid a dividend to give more confidence in their financials.
TOF,
ReplyDeletere the shippers:
I own SSW - it is more of a ship finance company and has not fallen off nearly as much as the true shipping companies, but it does tend to do well when the shippers rise. It is far safer than most shippers though, pays a good dividend, and are in the process of buying back a bunch of shares at $15.
I've also looked at the shipping companies and have OSG on my list of potential buys. I like safer companies and this seemed to be the best. It still pays a good dividend and they say they are managing their finances well and also expect to take advantage of this downturn to grow. It may not have the most upside, but is probably less financial risk than some of them.
Damn TOF-
ReplyDeleteI was smiling today as I thought you had a hefty RDN position. No worries. Should be tons of opps to come. EXM, DRYS. Keep researching the shippers. S+S in '12. Shipping and Solars.
Jesse - Yeah I shouldn't complain...I made about 2% today but WTF!
ReplyDeleteI like the SS crowd. FRO is another one.
Watching the Trader tweets coming in like crazy. Everyone is going to 100% cash as we are "extended".
ReplyDeleteThis means we go higher.
Lots of great setups.
TAN etf 3 day flag on slowing volume closing on support. Me thinks solars could go tomorrow.
ReplyDeleteIRE gonna explode on the weekly. wow
ReplyDeleteExpanding volume breakouts taking place all over the place.
ReplyDeleteSo far, this is the year of the mean under the surface rally.
RIG looks good on the daily and weekly for oil investors. I think they just fired their CFO.
TOF-
ReplyDeleteI love FRO to death, but I won't touch it anymore. I can't figure out how the new holding company is going to work out. Nobody seems to know. Some are saying that the new "FRO 2012" has something like 4 vessels.
jesse yeah i saw something about the org structure chg. ok i'll cross that one off the list.
ReplyDeletei was thinking go with best balance sheet but then i think abt thecasinos from mar 09 and the ones with crazy debt (lvs particularly) were the best gainers...i think we could be at mar 09 levels in several sectors...
EEM 3 day tight flag. Probably will see a worldwide market surge tomorrow.
ReplyDeleteLots of tight flags in various sectors-
Shippers- SEA
Solars- TAN
Coal- KOL
Oil- OIH
They should all go.
One of my resolutions is to do a sector down analysis this year- and only invest in sectors that are going to move.
Something like DANG has a lot going for it. The internet holders etf looks poised to run, China looks poised to bounce tremendously this year, and AMZN looks ready to make a major retracement.
PIR has the best IBD chart with a B.O. on volume Love the wicker. Forget those bottom feeders.
ReplyDeleteDang, another sector ready to rebound-
ReplyDeleteGenomics
GNOM, HGSI etc.
I'm seriously thinking about canceling my trip to S. America and working full time out of perhaps Miami for the next few months.
Just so many low level bases triggering breakouts left and right.
This market is giving me a major headache!
ReplyDelete2nd says "And if we're starting a new bull run here, then the safest play is catching the wave post-confirmation, and riding the middle 70-80% of the move. Not as exciting as catching the bottom, but worth a cigar nonetheless. "
ReplyDeleteI'm with 2nd
jesse, thx for the email. Makes me want to go out to Jan13 and buy calls.
did nothing today
natty, marked the bal mo around $2.91 today, next winter is only $3.75. This time last year the Nov11-Mar12 was around $5.05.
ReplyDeleteDavid,
ReplyDeleteSORL is very cheap and financials look fine (assuming they are true). P/E of 2.5, P/B of .3; only long term debt is a lease obligation from a lease buyback of some equipment. Stocks has spent most of it's life at double current price.
Piper Jaffrey had really good things to say about their plant, technology, capabilities, etc., but knocked it down based on an unknown auditor and unusual ownership structure.
I'm tempted to take a small position to start and see where it goes.
Do you own this? How did you find out about it?
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ReplyDelete