Monday, September 1, 2014

Sylvania Platinum new investor presentation

Link to presentation:


The company has now reached steady state production of approximately 50k oz of pgm's per year at a cashcost of around $712/oz. The company is cashflow positive and is now looking to begin returning cash to shareholders via a dividend and or buybacks. This should be achievable as the company has no big capital projects coming up and has a very low sustaining capital need. They anticipate a first dividend in FY2015. Considering the fact that the platinum group metals are in a supply deficit I expect continued increases in their price. Speaking of the price palladium, it once again has a nine handle on the front end and continues to methodically make its way higher this year.

Humans need not apply video




Interesting video that builds on my meme that automation is going to make more and more in roads into displacing human workers. My view that one needs to be an owner of capital to cushion this transition continues to make sense. Unfortunately people have normalcy bias and think tomorrow will be like today. What they are forgetting is that technological progress is increasing at an exponential rate and is not standing still. The days of getting a job with a company and retiring comfortably to Florida after 30 years with a gold watch and iron clad pension are over.

Friday, August 29, 2014

My Greek Bank specualtion is going in the right direction

You will recall that I am speculating on Greek banks moving from bad to less bad. Both National Bank of Greece and Alpha Bank reported results yesterday. After reading the reports and reading the transcript from NGB's conference call my bad to less bad thesis is in fact playing out. Here are links to both reports:


NGB 2014 first half report
Alpha Bank 2014 first half report


Interesting comments on NGB's conference call transcript


Look this is not an investment for your grandmother and there is still substantial risk that makes even me nervous. Nevertheless it cannot be disputed that the Greek economy is improving, it will never be Singapore, and thus the banks are improving. The ECB looks like it will get drug into doing QE at some point and this will be helpful in healing the banks as it was here in the US. These are still interesting speculations for the risk averse.













Strike at Cameco breathes life into uranium price

Link:


The company announced today that it will be putting a stop to operations at the McArthur River uranium mine and Key Lake mill in the Athabasca Basin due to a labor-management dispute. Cameco received a strike notice from United Steelworkers Union Local 8914 employees for Saturday night. In response, the company issued a lockout notice.


(skip)


The Athabasca Basin is expected to produce 16.3 percent of global uranium supply in 2014, according to Raymond James, with McArthur/Key Lake being by and large the most significant contributors to the market. However, as Sadowski says in his note, in recent years, global reliance on McArthur/Key Lake has ebbed due to the rise of Kazakh output. Nonetheless, the firm is still expecting output of 19.2 million ounces in 2014, which is roughly 12.8 percent of the world's mine supply and 10.2 percent of total supply, including secondary sources.


I am not really sure what the effect of this strike will have on the uranium price. If it is longer strike then it will help shrink the temporary supply surplus. Cameco may not be in big hurry to settle the strike as it can easily fulfill its contracts. It can even go into the spot market and buy cheap uranium to settle contracts that were set at a higher price. Nevertheless we have seen what a protracted strike can do to a commodity that has tenuous supply/demand fundamentals i.e. palladium. Time will tell what happens with this situation. Uranium is still my number one long term specualtion.

Wednesday, August 27, 2014

India's economic growth at two year high

Link:


India's economy may have expanded at its fastest pace in more than two years last quarter, helped by rising industrial production and growing consumer optimism.


Gross domestic product in the three months ended June 30 likely grew 5.5% from a year earlier, according to the median estimate of a poll of 19 economists by The Wall Street Journal. If the growth meets estimates, it will be a significant step up from the 4.6% in the two preceding quarters, and the highest India has seen in nine quarters.

(skip)

In the first three months in office, Prime Minister Narendra Modi's government has taken some cautious but encouraging steps. It has allowed greater foreign ownership in defense companies and opened up railways to foreign investment. It has also moved to lower some bureaucratic barriers to business.

While some investors and analysts say they are still expecting much more of Mr. Modi, the stock market has climbed to new highs amid optimism that the new leader could eventually prove to be India's most business-friendly prime minister. There are already early signs that businesses and consumers are spending more.

As I wrote early this summer I expected the election of Mr. Modi. a pro-business politician, to lead to a perception change at the margin regarding India's prospects. It appears the optimism surrounding his election is carrying over into the economy and the stock market. I am playing this via the Matthews India Fund which is currently up around 30%. In order for the economy to continue to grow Mr. Modi will have to push on with the reforms and get results. It appears at least for now that the Indian economy will see growth above what has occurred in the last few years, which is translating into stockmarket gains.



Sunday, August 24, 2014

Idiots guide to not getting shot by the police




I was trying to stay away from the political on this blog since I started posting again but I think this whole episode speaks to my overall thesis of a country in decline. We are in a global economy and we are competing with all the other nations on the earth. If we are in a situation where we have segments of our population that think they are being set up for "genocide" or are so irrational as to think that there eleven year old is in danger of being shot by a white cop then we will have serious issues going forward. This particular woman is obliviously part of the talented tenth and I am sure does not live in a ghetto or area infested with crime, drugs, and thuggery yet she is hysterical and chooses to see the facts through the prism of race. Of course endorsing that narrative gets you on tv and invited to all the right parties so the facts be damned I guess.

Why China and Buffet are buying hard assets




Jim Rickards who is a well known author, investment banker, and lecturer comments on why China and Warren Buffett are unloading US dollars and buying hard assets. It comes down to the fact that the US government has no choice, because of its huge debt and unfunded liabilities, but to debase the value of the dollar.

Saturday, August 23, 2014

Adding Rightside Group to the beating Buffet portfolio

Rightside Group (NAME) is in the domain registry business. Domains are the identifiers for websites on the internet like xyzcorp.com, irs.gov. ncstate.edu, etc....Because the internet keeps growing the amount of domain names has not kept up with growth in websites and traffic. Therefore ICANN, the international non-profit that manages this system has issued a whole new slew of internet domains. Rightside is currently the number two domain registrar. So basically anytime a person or company creates a new domain and it is one that Rightside controls it will get a fee. Rightside is essentially an internet toll road operator as it pertains to domain names. This is a business with very high margins in a business, the internet, that has infinite growth opportunities. I like the business because it is basically a virtual picks and shovels business and not a content business. I could care less what is put on these websites and if anyone looks at them as long as the domain fees are paid every year Rightside gets paid.


The issuance of all of these new domains was described by Googles CIO as, "the most important and exciting change in the internet in a long, long time. Maybe since the beginning of the modern internet.” The person that writes the blog Buysidenotes.com has a full write up on the business and its prospects going forward. This selection is an example of how I leverage someone elses thinking and research for my own portfolio. I am adding Rightside Group (NAME) to the Beating Buffet portfolio and my own personal portfolio.


You can track the growth of domain registrations at this website. You will notice that since the beginning of 2014 when ICANN issued the registries the number has been growing quickly and is now close to 2 million registrations.

China and Mongolia have closer economic ties

Link:


China and Mongolia are seeking to build stronger economic links by boosting trade, expanding practical cooperation, and facilitating cargo transportation for landlocked Mongolia.


The two countries will strive to lift bilateral trade to 10 billion U.S. dollars by 2020, according to a joint declaration signed here Thursday during Chinese President Xi Jinping's state visit to Mongolia.


China has been Mongolia's largest trading partner and largest source of foreign investment over the past 10-plus years. Two-way trade stood at 324 million dollars in 2002, but soared to nearly 6 billion dollars in 2013.


(skip)


China, said the declaration, will allow Mongolia to use its northern and northeastern seaports that are open to foreign vessels, which will facilitate goods transportation and exports for the landlocked Central Asian country.


Meanwhile, the two countries vowed to enhance cooperation in rail and air transportation and speed up infrastructure construction for their border ports.


(skip)


In addition, the two countries are studying issues related to the construction of coal mine pithead power plants in Mongolia and Mongolia's electricity exports to China, according to the declaration.


So the Chinese President's visit seems to have went very well and I expect to see closer cooperation on economic items between China and Mongolia. It will not take too much spillover from China to create a big difference to the Mongolia economy. The Mongolia economy is only $12 billion per year. Fargo, ND economy is bigger than all of Mongolia's economy so we are still at very small base from which to grow.

Wednesday, August 20, 2014

China to sign various deals with Mongolia during offical visit

Link:


China will sign a series of energy and infrastructure deals with Mongolia as part of President Xi Jinping's two-day state visit to the neighbouring country this week, according to the Foreign Ministry.


Assistant Minister of Foreign Affairs Liu Jianchao said yesterday that the trip would also yield support for Mongolia's plans to boost cross-border transport through China. The trip, scheduled for Thursday and Friday, comes as China tries to expand its influence in Central Asia by promoting its idea of a Silk Road Economic Belt, an initiative designed to expand economic cooperation in the region.


It also comes as China continues to look beyond its borders to meet its growing economy's increasing demand for energy and resources.


I for one have been eagerly anticipating this visit. The Mongolian economy has recently slowed to around 5% mostly due to a big slow down in foreigner direct investment coupled with lower commodity prices. The dispute over the the second phase of the Oyu Tolgoi copper mine has not helped investor perceptions. What I find ironic is that Mongolia is turning to China for investment and economic cooperation. This whole economic slowdown and loss of investor confidence was a direct result of the Mongolian governments knee jerk reaction to the attempted takeover of SouthGobi Energy by China Aluminum a couple of years ago. After the economy suffered and every foreign investor pretty much left the country, along with their capital, the Mongolians are now welcoming the Chinese and hoping for investment. Governments who can explain them? Anyway this should lead to a change in view towards Mongolia and hopefully capital will begin returning. After this visit Putin will visit Mongolia in a couple of weeks. With the current issues Russia is having in the west it has begun shifting, over the last few years, towards Asia. Because Mongolia sits between China and Russia it can play the part of facilitator and toll road operator for trade between China and Russia as the relationship between these tow grows.