Saturday, October 25, 2014

Short term airline trade

Because oil prices have dropped I started looking at airline stocks for a short term trade. However I was at first shocked that the airline stocks had not moved higher despite a 20% fall in oil prices. Fuel is the largest cost to airlines. However it seems the Ebola non crisis has had a dampening effect on these stocks as people speculate that a travel ban will be announced. What I think is more likely is that the incidence of Ebola will be low and there will no outbreak. The 24 news cycle will move onto something else and airline stocks will move higher assuming oil stays down.  I have bought some shares of Avianca (AVH) which is a a South American based airline as a way to speculate. As usual I have a 25% stoploss in place. I think that this stock can get back to the $17-18 dollar range rather quickly.

Thursday, October 23, 2014

India frees diesel prices


India said Saturday it was freeing diesel prices from government control, marking another step to ease the state's grip on the economy and propel reforms by the new pro-business government.

Prime Minister Narendra Modi's administration also sharply hiked natural gas prices to spur exploration in the fuel-import dependent nation. Huge energy imports contribute to India's trade deficit.

"The prices of diesel will be market-determined at both the retail and refinery gate level for all consumers" and move in tandem with international prices, the government said in statement.

This is a great move. The price of oil has dropped recently so the reform minded government in India gets rid of the subsidy for diesel. This will lower the governments burden and when prices adjust to the market forces if they rise then people will have to get more efficient. This will have ripple effects in the inefficient Indian economy. I continue to like India as a long term investment.

Sunday, October 12, 2014

Mercedes-Benz self driving trucks


Mercedes-Benz believes it's built a self-driving semi-truck that could eventually help cut down on highway tragedies that kill thousands of drivers each year. The Future Truck 2025 can't navigate city streets autonomously like Google's fleet of cars, but is perfectly capable of holding its own on the open road — and that's where sleep-deprived truck drivers most often pose a threat to people driving smaller passenger vehicles. Using a combination of advanced dual cameras, radar sensors, and the latest blind-spot technology (Mercedes refers to the system as "Highway Pilot"), the Future Truck 2025 analyzes the road to get a sense of surrounding traffic and terrain. The "highway" part of that is critical; a driver is still required to get the truck onto the interstate and successfully merge into traffic.

The Trojan Horse for getting these trucks approved will be highway safety and the argument will be made that tired semi drivers will be eliminated and thousands of lives will be saved (which is true). Once they get them on the road it will be just a matter of time before they are fully automated and the drivers are eliminated. I have been talking about automation and technology changing our future at a pace that will be very disruptive for most people. Nevertheless it is coming so take advantage and do not be a victim.

Uranium prices are too low to open new mines



The player in question is France's Areva. Which said that current uranium prices are too low to go ahead with one of the company's major development projects globally: the Kiggavik uranium deposit in Canada's northern Nunavut Territory.

Last week Areva announced that it has submitted a final environmental impact statement to local Nunavut authorities for a potential mine at Kiggavik. A key step in moving the project toward production.

But in the same news release, Areva said that uranium prices are too low to "favour a construction decision" for the project. Leaving the timing of mine building here uncertain.

This is exactly what I have been talking about regarding the uranium price. The cure for low prices is low prices. We have seen other stories where the production of uranium is being curtailed because the price is to low to make money. Now we are seeing one of the biggest players in the uranium space not moving forward with a project because the price is to low to justify a decent return on investment. In the meantime existing supply of uranium is being burned up in reactors and we have more reactors being built than pre-Fukushima. This is actually ggod news if you are specualting on the uranium price moving higher.

Saturday, October 11, 2014

Mart Resources new pipeline is ready to go


Mart Resources ( released a corporate update this morning with details on the Umugini pipeline as well as a drilling update. Mart is a junior oil producer in Nigeria with current production of 7,874 bopd (August). Management says the completion of the Umugini pipeline could potentially double current production.


This is significant news for Mart shareholders as once this pipeline is running at full capacity it will double current production and help limit line loss to ~8%. Mart has had significant problems with its previous pipeline including line loss rates of up to >20% of oil flowing through the pipeline due to theft. The old pipeline also required on average several days of downtime per month for maintenance and repairs.

Mart is also currently drilling and has completed well UMU-12 which will undergo clean up and testing of a 40 foot oil column. The rig is being moved to a new location to drill UMU-13, an exploration well.

Mart Resources is one of the stocks in my speculative portfolio. The news about this pipeline is the catalyst we were waiting for to move the stock. With oil prices pulling back and the Ebola scare in West Africa the shares are down. Nevertheless production will double and assuming oil prices do not crash, I don't think they will, then the share price will move higher as higher volumes move through the pipeline. Pretty simple thesis, now lets see if the company can execute. This recent pullback could give people who did not buy earlier another bite at the apple.

Myanmar economy to grow over 8%


The International Monetary Fund (IMF) estimated on Monday that Myanmar's economy will grow by an average 8 per cent in the coming years led by rising gas production and investment.
The IMF praised Myanmar for its economic reforms, but said more were needed at both policy and institutional level as the authorities' capacity was becoming stretched.

This is why one must expand their investment horizons to the whole world. Just because the US or Europe may be struggling does not mean that other areas of the world are not expanding. This type of news is why I like wireless provider Telenor that I profiled in a recent article.

Sunday, October 5, 2014

Opened position in Telenor (TELNY)

I have been very bullish on Myanmar for some time. The opening up of the country after years of rule by a military junta was really fascinating to watch. I do not think anyone expected the pace of political and economic reforms to happen as quickly as they did in Myanmar. These reforms have translated to big economic changes in the country. For example at one time, back when it was under British rule, Myanmar was the largest rice producer in SE Asia. Rice production collapsed under the military rule as they instituted socialist policies which of course do not work. The expectation now is that Myanmar will be exporting over 2 million tonnes of rice in a couple of years.

I want to take part in this economic growth but it has been hard to find a vehicle to invest in that will give exposure to Myanmar. I made some money on Yoma Strategic Holdings but it is overvalued currently. There is no stockmarket currently in Myanmar so I have to find a proxy.

Telenor is a wireless provider based in Norway that provides wireless services in Norway and many emerging markets. These markets include; Thailand, Bangladesh, Pakistan, India, Malaysia. The company also holds a 33% interest in Vimpelcom, a large Russian wireless provider.

Myanmar granted licenses to two providers Telenor and Qatar's Ooredoo. Telenor turned on their network last week and began service.

Telenor Group has announced that it will begin connecting customers in Myanmar on Saturday, September 27. The day marks the official roll-out of Telenor's network, starting in the nation's second-largest city of Mandalay. Telenor will then continue towards the metropolitan hubs of Nay Pyi Taw and Yangon, and thereafter expand into more towns, villages and rural areas.

I am considering Telenor a longer term investment as a play on not only Myanmar, which is described as the last big wireless opportunity, but on emerging Asia as a whole. As incomes increase wireless usage will increase along with revenue. Penetration rates in these countries are still low and there is room for significant growth in users and services. Telenor has been a decent performer and pays out a nice dividend (currently yields near 5%). The company has been buying back shares over the last few years so returning capital to shareholders is a priority which I like. An investment in Telenor is a good way to diversify out of the US and take part in the overall rise in purchasing power in emerging Asia.

Here is a link to the Telenor Investor page.

At some point the truth has to be acknowledged

There is no man made global warming:

This week saw the 18th anniversary since the Earth's temperature last rose - something that Dr Benny Peiser, from the Global Warming Policy Forum, says experts are struggling to understand.

He explains that we are now in the midst of a "crisis of credibility" because the global warming - and accompanied 'Doomsday' effects - that we were once warned about has not happened.

Scientists from the Intergovernmental Panel on Climate Change (IPCC) once predicted a temperature rise of 0.2 degrees per decade - but are now baffled by the fact our planet's temperature has not increased for almost two decades.

Whats baffling is how long this farce has went on. No one denies that climate changes, this is obvious. The issue is man does not cause it. The "experts" models were wrong so why are they still considered experts.

Speaking exclusively to, Dr Peiser said: "What has happened is that the public has become more sceptical because they were told we are facing Doomsday, and suddenly they realise ‘Where is the warming that we were promised?’"

"They say we can predict the climate and the reality is that they can’t."

If they cannot predict the climate than why are we being asked to give up our way of life as the emerging economies steam right past us? These fraudsters need top be indicted? Don't worry though they will come up with another scare story to strip mine the hoi polloi of their money and liberty.

Saturday, October 4, 2014

Closing position in Rightside (NAME)

One of the rules I have in place is to put a 25% stop loss on all my positions. I do this in case my analysis is wrong or something goes wrong with the stock. I want an unemotional circuit breaker that shuts down the position and stops me from riding it down for an even bigger loss. If a stock drops 25% and the market is not in crash mode something is just not right with the story. This could be the case with Rightside. I like the story but I have seen some articles where the uptake of their new top level domains has been weak. Maybe that is why the stock is down. It does not matter at this point. I have sold the position for a loss and will monitor the stock to see what happens with the business. I hate losses but I would rather take a 25% loss than let it drop further and take a 50% loss which would entail the need for a 100% gain just to get back to even.

Saturday, September 27, 2014

India, change slower than expected?


When Narendra Modi’s Bharatiya Janata Party won a thumping majority for its pro-growth promises in India’s elections in May, hopes swelled that the new government would adopt economic reforms that had proved beyond the brittle coalitions of the past. Yet in defiance of the maxim that the boldest steps are best taken early, Mr Modi has so far eschewed dramatic change.


The small measures taken so far have at least focused on some big problems. One cause of the slowdown was a sudden drop in investment, as big projects, such as power plants and roads, got snarled up in bureaucracy (see chart 1). Sajjid Chinoy of JPMorgan Chase, a bank, attributes almost 30% of the peak-to-trough fall in the growth rate to this backlog. Civil servants were already struggling to keep up with the paperwork before a rash of corruption scandals made them especially cautious.

Mr Modi has cracked heads. Shocking tales of civil servants working late have become commonplace. Many permits can now be obtained online. By the start of September the government had approved 175 stalled projects, according to Citigroup, another bank.

There has been some criticism of Mr. Modi since he got elected that he and his party have not gone "big" with reforms. However one has to remember that India has an entrenched bureaucracy and special interests that go back to colonial times. In addition, subsidies for fuel and fertilizer, that mostly go to poor rural voters, will take time to roll back. I see Mr. Modi's strategy being to get in the weeds and grease the skids to get private investment projects moving (as the article states they have gotten 175 stalled projects moving again). He has been doing this and investment is beginning to increase again in India. This should lead to higher growth next year, which even the Asian Development Bank is predicting. Higher growth and lower inflation will then give Mr. Modi room to maneuver on lowering subsidies and chipping away further at the bureaucracy. These things take time but he will be under scrutiny because he was not the media or establishment candidate. I am still bullish on India and think he will be successful.