December 3, 2017
December 3, 2017


Writing from Mongolia…

One obvious “possible” megatrend is the substitution of natural gas for oil in transportation in the United States. The obvious plays on this theme are CLNE and WRPT (I have absolutely no opinion on whether these are attractive investments)I am hoping you could publish your thoughts on the potential for a massive increase in the use of natural gas in the United States, particularly in light of today’s presidential endorsement of greater natural gas use, and if there are any investible stocks. Thanks.

Yes, it is a big trend—at last for public transport. I don’t have an opinion on if many people will have natural gas cars in a decade. I know nothing about either of those companies or natural gas. I think there is massive oversupply, which is good for companies that intend to use a lot of gas. As an investor, I think there are easier ways to make money. Sorry, I don’t have much to add.

You recently made the following comment:

“but if I had to chose 5 fx to own for the next few years, NZD would certainly be in that basket, along with RUB, THB, CAD and by far the biggest weight going to MNT (Togrog). A few others like AUD and PEN (if the elections go ok), would probably get honorable mentions.”

Would you mind elaborating on the best way to own these currencies, particularly the Togrug? Assuming you are not buying individual stocks, would you buy government bonds (are there any denominated in Togrug)? I know that debt does not get you the 5 baggers you are looking for, but for those of us who are risk adverse, or simply not able to keep up with what is going on with individual companies, how would you suggest diversifying assets into these currencies? There must be something better than simply buying futures.

You can buy most of these currencies through any broker dealing in international currencies. Togrog is a bit tougher. I opened a savings account with a bank in Mongolia that pays a bit over 1% a month in interest. I also have earned nearly 15%in currency appreciation. I’ve had a Citibank account for a decade and I don’t think I’ve come anywhere close to those returns—for the full decade!! I think MNT could double from here and still be undervalued.

Kuppy: Is there a way for US investors to buy the Mongolian Togrog? Not sure if we need to open a brokerage account somewhere(where??) or if theres an easier way.

Also, I have been watching the iragi Diniri and its very cheap to buy and i am hearing the strong possibility that it will or should be much higher than it is now. Have you looked at this? I have to believe at some point Irag will get it together and its currency is very undervalued versus the assets it controls and the demand for those assets

For Togrog, please see above. I’m sure there’s an easier way, but I’ve gone with simply opening a savings account, besides, I love impressing people in the states when I use my Mongolian debit card…

I know of a few smart guys who like the Dinar. That one is too dicey for me. I’d rather just own a whole lot of MNT. There’s a rule that you shouldn’t invest in a currency if you wouldn’t travel there on holiday… or can’t drink the water. Not sure about Iraqi water, but I sure wouldn’t go there right now for sightseeing….

Hi Kuppy – where would you position Brazil Real in your currency spectrum? It’s non-stop run, while well deserved, feels excessive. But perhaps more money printing will help continue it’s run.
Thanks for your insights.

My Brazilian friends tell me that it’s unfathomably expensive there. I’ve always believed that when it gets expensive to buy beers, it’s time to find a new currency. Can it go higher? Of course, but I’d say there’s not enough upside left to interest me.

I would like to know your thoughts on Axiom Mining Limited. It is a gold and nickel stock

I’ve never heard of it. Sorry.

There are a bunch of new readers at AIC and I am getting a lot of questions about mining stocks, so I thought I’d repost this with my standard response. There are 5,000+ junior miners and I know something intelligible about maybe 50 of them. I don’t follow the sector any longer, so even my ‘knowledge’ is dated.

I am curious as to the impact of the recent announcement for the privatization of Tavan Tolgoi and the allocation of shares to Mongolian citizens. Will we see a massive sell-off for easy cash or will it generate an interest for share owning and push the price up? Also I am not sure what to make of the 6.5 P/E ratio compared to those of other companies in the same industry.

My understanding is that TT is an amazing asset and it should trade at a premium to other worldwide coal assets. Mongolian citizens will be given shares, but there will also be a multi-year selling restriction so I don’t think that will have any impact on the share price early on. As we get closer to the IPO, I will really dig in to learn more about the asset. For disclosure purposes, my fund owns shares in ‘little’ Tavan Tolgoi which is listed on the Mongolian stock exchange. I think that is the TT with a 6.5 P/E ratio that you mention as the TT they intend to privatize has no earnings yet.

Firstly thank you for putting up such an excellent site. This is indeed one of the best sites on investment I can find on the Net.

I was intrigued by your post on Mongolia and BDSec. However I am not entirely comfortable with the corporate governance issue in Mongolia. In particular, at the very least I would expect the listed companis on Mongolia Stock Exchange to be required to publish its audited financial statement on a timely basis.
It seems only a very small portion of the Top 30 index members voluntarily disclose their financial statements.

I cant seem to find any good source for Mongolia listed companies financial information, except those occasional write up by brokers and out-dated brief financial info (2008 / 2009). I tried calling some of these companies separately but most of the times ended up with pretty frustrating experience.

Just wonder how do you usually go about researching these companies. Can you please recommend any good source /websites for basic financial information on these companies?

That pretty much sums up my experiences with the public companies here. I have plenty of friends in Mongolia who know the management teams personally and I still cannot get much of the info I want… It sure adds a good handicap factor when you try and figure out the fair value of a business armed only with 2008 financials…

When I want to learn something, I just start bugging people I know and try to go visit the company. I do not know of a better way to do it. When in doubt, always visit a business in person. It’s the only way to learn something (in any country). Then expect them to tell you that the information is confidential and tell you to go home.. HAHA

Have you considered and do you have any opinion on Naco Fuel (NKT.MO)? I know it’s tiny, but it seems cheap with a mkt cap of $3M, since they should be able to earn close to that annually, if I understand their business correctly. It seems like a fairly simple, safe business. Recent UB legislation about burning smokeless fuels should also help ensure demand. On the other hand, it seems like they are behind their originally-planned production schedule, and their stock price has been going nowhere, so I wonder if something major is wrong, or if I’m missing something important.

When in doubt, go visit. It’s a beautiful car ride to Darhan, though they were still building the facility when I went to visit. I’m waiting to see them start producing regular profits. I might have to pay up, but I have never been a fan of start-ups with fancy technology. They always seem to take longer and cost more than expected.

It sounds like PAAS is confident that the local government will approve a waiver/change the law to allow open-pit mining for their Navidad project in Argentina. They mention the locals are getting on-board, local province elections are Mar ’11 (results?!), and Argentina elections are Nov ’11, but there’s no mention of what they think will trigger the waiver/approval. With your extensive experience with miners, do you have an opinion on whether the local or national elections are expected to have the approval impact and what length of delay/lag after the elections is to be expected for approval/disapproval?

Navidad sounds like an amazing prospect, nearly doubling their annual silver production in a couple years. This potential certainly doesn’t feel like it’s priced into PAAS, but then again, if it doesn’t get approved it will likely turn into a very expensive mistake.

I’m sorry but I don’t know the details very well. It sounded awful expensive when they bought it because they may not ever get it permitted. Then again, the guys at PAAS are some of the smartest people on this planet. If they thought it was a good idea, then it probably was.

Hey Kuppy,

This is kind of off the beat for your site, but I suspect you’ll have some interesting things to say about this.

My 19 year-old cousin is in that early-life semi-crisis phase of “what the hell do I do with my life?”. Having clearly answered “I have no effin idea” (she took psychology for her freshman and sophomore years) she’s now considering switching to finance/investments/ econ. She came to me for advice, and I’ve been racking my brain thinking of ways to get her to dip her toes in the pool, so to speak, without scaring her off with jargon, charts and a mess of numbers. For example, I’m sending interesting business or econ articles or blog posts to read, and then we discuss. I have some books in mind to send her; e.g., Faber’s “Tomorrow’s Gold”, Lynch’s “One up on Wall Street.” Maybe get her to watch “Wall Street”. Maybe “Market Wizards.”

Problem I’m finding is that I absorbed my knowledge through like 25 years of osmosis, and, more recently, a lot of somewhat complicated books and writings. Basically, I don’t remember how to learn this stuff or get a feel for it to begin with when you have no context. She wants to take an intro econ class, but I’m worried all the BS and graphs will throw her off. Would like her to get a sense of what a career in these fields really feels like and entails, you know?

Any ideas? Maybe some books or writers that wouldn’t scare off a newbie? Maybe an approach you’d use to someone very important in your life?

Thanks alot!

I’m not sure if I’m any sort of expert at this stuff. I am got a degree in history because they had night classes—letting me follow the markets during the day. I don’t think you can interest someone in the markets. Either it’s a passion for them, or it’s a career that you do because it pays better than most others. Most of my friends in the latter category seem to hate their jobs…

If you want to interest her in economics and finance, give her some money and let her run a hot dog stand for the summer. She’ll learn more about business than she would in a multi-year business school program, and it’s a good deal cheaper. Unless you have a passion for figuring out the ‘why’ in the numbers, you won’t be very good at it.