December 3, 2017
December 3, 2017



For your readers

This is VERY big news. For the past year, Mongolian businesses have been starved for foreign capital as the Government of Mongolia and Turquoise Hill had a very public battle over various issues. It isn’t 100% resolved, but both sides have essentially agreed to stop fighting and move on towards building a very successful mine that will become roughly a third of the country’s total GDP when ramped up in 3 years. This weekend looks to have been a turning point in events and this should be seen as a huge positive for all business in Mongolia.

I think that this news and other moves by the Government of Mongolia to liberalize the foreign investment laws will lead to sizable increases in additional investment and the GDP growth rate.

Hi Kuppy,
In January when you sold TITN, you hoped to get back in at a great price. Did the drubbing the shares recently took overcompensate for the mostly construction-related EPS miss? How do you view the shares’ attractiveness at 10x the mid-point of the coming year’s estimate?
Thanks for originally bringing this company to our attention.

I got lucky on the exit. I like this business, but worry about Q1 given where agriculture prices are. I’m more tempted to wait until after the quarter and see if I can buy it even cheaper. If not, I don’t mind missing. However, it’s a pretty good business to own–even at these levels.

Looks like the moment has come for an investment in Titan Machinary which you talked about some time around the end of January. Could you reflect on the macro developments and if you are considering another look?

I think the macro is fine. The company got tagged due to equipment rentals which aren’t going well. It’s a non-core business that probably doesn’t make sense. The core agriculture business is very strong. I am just hoping for a lower price.

The conventional wisdom seems to be “short the yen and buy Japanese stocks”. I tend to agree about shorting the yen, but it seems to me that international investors are not going to want to have anything to do with Japanese stocks (basically I am in agreement with Kyle Bass). I read that the Japanese were buying French bonds, but I don’t see that lasting. Ok, I am done rambling. How do you think things will play out in Japan, and what is the best way to profit from it, aside from precious metals? Thanks.

Best way to profit? Buy gold. Every country is printing money at some above-healthy rate.

I have no real opinion on Japanese stocks except to note that many Japanese businesses have off-shored their production businesses to other cheaper countries. Therefore, a lower JPY won’t really help many companies, but it will hurt them in that they own a lot of cash which is rapidly dropping in value. In summary, the knee-jerk move higher has happened in Japanese shares and the easy money is made.

Curious your thoughts on the commentary in this link

Everyone is entitled to their own opinions and mine regarding gold have been VERY expensive over the past few weeks. That said, I seriously doubt that gold has peaked longer term. In the short term, anything is possible, but the factors that led to gold going higher have not in any way changed. The only change is the price of gold.