10/11/2011
December 3, 2017
09/27/2011
December 3, 2017

10/04/2011

I’m in New York City….


What are the ways you can lose on EGD, and how do you monitor it from Mongolia?

This is small cap. There’s lots of ways to lose. Fortunately, they have a rock solid balance sheet–so it’s less likely that I lose. There isn’t much that is needed ot monitor a position. I simply buy and read the Pr. About once a quarter, I call up for an update. That’s all there is to it. You can monitor things from anywhere in the world.


Another BIG down day for GOLD stocks. Energold looks cheap. When would you stat buying again.
This sure looks like weeks of HOLD! HOLD! To me.

I’m “all in” on Energold. Can’t buy more. It’s waaaay too large for me. on the other miners, I think it’s time to buy again. Remember, large cap miners are trading toys. Buy the dips, sell the bounces. They’ve gone nowhere in years, not sure if they go far in the near future. They’ll have their day, but until then, they’re awful businesses, but great for trading in the range.


Kuppy, what is your gut telling you about ISVLF? Is the bleeding in some of these smaller miners about over?

I bought a few IPT today. It’s the first time in ages. Keep in mind that they automatically exercised the warrants from the last financing, so I was a seller for months in the low 2’s. It sure is cheap, but I’m worried a bit that recently the narcos killed the mayor of Zacualpan. I’d say it should trade at a cheaper valuation because of the threat of random violance that comes with doing business in Mexico.


Hi Kuppy: Do you view this as “back up the truck” territory for Energold and Andean at these prices? Ditto Mercer and Fibrek (albeit in the context of your response that Fibrek has you a little nervous compared to Mercer). Obviously depends on overall position sizing goals and personal situation, but I guess if you were waiting to add to these positions does this qualify in your eyes as a great opportunity?

I think this is a great opportunity to buy Energold. I’d be much more cautious about Andean. It’s cheap, but without community agreements, it’s a wasting asset. It’s one of those investments that I’d rather buy at $1.25 the day they announce community agreements, rather than speculate on them at 40c. I recently swapped some Fibrek for Mercer. Mercer doesn’t have as strong of a balance sheet at FBK, but I simply prefer it to FBK because it is a pure play NBSK company. Gun to my head, in this environment, I’d much prefer to buy larger cap companies because you can trade out of them based on the changing sentiment around QE3–which is really what’s driving the universe currently.


Hi Kuppy,
what do you think of Sohu at a running p/e of 9, of Alibaba at a running p/e of 15? These companies grow revenue very consistently at 30-40% per year and have huge profit margins. What do you think of fosun international at a p/e of 4?
What do you think of chinese AAA prime REITS at 40% of NAV as HongKong land?

Repeat after me: “I do not trust any company that is out of China. At this point, I don’t even trust them not to poison milk and baby food–forget financial products sold to Western investors.”


Any comment on Andean’s recent granting of ~2M options?

If you want to keep key people, you need to incentivize them…. Options aren’t necessarily bad. I just object ot excessive dilution of shareholders.


Do you think we’ve seen the lows in gold and silver?

I’d say we’re pretty close. I have my trading positions on. Put them on last week on the washout day.

In the past two days, I wrote puts on the GDX and silver just to get a bit chunkier. Either they give me positions at good prices, or I earn my premium which is a very healthy yield. It’s all you can do when you have a big cash position.


FYI for the reader who wants to know if Silvercorp is legit or not. There has been alot of insider buying in the last few months. Check it out.

I have no axe to grind in this battle, so I pass this along to shareholders with the caveat that they just sued the newsletter that had made the claims of illegal activities. In my experience, if they sue the messenger, then there’s probably some truth to the message.


Kuppy, I found something bearish that you wrote about RIMM from a couple years back which seems to have been rather presient. How do you feel about it now ($100+ lower)? Would you agree that its a rather un-coorelated bet at least. At $21 would you say that we now have positive skew on the long side? In the most recent quarter Sell-thru beat Handsets-shipped by 3.5mm, is this destocking bullish or bearish?

Ahhh… RIMM…. I got it right and lost millions shorting it…. This one stock is the reason that i no longer short…. I was 2 years early and got annihilated.

It’s currently cheap by conventional metrics, but it’s a busted business. It’s one of those value traps that occasionally will give you a few good tradable short squeezes, but eventually, the only way that you’ll make real money on this is if someone overpays to buy it. Otherwise, it will always look cheap, right until it goes to zero.


Hi Kuppy,

1. Given the “inhuman volatility” that you recently wrote about, are you buying the VIXX to capitalize on the swings? I traditionally have been of the buy and hold type, but as of late, I’m wondering if it would be better to cash out now and wait for the (likely) forthcoming QE drop, which seems closer to your strategy.

2. After reading your posts on Mongolia, I too, have become increasingly excited about the region’s potential. However, between the infrastructure demands, the politics (what’s new), the inflation, the recently released IMF report with concerns that the Mongolian economy is overheating, and disappointing Chinese data, it seems like risks are quite high. How are you evaluating and valuing your investments in this type of less transparent environment? When you are on the ground in Mongolia, what kinds of questions are you asking management? And if we don’t have the ability to be physically in Mongolia to conduct DD, any recommendations as to how we can still do some research? (I’ve looked at rescap, frontier, eurasia)

I got crushed long IVO (short VXX). I’m not about to reverse long.

You need to be on the ground to really understand and invest in Mongolia. I don’t think it’s “overheating.” The IMF is a bit bitter that Mongolia refused to follow their suggestions and then politely asked them to leave the country. I’d be skeptical of most things I read about Mongolia unless you’re actively involved as most of the public data isn’t very accurate.


Kuppy,

Carefully reviewing your Volatility post and I’m thinking that this sentence is key on QE3 being done:
“However, they can’t start until people are willing to accept that only QE can save the world.”

Do you think this translate to stocks being much lower (then Tea Partiers and Senators will call for QE3) and the economic forecast for US GDP goes negative: 90% prediction by economists of a recession; not the 50% prediction I heard on Sunday talk shows.
As always, I appreciate your work on your site. Thank you.

I don’t know how much lower stocks have to be. I just don’t think there’s the political will to do much yet–though if Europe doesn’t print piles of money soon, they’ll be back in the dark ages…


I am very long Impact Silver. I regard it as almost the perfect stock for the long term. I understand you own a little rather than a lot despite your appreciation of the management evident in your ownership of egd.v. Is that because you are wary of owning mines in foreign countries where nationalization might happen?
I agree that’s an issue but Mexico seems about as safe as possible with NAFTA.

Mining is a VERY difficult business. You never want any one mining stock to be a large position. I’m also scared of the politics of Mexico. That said, Fred Davidson is a great CEO.


I’ve been spending a bit of time researching old newspapers on line for ideas on how Argentina played out, and what Lavagna did to restore fiscal order. I know that events never are exactly the same, but they might rhyme. Any parallels with Europe?Thanks

The best book I know of is “and the money rolled in (and out)” I think Argentina is a great template of what will happen in the Western world in the next few decades. They’ll print money, debase the currency, they’ll try to fix problems and then realize printing is easier, then they’ll print more. I really should know more about Aregentina and regret not knowing more. I spent 3 weeks driving 8,000 KM around the country last year trying to learn about socialism run amok and was amazed at just how bad you can screw a place up with bad government policies. It’s stunning just what a mess it is. You cannot run a business there.


Kuppy, the MSE 20 continues to buck the trend and rise while every other market is going down. What does it mean?

Buy strength. Always buy strength. MSE was up yesterday something like 4% while the US was down 3%. That’s telling you something…..