Kuppy, you mentioned about interactive brokers previously as an investment. You are more familiar with the business than me, is there a risk it can blow up? Is it safe to start an interactive brokers account and put money in there? The cheap commission rates seem too good to be true
I don’t know enough about it as an investment, though the shares seem cheap and I’ve thought that for years. I think IB is the most conservatively managed broker/dealer in the world and it is the only one that I really trust. I feel very safe having my money there.
Hi Kuppy, what’s your view on Energold’s working capital?
Their inventory days are more than 200 days, a very big number. Could you offer some insight on this?
Also their A/R is twice as large as their A/P. With this revenue growth rate, it becomes another drain on cash.
Energold has a lot of working capital. It’s part of the business. Inventory days seem high because the rigs have lots of spare parts. Many of these parts should be capitalized and then depreciated. Energold instead choses to be more conservative and expense these items, hence what would be PP&E at most drillers shows up as inventory and also shows up as a higher expense item. It all works out to making Energold seem less profitable optically than it is.
A/R is mostly to well funded mining companies, but it naturally takes a lot of working capital to grow the business and this is one of the reasons that they’ve had to raise capital as they’ve grown.
On the MSE upward movement in the past few days, it is a phenomenon of TTL starting to trade again. They halted the thing in July in order to complete a 100 for 1 stock split, and it started trading the other day. Not sure why administering a split takes that long
With the 15% daily maximum limit to movement in MSE stocks, TTL has limited up for several days in a row, sometimes on only 2 shares of volume
So if a $6 to $8 stock (8,000 MNT to 10,000 MNT) can trade 2 shares ($12 to $16 in volume) and move the entire index 2-4%, it is something to be aware of. Meantime, all the other MSE traded coal miners are gliding down to lower levels
A friend forwarded this to me to explain part of the reason for the strength in the Mongolian Stock Exchange lately. I should point out that my fund owns some TTL and it’s only traded a few shares on some days because it has been bid up to the exchange limit.
For what it’s worth, my friend has a fund that specializes in investing in MSE companies.
I was just wonder what are your thought on two stocks that looks very cheap. First one is micro cap stock ticker SPA that has cash of almost 30% of their their market cap and CEO who save them from bankruptcy and no debt. The other stock is XRX. Just wanted to hear your thoughts on it. And what do you recommend as a buying opportunity right now.
I don’t know enough to have an opinion on either. My focus right now really is money printing ideas.
Hi Harris, thanks a lot for all your wonderful articles. I have two questions about Energold.
First is a minor problem. On its 2010 annual report, there is a calculation error. Investing cash flow should be -483,799 instead of -2,483,799. Do you know what “Investment in a private corporation” is?
Second question is about Energold’s competitive advantages. You’ve mentioned that it took Energold years to have today’s worldwide footprint and some of its competitors have given up replicating Energold. Could you elaborate a little on this or even maybe give an example?
The investment in a private corp is likely the CPC in the Dominican Republic that they have.
On Number 2, they have a presence in dozens of countries. It’s expensive to get into a country and build a presence. The company has sacrificed a number of years of profitability to build up this presence. It’s going to be very expensive for someone else to replicate it.
Do you still have the gold and silver you bought?
I sold the silver for a few dollar gain and made about 50 on the gold (twice). I buy these when REALLY oversold. I sell on the first pop. I have LOTS of exposure. But I’m always looking to make a few extra dollars when the market obliges…
Have you ever – recently or otherwise – looked at opportunities in Iceland? Just seems like Iceland is capable of real growth now that it’s shed the shackles of debt, although I wonder how appetizing new investment is to the population at large. Still, from far away the “landscape” seems at least capable of growth compared to just about everywhere else.
How about Africa – Angola in particular? Africa at large seems like a big mystery to me and the whimsical nature of property rights protection is, um, worrisome. At the same time, it seems like not a lot of people are looking there and some places, like Angola, are experiencing “reverse diaspora” where European colonists, business-folk and capitalists are returning.
No specific ideas, just sniffing around in places no one appears to be sniffing…
In 2009, I spent 2 weeks in Iceland and came away convinced that I was too early on catching a bottom as assets seemed very expensive. Their stock market only has a few companies in it, but some of those do seem quite cheap. I wonder how you ever get paid if you’re an investor in an illiquid stock on a non-existant market though…. I’d be bullish on Iceland longer term.
I am quite bullish on Africa. I just don’t know enough to go and play it. I went to Ghana, Burkina Faso and Ivory Coast in the fall of 2007 and sort of thought it was too hard to figure out at the time. (Having guns pointed at me in Ivory Coast didn’t help) Much like Mongolia, unless you’re on the ground, you won’t really figure it out. At the time, I didn’t think the opportunity was good enough to get me to move to Africa…. I think Mongolia is a bigger opportunity and it’s the reason I took the plunge on this one.
Kuppy, Was wondering if you wouldn’t mind revisiting the reasons (as far as you can tell) for the parabolic rise in the MSE Top 20 that occured in the 1st part of ’11. If I’m not mistaken, Firebird launched their Mongolia fund then, & given how thin the market is, that would largely explain it. & given the increasing profile & fundamentals of Mongolia, isn’t another parabolic rise inevitable & due rather soon? Thanks
I don’t know if it was Firebird getting positioned (unlikely as they’re smart investors) or someone else. Rumor was that some European institution produced an MSE 20 swap and then got stuck trying to hedge it off in the actual market. In the end, who cares why…?? It went up because it was cheap and the economy is growing at a ridiculous rate. It will go much higher over time. Maybe it won’t have 100% up months, but it should go up many times over the next few years. I’m not smart enough to tell you if it will happen soon or not.