Stock price when the opinion was issued
Building a mine with DeBeers that should go into production by the end of the year. He prefers Kennady Diamonds (KDI-X) as he feels it is significantly undervalued relative to what he thinks they have, especially in the context that there is a mine on their back door that will be operating soon, and this will come back into DeBeers fold.
There are some issues in the end markets for diamonds. India had a de-monetization of currency late last year. The Indian diamond cutting and polishing industry is pretty much a cash-based fragmented market place. De-monetization has created quite a disruption and created problems for producers selling into it. He would be a little wary about this. However, there has been some M&A stirred up within the sector and there could be value buyers sniffing around, but the near-term profitability is a little bit murky.
Sees no change to the dividend theory. The 3 Irish business millionaires actually control the company and are holding it long-term for the dividends. The company has some costs going on disadvantaging it. The diamond sector itself has not produced really stellar performance. This is a “wait and see”.
This is not the first bear market he has seen. This is the next new big mine. Diamonds have been going thought a bit of a dry spell. There were finance issues. The rough market for diamonds is up a little right now. He prefers to go in at a little earlier stage. He believes it will be consolidated.