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Holds insurance and reinsurance companies. (Owns the preferreds). Doesn’t like what they have done with the share structure that started in September. It effectively gives management control. They said it was to avoid a takeover, but as a shareholder if somebody comes in with an offer, it is usually at a premium, and gives him an option to accept or reject. Stock price is a bit high, so he wouldn’t Buy at this point. Just did a couple of deals, one in India and another in Greece. This is a contrarian thing which he thinks is a good thing.
Not comfortable with management. Debt load is too high. Has a big project in Madagascar that has not worked out. It is always one of the dangers when you put a lot of money into something that is far away. As commodity prices come back, it should help them. The company has tremendous upside, but feels bankruptcy is not out of the question.
Took a tax loss on this, but since then it has quadrupled. His target price was about $16. If he had it now, he would still Hold it. The Rand has gone way down in value, which is helping quite a bit. Also, the price of gold has gone up. They were working to get costs down in their various mines. Management is doing a good job.
Gold? A year ago he was buying a lot of gold companies. Right now has been selling some. Often, before PDAC (a mining show starting this weekend) gold stocks seem to really move. Doesn’t know if there is a relationship, but thinks that maybe there is. Finding a good gold company with low debt is difficult to do.
One of the gold companies he bought that has not done well. Paid $0.28 for this. Was recently at their AGM when the CEO said she was going to move on. CFO has taken over the reins on an interim basis. Looking to raise about $6 million for their project in Spain, which is actually producing gold. Bolivia holdings are still going at a reasonable pace with very, very low all-in sustaining costs. Not having a CEO leaves a big question mark. He is happy to hold, and he’ll just wait. Thinks it has a fair bit of upside. Has $17 million in the bank with only about $1.5 million of debt.
If you invest in this, it is like buying a lottery ticket. They are looking at strategic alternatives, so every week they come out with announcements. Currently working with a company that may move in and take them over. That company has lent them a little money, although the interest rate is 15%. Right now the mines are not operating. Lost about $100 million in the last 9 months.
(A Top Pick March 26/15. Up 0.75%.) Their one and only mine is located in Turkey. A lot of people question about investing in Turkey. The company has about US$360 million in the bank, with no debt. Have a line of credit for US$250 million, because they want to expand their play in Turkey to extend the mine life. Doesn’t like that the balance sheet is going to get messy to some degree, but management has been good at hitting targets. His initial Sell target is $6.84 and he still likes it. Still a Buy.
(A Top Pick March 26/15. Down 82.46%.) A driller and has been an absolute disaster. He has had very few blowouts in the past few years, but this one was absolutely brutal. Eliminated their dividend, revenues have gone way, way down, and they have had to lay off a lot of staff. There is a good chance they will survive, but there is no guarantee. Now has it as a Hold.
(A Top Pick March 26/15. Up 20.89%.) Small US bank with about 25 outlets. Good capitalization ratios and good management. Profitable. Waiting for them to reinstate a dividend. When he looks at the money they are making, they could put in a dividend now. Expects a dividend will be reinstated before 2017, and one that a stock would usually go up on.
Always amazed with this company because they have such a following. The share count has skyrocketed over the last 4 years. Just had an investment from a Chinese company for $82 million, to take about 20% of the company. It could be years down the road before they have this developed and producing. He doesn’t buy into anything that doesn’t have revenues, unless he is very convinced it will do so in the next 6 months or so. Uranium is probably undervalued, and nuclear plants are coming back into style. Prefers GSE Systems (GVP-A), a great company with no debt and good management.
Canadian Banks? Have been reporting fantastic earnings, record ones in some cases. The economy is supposedly not doing well at all, but banks are making so much money that there is a disconnect that he doesn’t like. They keep raising the dividends, which he thinks is a mistake. They should be paying down some debt instead. Banks have got into trouble before, and that creates dangers. If you have dangers in the banks, that means major dangers for the economy. He would be wary of buying common shares at this point.
Interest Rates. Negative interest rates are stupid. They increase risk because they are effectively forcing banks to lend money, perhaps to organizations that they wouldn’t want to. Rates are so low to begin with that if corporations want money they can basically go and get it. Also, feels it discourages savings to some degree, and savings are effectively an insurance policy. Governments want people to spend more money which is silly. It makes companies produce more than what they normally would, and to expand more than they would, which has created gluts in certain areas. This is new economics that really doesn’t make sense, and is more likely to lead to a recession.