Saturday, March 9, 2013

My Portfolio Updates

Zem is rebounding. With Hugo gone this could mean upside or downside. No one really has a clue but knowing the tastes of the people suggests a continuation but slightly more open to outside investment. I think there will be a small stampede there but the country will limit how much comes in. FDI (Foreign Direct Investment) can cause Dutch Disease. 

Gold is taking a dump due to movement of the really big funds. This has been hitting the larger producers and the mid tier. There's been a trend in metals over the last year or so putting a lot of pressure on them. The Junior explorer market is being ripped apart setting up a unique boom bust cycle with special considerations. We are going to experience really big swings for a long time. The explorers are being starved out and it's not a sorting order of grade and feasibility. 
"Recent history: Shares of the mid-tier gold miner, which has projects in West Africa, South America and Canada, have taken a nearly 50 per cent haircut over the past year. The latest drubbing came last month after analysts cut their price targets when Iamgold forecast that mining costs would increase to between $850 (U.S.) and $925 an ounce, against expectations closer to the $700- to $730-range. The miner also reduced exploration activity recently in Mali because of political instability  Amid these woes, it hasn't helped that the price of gold has been stuck in $1,600-range over the past year. There is also, perhaps, some lingering skepticism by investors about the leadership of Iamgold’s chief executive officer Steve Letwin, who came from the energy as opposed to mining sector just over two years ago."
IMG's recent cost cutting measures might help the stock in the near term. I would consider this a cautious buy because it's possible they have to break up the company. The major investors are not happy at all. The stock is well below asset value and that reflects a lack of confidence in management. The upside is that right now there's a perfect recipe for a take over.

ECA is rebounding nicely. It's not clear if this is the sale of Kitimat LNG site, the change of directorship or the rebound in the price of gas. Perhaps all three and a desire by the larger investment funds to seek long term liquidity. Last year's headlines "Natural gas prices continue to free-fall, and for the first time in over a decade, prices dropped to $2 on Wednesday." are responsible for the decline and you might have expected more of the larger players to take up shares as they became vary cheap but this didn't happen. Instead, the big money took losses in what they considered secure stores of wealth. It's hard to imaging people paying for the privilege to keep money in a foreign bank but this is what transpired last year. 

On the lighter side, SWE looks poised to run this year. This will depend on how ambitious management is. Since it was a freebee there's nothing but upside. Its chart also suggests that it has found a bottom.

Cat. BMO and other talking heads might have this one right. While they suffered a 4% dip in sales I think a lot of that is due to the nationalization trend but it should rebound. Even under nationalization construction must still go ahead. It normally slows but it does not stop. CAT's caution was correct. CAT is still a hold.

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