giofranchi

It seems you are talking about price while the overall discussion is about value. I don't care if the price will always stays depressed I will just enjoy the dividends! (Of course it won't because the market might be slow and stupid, it always catches up in the end). Well, I understand what Andy is saying! That’s why I keep averaging down slowly, and I also keep holding a lot of cash: to average down slowly lets me take advantage of a depressed price, if Kami financing gets approved before a market-wide correction; to keep a lot of cash would let me take advantage of a true slump in stock price, should a market-wide correction come before the Kami financing. Gio

Hi shalab, on page 308 of this thread you find my NAV calculation, assuming all iron ore related assets are worthless. Given its past growth, and future prospects for growth, I thinks ALS is worth much more than the multiple of NAV (with iron ore related assets at zero) it’s selling for today. But, of course, if Kami doesn’t get financed, there is no other clear opportunity for growth in the short term yet… And that’s why imo the price is trading at today’s levels. Gio

Blue Macaw, you certainly are worth 100 Gio, when it comes to mining knowledge… but I guess we just think about business differently… Imo it always comes down to one person (who hopefully surrounds himself with smart people!): Is Mr. Dalton great and reliable? I am in, no matter what the stock price does. Is Mr. Dalton poor or unreliable? I am out, no matter what the stock price does. If you don’t like that binary outcome… as I said, we just think differently about business. Gio

Ok! Thank you! I like that! My counterargument is that I don’t think business works that way… you said we have been told that Kami would be financed by end 2013… now we are at end of Q2 2014 and no financing yet… well, 6 months!! 6 months ago the market was cheering Mr. Dalton because he announced the purchase of the “Prairie Royalties” and the CDP, hailing him as a great steward of capital… 6 months later the market labels him as a poor steward of capital, because he is encountering difficulties getting the financing of Kami approved… The market is even saying the value of Kami, which imo depends on its production and costs for many years into the future, declines each day that financing gets postponed… So, if you have time and patience, let me tell you what happened to me last October: the Manager of the Human Resources for Salini-Impregilo, today by far the largest construction company in Italy, came to me and told me: “Salini-Impregilo would like to start a new master course about the project management of great infrastructural works around the globe, to cultivate its new top managers. And it has chosen your Master School as the best vehicle to achieve that goal”. And they have offered to cover practically all the costs to activate that new master course, while all the revenues will be ours to keep. We already have 4 different master courses, which of course enjoy much lower margins than the new one. Therefore, this new initiative will be very important for us: decidedly more than 20% our present revenues, and a much higher percentage of our earnings! Well, until 3 days ago I hadn’t been able to get a final agreement from Salini-Impregilo… 7 months have passed without me being able to get the “financing” of this very important new “project”… Do you picture me spending each day of those 7 months thinking “oh my god! With every day that passes the true worth of the new master course is decreasing!”? ??? No, absolutely not! And for two reasons: 1) its true worth was not decreasing, 2) I had 100 other things to take care of every single day!! And that is only a master course… And my company is orders of magnitudes smaller than ALS… Gio

Hey! Ok... Call me naïve, if you’d like to… But I have 2 needs and 2 needs only: Need n.1) To like the person Need n.2) To like the business I have still to understand why ALS doesn’t satisfy both needs. But, please, let me know! ;) Gio

What do you mean by “mgmt is replaced by more competent people”? ??? This is exactly what I am asking ItsAValueTrap and all of you: is ALS’s management, Mr. Dalton, a top of the class entrepreneur, or should he be replaced? If the answer is he should be replaced, all that speculation about what the stock price will do is completely meaningless to me: on Monday I will sell my whole position. If the answer is he is a top of the class entrepreneur, all that speculation about what the stock price will do is completely meaningless to me: on Monday I will keep averaging down. ;) ;) Gio

Why? I don’t understand. Let’s say iron ore assets are worth zero: why would you sell potash and coal assets, or investments in other royalty companies which are very profitable, to pay down debt in a hurry?! When the cash flow from potash and coal royalties is so much more than enough to cover the interest on that debt? It makes no business sense to me… Just use the CDP to develop new royalties, keep paying the interest on your debt, and use the rest of your cash flow to buy new royalties and to increase cash flow. The equity investments in other royalty companies will increase in value, and meanwhile some new project will hopefully start to pay off with even more royalties… Soon we will put together enough cash flow to gradually pay down the principal too. If we sell our assets without a true necessity, the “compounding” I have described above will never materialize! Gio

So ItsAValueTrap, given the fact yesterday you first said the most bullish thing that can be uttered about any business, that it is led by an entrepreneur in the 99th percentile, and later you went on saying all kinds of bearish things about ALS… I would like to know: what do you really think about Mr. Dalton? Here I would also add what I think about people’s objection that Mr. Dalton was able to do what he has done until now, only because he found himself in the midst of a secular bull in commodities we will never witness again: That argument to me sounds like saying that a very successful venture capitalist enjoys a wonderful track record thanks to the fact he operated during a long bull market in stocks… Though a bull market certainly helps, both a venture capital and a PG dabble in very small things with the hidden potential of becoming huge. Their business model is investing little capital in many newly formed entities, expecting to score big profits in only a very few of them. What do you think is the correlation between those very few entities which increase 50x or 100x and the general market? I dare say very small! Don’t you agree? If Mr. Dalton is truly good at what he does, ALS will keep growing. And now with the stability a portfolio of royalties with safe and steady cash flow guarantees. So ItsAValueTrap, is Mr. Dalton in the 99th percentile, or is he not? Gio

Thank you ItsAValueTrap, I do not even try to follow your analysis… It is definitely out of my circle of competence… Therefore, I ask you again: is Mr. Dalton in the 99th percentile, or is he not? If he is, please answer this questions that I don’t understand: 1) Has he worked a long time to build Kami… which is an iron mine with high operating costs?! I am not in the 99th percentile… not by a long stretch… but I know that, when it comes to commodities, business gets interesting only if you are among the low cost producers! And Mr. Dalton ignores this?! 2) You are practically saying ADV management lied about Kami’s operating costs… one thing I am sure: an entrepreneur in the 99th percentile doesn’t get himself involved with people who lie. Both 1) and 2) are completely inconsistent with the idea Mr. Dalton is in the 99th percentile. So, either 1) and 2) are false, or Mr. Dalton is not such a good entrepreneur as we thought. No, I don’t think I agree. You want to issue debt only if you buy assets that produce safe and steady cash flow. The royalties do, the CDP doesn’t yet. What looks like a “good judgment” in hindsight, issuing stocks at $14, was actually nothing but conservative business practice. Exactly what I expect from an entrepreneur in the 99th percentile. Furthermore, new equity as a financing mean had always been contemplated: on page 5 of the Management’s Discussion and Analysis for the period ended January 31, 2014, we read: All that “shock”, when new equity was finally issued, is simply unjustifiable. Also this I don’t understand… You seem to be very interested about stock buybacks… But they don’t always make sense! Even if the stock is undervalued! Let me give you a simple example that everyone can understand: let’s suppose Mr. Buffett has just bought one “elephant” of his, and BRK's cash has declined below what he judges to be the safety threshold… and BRK stock trades at 1.15 x BV… Do you imagine him buying back stocks?! Absolutely not! Because it doesn’t make business sense! It is all about this: what makes sense in business. And there are not specific rules that can always be applied. It depends on the circumstances. Period. The only reason there could be something wrong with Altius is if Mr. Dalton is not in the 99th percentile. ;) Gio

That’s why I ask again: what would ADV true operating costs per ton of iron ore be? Because, if they are around $60, some 30% higher than what management said they would be!, how could Kami be a bust?! It would be among the low-cost producers of iron ore in the world… Practically impossible to fail! ;) Gio

Thank you! This is basically what Dazel has been saying all along, isn’t it? How should ADV compare, in case Kami gets built? I am aware ADV management thinks Kami’s operating costs per ton are little above $40… But ItsAValueTrap has always been very skeptical about such an estimate… And of course it is not easy to believe ADV could be more efficient than both Rio Tinto and BHP… Therefore, what might be a more reliable number? Probably, this has already been discussed many times… so bear with me, please! :) Thanks, Gio

You are talking about me?? Yes, of course you are talking about me!! “John and Gio”… I love the sound!! ;D ;D ;D Gio

+1... I am a big fan of things laid out on a plate!! ;D ;D ;D Gio

I am a material science engineer turned civil engineer. And I started my first company, civil engineering consulting services, 10 years ago. I didn’t start investing because of the love for math, analysis, problem solving, etc. … well, maybe the love for money … ;D ;D The reason I started investing is much more straightforward imo: I knew my engineering firm would never benefit from scale… it is not an easily scalable business… and therefore almost doesn’t need new investments each year. So, the reason I started investing is to answer the following question: what am I supposed to do with the fcf my firm puts in my hands? ;) Gio

Well, this is the way I see it: if Mr. Dalton is in the 99th percentile AND Kami is a bust, ALS is very cheap today. I have been saying this for a while now, and the stock price has kept going down… therefore, I certainly might be very wrong… but no counterargument I have read or heard until now has convinced me yet. ;) Gio

Well, I don’t see this happening: last year SIRI stock price rose handsomely, while LMCA stock price stagnated. Anyway, if what you say is true, and Mr. Malone will issue stock as a currency to his advantage, I plan not to be sleeping at the wheel and to make sure Mr. Malone will issue stock not only to his but to “our” advantage! (rights offering next July?) ;) Gio

Ahahahah!!!! Just great!! ;) Cheers, Gio

txlaw! And I thought you were a lawyer…!!! ;D ;D ;D Well, I think Mr. Malone knows the strengths and the weaknesses of Sirius as well as anybody else (probably better?). Sirius has been a wonderful investment so far… when its weaknesses start outweighing its strengths, I think Mr. Malone will recognize the change in the competitive landscape, and will act accordingly… Actually, with Charter he is already working on something else, isn’t he? I am reading [amazonsearch]A Money Mind at 90[/amazonsearch] by Philip L. Carret (who passed away in 1998 at 102): if Mr. Malone gets to 90 preserving his “money mind”, we still have almost 2 decades of benefiting from his shrewdness… It would be a pity to lose this opportunity simply because we get a bit uncomfortable with an investment of his, wouldn’t it? ;) Gio

Sorry gio, I wasn't trying to be a smarty pants......just suggesting that all is not lost here. 8) No problem at all!! What you have said and suggested makes just perfect sense! ;) Cheers, Gio

HIT & SUNK!!! ;D ;D ;D Gio

Thank you again, skanjete! I guess the simple facts you speak Dutch and you were able to attend the Annual Meeting are big advantages you have over the rest of us… I will go on following this thing with great interest, hoping to make up my mind sooner rather than later! :) Cheers, Gio

Ok, so now let me see… what I am looking for: 1) A manager young enough – TEZ.F: check! 2) A manager with a good and already long enough track record; I want to know what that manager has accomplished in the past, and for how long he has sustained good performance – TEZ.F: check! Though I must admit it is only on the basis of what skanjete told us… I wasn’t able to find practically anything else about Mr. Tack’s business accomplishments. 3) A manager with a lot of skin in the game – TEZ.F: check! 4) A manager who explains extensively and clearly enough how he/she is going to create value in the future – TEZ.F: unfortunately, it is very difficult to find Mr. Tack writing and reasoning about his businesses and strategies… In the last 24 hours I have found practically nothing… Also the Picanol Letters to the Shareholders read like an account of what has happened… but the why and the how are almost never touched! 5) I should understand easily enough what the manager has explained, and agree with his/her views about the business – TEZ.F: without 4) requisite 5) of course cannot be fulfilled. 6) A business that is predictable enough – TEZ.F: check! Though clearly not high margins, chemical products will be needed for the foreseeable future. So, where does all this leave me? Points 4) and 5) are clearly a problem for me, in part also point 2)… Is it too much to ask of Mr. Tack that he explains what he is about to do, and how he intends to achieve his business goals? skanjete, do you understand if I say I trust you and thank you very much for the work you have shared with us, but that I also need Mr. Tack himself to confirm what you have said? …But I guess this is exactly why in general I find it so much difficult to invest in public companies outside North America: because elsewhere I find so little information and transparency! I don’t know… I admit I am torn: on one hand I like very much what’s going on here, on the other hand my investment process isn’t complete… Gio

Yeah! If you can understand it…!! I had found that interview… but couldn’t understand a single sentence!! :( Gio

I guess it is something like this: do you prefer to invest in BH, or in CBRL, or whatever company Mr. Biglari is targeting? Some prefer the latter, because the effect of thoughtful restructuring doesn’t get diluted inside a company with many other assets. Gio

skanjete, I wasn't able to find Mr. Tack's age anywhere... Do you happen to know it? ;) Thank you, Gio