Liberty

Earlier in the thread I've explained why I think even Altius should get a decently high discount rate. Actual events over the years have shown this correct, since many large projects have fallen by the wayside, large write-downs have been made, etc. Commodities aren't predictable, even if all you do is invest in other people's projects. But 15% isn't that high for a resource small cap and capex has nothing to do with it. It's about what return do you want on your money? What's your hurdle rate? If ALS is making a sub-10% return on that big royalty package that they bought during a period of high commodity distress, is that high enough for you? What matters in the end is the return that it gets on its money (ROIC). If it takes 11 years to payback its original investment, that's a 6.5% CAGR return. If commodity prices go down during that period, maybe payback takes 15 or 20 years. That's a real risk. If commodity prices go down enough, a project might never be made or might be delayed for over a decade (Alderon?), that reduces the return rate further. Another downside with royalties is even if you hit the jackpot and get a really good royalty, you can't reinvest in it at the original rate you got, if at all. You constantly have to find new ones (more like bonds than a business that you can directly reinvest in). So if your base case isn't that high to begin with and you are taking commodity price exposure risks on top of it, to me that seems risky. And you're riding the cycle. When commodity prices are inflecting up, everything will feel great as the amounts go up and up, and then after a while (probably just when you got used to it) the cycle might turn and for the next 5 years you might see the size of the checks go down and down... All in an unpredictable fashion. As I said many times, I'm not forecasting that the stock will do badly or well. I'm just talking about some of the downsides of the model that I think haven't been discussed enough in this very long thread.

NPV isn't just for sales. It's just a representation of the time value of money vs your opportunity cost. Except those aren't the numbers, right? If you have to pay $240m three years ago to get $3bn over: 1) 60 years (that's a 4.3% CAGR) 2) 50 years (that's a 5.18% CAGR) 3) 40 years (6.52% CAGR) 4) 30 years (8.78% CAGR) 5) 20 years (13.46% CAGR) 6) 10 years (28.73% CAGR) So those 3 billions you speculate about (because nobody can be sure how much will come out of that royalty), how fast are you expecting ALS to get them in return for their $240m? Looking at Altius' royalty pages, it doesn't sound like it's going to be within 10 or 20 years... So the CAGR returns you are getting if you spread it out over those kinds of timelines start to be kind of low for my taste, especially considering that this isn't exactly a blue chip company in a stable sector, and surprises can be to the downside as well as the upside... If you're discount rate is even just 15%, getting 3 billion for that 240m package needs to happen kind of fast for it to be worth it.

You called wind power "retarded", so I gave you some facts. I said elsewhere what I thought about Alberta specifically, I was just answering your broad generalization. Uptime isn't the same as capacity factor. I think you need to learn about the concept of the time value of money. And unless you own 100% of ALS, you and your lineage won't get anywhere near that money.

Hydrogen is a way to store energy. It's not a source of energy (at least not on earth). Fossil fuels were great to get us here. But now that we know their downsides and have alternatives, we should transition as fast as possible.

More on Ross: https://www.apmreports.org/story/2017/11/08/wilbur-ross-owns-more-ships Easy to see why Trump felt a kinship...

??? I think you missed the point. Saying that wind power is "retarded" because a wind farm didn't produce much power on a day when the wind didn't blow is kind of... well... Did you know that the average coal plant's capacity factor is around 60% while wind farms vary around 20-40%, with some offshore wind farms having capacity factors above 60%? Personally, if I can pick a challenge for our society to have to deal with, I'll take renewable's variability over coal's poisoning of the air, water and soil, as well as messing up the climate, but that's just me.

3 billion over how long? What commodity prices assumptions are built in that number? What discount rate? What kind of IRR are you expecting? I think absolute number of dollars is pretty meaningless. $240m invested in the SP500 will return $3bn at some point too. The performance will be different whether it's over 20 years or 60 years...

http://www.rationalwalk.com/?p=16299

11 years to payback is about a 6.5% CAGR. Whether that's good depends on your hurdle rate, I guess.

You mean on their heavily impaired coal royalty from which they expected to get 25 extra years of revenues? http://www.marketwired.com/press-release/altius-write-down-of-genesee-royalty-on-alberta-electrical-policy-change-tsx-als-2193238.htm I don't know how long it'll go. Most likely is 2030. But if I was an ALS shareholder, I'd take seriously the possibility that it could also be before then. 2030 is a nice arbitrary round number that they threw out there, but in the intervening 12 years, if gas stays cheap and renewables keep getting cheaper and more and more of the world gets serious about carbon and air pollution (possibly as a backlash to the Trump era), there could very well be renewed pressure to move away from coal even faster.

How many times do I have to say that something else will probably kill coal in Alberta before renewables, but they're still coming and coal is still going away? I never said wind is what will take out coal in Alberta. You were talking about how little wind power there was in Alberta, so I gave some numbers to show the larger context and the trend.

Because they aren't on log charts and because real-world curves are never entirely smooth. Silicon is literally dirt-cheap. Lowering costs is all about scaling up production, automating processes, improving efficiencies so that out of the same amount of silicon you get more power, etc. Then they're also automating installation processes (robots are starting to install panels at utility-scale solar farms), etc. Plenty more cost reductions coming, we're early in this game.

It's already happening in many countries and region (you can extrapolate where it'll go next as costs come down by another half, etc). It'll require changes to the grid (more long-distance DC transmission, more interconnected regional grids) and more development of grid-scale storage (check this out: ) but the trends are clear. http://costofsolar.com/management/uploads/2013/06/price-of-solar-power-drop-graph.jpg Ideally, combined with LFTR tech (liquid fluoride thorium reactors) or breeders and hydro and smarter grids with TOU rates and demand response mechanisms, it could power the world very well and very cleanly.

I'm sure you're right that Alberta will have more wind and solar power by 2100. Not my concern. My concern is baseload competitors to Genesee and Sheerness in the period from today through December 31st, 2030. It won't be wind or solar replacing coal's baseload power in that period. It could be combined cycle natural gas but the utilities haven't pulled the trigger on the multi-billion dollar investments those plants would require. Mostly because carbon taxes don't favor the carbon that natural gas plants produce either. There's significant inertia in Alberta's power market (not much new generation of any kind currently in construction). Altius collects its checks and enjoys that inertia. Natural gas is way less carbon intensive per unit of power than coal. From memory it's about 1/4th. https://www.eia.gov/tools/faqs/faq.php?id=73&t=11 This shows about 1/2 from straight burning it, but natural gas plants tend to be more efficient than coal plants, so I could easily see 1/3 to 1/4th (especially if you compare a new cogen gas plant to an old coal plant). Gas plants also have higher capacity factors than coal. And then there are all the other benefits (nat gas doesn't cause the smog that coal does, gas wells are less destructive than coal mining, no mercury, no fly ash to store, etc). If you think it'll take until 2100 until wind and solar make a big difference in NA, you're not looking at the growth trends and cost trends properly.

I didn't say it would be wind that would do it in Alberta. But it's head-in-the-sand to think that's it's not a rapidly emerging source of clean power that will play a major role everywhere in the future, just like solar.

Nice comparison of the iPhone X video capabilities to a pro camera:

They bought a 12% (10% diluted) stake in SNAP: https://www.reuters.com/article/us-snap-tencent-stake/chinas-tencent-buys-12-percent-stake-in-snapchat-owner-idUSKBN1D81G3

Canada is a bigger country than the US with 1/10th the population. You don't think wind will take more share here over time with all this energy resource available for the taking, with only upfront costs and then no fuel costs? Storage costs are going down rapidly too, and if the environmental and health costs of coal are ever taken into account, coal plants won't be around long. But in Alberta specifically, who knows, it'll probably be gas that'll kill coal first.

This is actual wind power generation in the U.S. in thousand-megawatthours: The thing with exponential growth is it looks like nothing for a long while and then it pretty rapidly takes over. This isn't even counting solar, which has been going down in cost even faster and has a bigger potential than wind. This tidal wave is coming and won't be stopped.

Kind of funny how the best practices in this digital world are to print something on paper... :D

I thought it might interest some here: https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf

Fits right in with his boss. That article was pretty brutal. I guess the Forbes people are pretty pissed off. It makes one of their best marketing/branding tools look bad, so they're taking it seriously no doubt.

Security is so hard to get right... In good part because you usually can't have the best people in the world working on every single project, and because the best attackers in the world can pick their targets until they find a weak one (and they are a lot more numerous than whatever team you have working on security, and their incentives are probably bigger than yours for not screwing up).

Saw that. I read somewhere it's fixed in 11.2 beta. It's more about the speed of input than about the numbers. If you do it slowly it works, but if you do it fast the + doesn't register in time and you get the wrong number.

Here's the letter: http://basehitinvesting.com/wp-content/uploads/2017/11/1972-Buffett-Letter-to-Sees-Candies.pdf John Huber on the letter: https://seekingalpha.com/article/4122148-buffett-1972-letter-sees-candies