Guest Dazel Posted April 4, 2012 Share Posted April 4, 2012 Beer baron, I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis... It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data... As we know GMO...does their homework. Dazel. Link to comment Share on other sites More sharing options...
Green King Posted April 4, 2012 Share Posted April 4, 2012 How did they get it ? what methods did they use? how do i know if they are right and how do i get a mental model of what they have done ? Beer baron, I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis... It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data... As we know GMO...does their homework. Dazel. Link to comment Share on other sites More sharing options...
link01 Posted April 4, 2012 Share Posted April 4, 2012 Beer baron, I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis... It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data... As we know GMO...does their homework. Dazel. Beer baron, I am referring to the work that was done by Jeremy grantham...a link has been posted here before..the thread is getting a little long...it was not due to volatility in their analysis... It was the probability of reversing the iron ore trend...2 million to one chance of that...they used 100 years of data... As we know GMO...does their homework. Dazel. dazel, i own a some altius in an ira account (are they a PFIC for US investors?) because of your ongoing generous & compelling analysis of it on this board (& because its trading at just above book with a nice cash cusion, plus they seem to be thoughthful capital allocators who dont indiscrimately spray tons of share issuance for acqusisitions at every turn), but looking at at chart of iron ore prices for the past 10 yrs presents---for me, at least---argues for some caution: http://www.indexmundi.com/commodities/?commodity=iron-ore&months=180 despite what GMO opines iron ore prices look like they might have an air pocket underneath it if the tug of war between inflation & deflation goes the latters way. commodities in general have been a big beneficiary of the worldwide credit boom over the last decades. but then again, so have bonds because of the incrementally slower growth that each dollar of defcit spending has bought, & with it, the prospect of a deflationary slump when the music stops. at that point i'll be looking more aggressively for inflatioanry investing themes. Link to comment Share on other sites More sharing options...
Liberty Posted April 4, 2012 Share Posted April 4, 2012 After reading some Nassim Taleb I'm now very suspicious of any predictions of "1 chance in 1 million" or whatever, but I do foresee that base metals will benefit from a large portion of the world developing. South-America, Asia, Africa.. Even the US economy going back to normal. And if things don't go well for a while, well, Altius has no debt, lots of cash to deploy, and great capital allocators who own a good number of shares in charge. So I'm not worried. This is what reassures me, rather than quantitative predictions. Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 5, 2012 Share Posted April 5, 2012 Green king, You do not and will not know if they are right...but their analysis is different from Taleb who is always pedi ting a black swan will appear....GMO called the market meltdown on fundamental analysis and think Fairfax got a lot of their information from GMO. I am not saying we could not have a pullback in iron ore quite frankly it would be beneficial to have a pull back. Why? Supply demand. GMO's thesis is that there demand will continue will continue to outstrip supply....why? Iron ore was under produced for so long because of it's low price....the opposite happens at these prices...more supply comes on...however, remember 2008? The were a ton (pardon the pun) of projects delayed and shelved during that period...you cannot just bring supply on it takes the better part of a decade to get mine going. If prices were to fall back it would actually help Altius because there iron ore properties are in an iron ore district...infrastructure is already there. That is why Thompson Consolidated were able to plug through 2008 and 2009....low cost is the key. Alderon would benefit from a drop in iron ore prices. Dazel. Link to comment Share on other sites More sharing options...
Liberty Posted April 5, 2012 Share Posted April 5, 2012 You do not and will not know if they are right...but their analysis is different from Taleb who is always pedi ting a black swan will appear.... I was more basing my comment on Fooled by Randomness than on The Black Swan. In it he makes a very good point that people assume that events follow a guassian distribution while in fact that's not the case. The math whizes believe that things are actually more predictable than they are. Hi prescription to survive and thrive in this umpredictable world (where we regularly see events that people once predicted were once-in-a-thousand years events..) is to have robust and resilient systems. I believe that Altius is one such robust and resilient company. Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 5, 2012 Share Posted April 5, 2012 Liberty, Thanks for the remarks.... I am a value investor. We will leave the predicting to others...we buy a buck for 50 cents. That simple....the macro is not our game. The macro I provide is other people' s analysis...I spend very little time on it....just pass it on. Our best case scenario is that commodities get crushed on the same arguments we are talking about. Altius is in the drivers seat....they can pick bucks all over the place for 50 cents....they are investors...NOT MINERS. That is why we own them... http://www.google.com/finance?q=TSE%3ALIF.UN Labrador iron ore royalty is an example of what is possible at Altius..the market has priced this in at a value of 0...after 9 years of developing their iron ore properties from scratch. Most importantly our upside is Free....there inventory of assets are priced at close to zero. Link to comment Share on other sites More sharing options...
Liberty Posted April 5, 2012 Share Posted April 5, 2012 I think we're pretty much on the same wavelength, Dazel. I too sometimes look at macro predictions, but I don't give them much weight. What matters to me is good management, good assets, good price, good downside protection. Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 10, 2012 Share Posted April 10, 2012 http://www.forbes.com/sites/kenrapoza/2012/04/09/china-housing-bubble-is-over-says-jim-rogers/ More info on china...take it for what is worth but we are seeing iron ore tick up..and hold steady around $150...there is only one reason for that and it is china. Dazel. Link to comment Share on other sites More sharing options...
Liberty Posted April 10, 2012 Share Posted April 10, 2012 Video about Alderon: http://alderonironore.com/_resources/videos/alderon_video_20120321.html Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 10, 2012 Share Posted April 10, 2012 http://www.commodityonline.com/news/indonesian-ore-export-ban-to-be-supportive-for-nickel-commerzbank-47137-3-47138.html Altius Voisey bay royalty and nickel holdings just got huge boost!! Dazel. Link to comment Share on other sites More sharing options...
bathtime Posted April 11, 2012 Share Posted April 11, 2012 Globe and Mail article on Alderon as possible takeover candidate: http://www.theglobeandmail.com/globe-investor/alderons-pedigree-makes-it-a-takeover-target/article2397582/ Link to comment Share on other sites More sharing options...
naboo Posted April 11, 2012 Share Posted April 11, 2012 Is now the best time to sell alderon? why not wait till the beingging of the production? Globe and Mail article on Alderon as possible takeover candidate: http://www.theglobeandmail.com/globe-investor/alderons-pedigree-makes-it-a-takeover-target/article2397582/ Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 11, 2012 Share Posted April 11, 2012 They will not be selling here...if it were to triple like the article suggested they would be sellers...the more likely scenario is they sell at the $6 level to a producer that assures them the quickest production. As I have said the royalty is worth more than all Altius right now. The market does not care right now...and we are fine with that...it is coming together as we expected. Dazel Link to comment Share on other sites More sharing options...
Ross812 Posted April 12, 2012 Share Posted April 12, 2012 I've been pouring over Altius trying to get more comfortable with them before I increase the size of my position. I found an interesting blog that discussed Altius's involvement with the Lower Churchill Hydro Royalty, and the NLRC. The post draws a lot of connections showing Altius's government connections. The post concludes with the author buying shares in Altius, so don't let the author's tone get to you too early. http://rocksolidpolitics.blogspot.com/search/label/Altius I am trying to invert and find a reason to short Altius before buying any more. Has anyone else tried this. Have you come up with anything? Was the NLRC blowup the reason the stock price fell? I'm looking for anything that could derail this investment. Right now, it seems the company is riding on Alderon. Are they being discounted because half their market cap is invested in a junior miner? Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 12, 2012 Share Posted April 12, 2012 Ross182, I would love to see a short thesis but more importantly I would love to see a large short percentage literally...an illiquid stock sometimes acts strangely. A short would have had it's way with Altius shares as they would have been able to move the price at will. I know you are doing an exercise...just saying a squeeze would be deadly for a short... Altius position in Alderon is $32mx $3.50...$112m. A little over one third market cap... Dazel. Link to comment Share on other sites More sharing options...
Ross812 Posted April 12, 2012 Share Posted April 12, 2012 Dazel, I've owned Altius since August of 2010 after I read your posts and ran the numbers. It has stayed about a 5% position which is pretty typical if I haven't spent the time to become really comfortable with it. I've just kept up with your commentary and read reports from the company. I'm about 20% cash right now and have another 20% coming if Jef stays above 17 on options expiration. I really need a place to put the cash and Altius looks to be the cheapest thing I'm watching right now. It seems to be a great place to put some money, but I need to understand it better. Thus, getting to know it from the other side of the trade. I'll post if I find anything else interesting. So far, other that macro problems, I haven't turned up anything. You're right on the Alderon position. I was typing faster than I was thinking. Alderon makes up a huge portion of the Altius market cap. If Alderon was backed out, Altius seems fairly valued in an ideal liquidation situation. So the margin of safety is Alderon, which seems to be a great investment so far. Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 12, 2012 Share Posted April 12, 2012 Ross182, It is a very important exercise you are doing...I would look at all assets individually...negatively...remeber that Alderon stock and Alderon 3% royalty are different assets...they do not effect each other unless Altius uses it's control position to secure that Alderon comes to production. So what is Alderon stock worth? What is the 3% royalty worth on their own? In a negative analysis (what the market is pricing) the royalty is worth 0. You do not have to do much math in inversion because the market has already done it. So the billion dollar question is when do you add the royalty to the value of the stock? Link to comment Share on other sites More sharing options...
jjsto Posted April 13, 2012 Share Posted April 13, 2012 Chinese investment finally arrives. (I guess this explains recent alderon sp movement) http://www.bloomberg.com/news/2012-04-13/hebei-steel-to-spend-195-million-on-alderon-stake-ore-venture.html Link to comment Share on other sites More sharing options...
jjsto Posted April 13, 2012 Share Posted April 13, 2012 Alderon press release here: http://www.alderonironore.com/_resources/news/2012-04-13-NewsRelease.pdf Link to comment Share on other sites More sharing options...
value-is-what-you-get Posted April 13, 2012 Share Posted April 13, 2012 Nice development. Like the ongoing management fee for Alderon, the minimal 5% discount for ore with a cap on volume and the nice steady pace at which this is developing. They are delivering good results on schedule without giving away the farm. Link to comment Share on other sites More sharing options...
Liberty Posted April 13, 2012 Share Posted April 13, 2012 Haven't read all the details yet, but seems like a very good deal. Link to comment Share on other sites More sharing options...
naboo Posted April 13, 2012 Share Posted April 13, 2012 It is more and more likely that Alderon will be CT2. Couldn't get ALS at $10 any more. Big Loss! Alderon press release here: http://www.alderonironore.com/_resources/news/2012-04-13-NewsRelease.pdf Link to comment Share on other sites More sharing options...
Guest Dazel Posted April 13, 2012 Share Posted April 13, 2012 The world resource sector will now take notice of Altius....This is the biggest steel producer in China. Global news will have companies looking at Altius' assets and value. What exactly is that 3% kami royalty worth now? This is a game changer absolutely huge for Altius. Dazel. Link to comment Share on other sites More sharing options...
Ross812 Posted April 13, 2012 Share Posted April 13, 2012 How many tons of iron can Alderon produce? The release this morning suggested 8 million tonnes? 4.8 million tones purchased by Hebei for 95% the market cost. Lets assume $100/ton so Alderon is now making at least grosses 456 million. Altius gets 13.7 million? ($100*95%*4.8*3%) DCF discounted at 11%, 0% growth. The 3% royalty is worth 124 million on the extreme low end... At $140 per ton 8 million per year the royalty is worth 305 million... Either way you could put a conservative and say the Alderon Royalty and shares are worth 230 million. Millrock 7.93 million shares worth $2.06 million 3.45 million warrants worth $.24 million NLRC 0 Voisey .3% Royalty, 2.25 million per year 0% growth, 11% discount 20 million CMB 2% uranium ? 2% smelter ? Viking Gold 2-4% sliding royalty ? Rambler 12 million shares worth 7.2 million Labrador Iron Ore I think this one is huge. Rio Tinto agreement for 3% or 10 million + 2% Ill go really conservative here and say all 4 projects are only worth the Rio Royalty -$30 million Cash and Income Tax Receivable - $58 million What I consider a very, very conservative of the cuff valuation- 347.5 million Very conservative, not even considering: Viking gold royalty Alberta Oil Shale holdings CMB Royalty NLRC loan recovery Any one of those is easily worth 5-10 million... The market is saying 348 right now... Link to comment Share on other sites More sharing options...
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