ALS.TO - Altius Minerals

[no_free_lunch]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

[bizaro86]

I think it is moving up largely on iron ore. Champion, the new owner of Kami, is going to need large mining truck to move the bales of cash they're making around. That probably makes them more likely to spend the $$ to build Kami, which would be a huge catalyst.

 

 

[TwoCitiesCapital]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

Yes. Waiting for it to be a good time for commodities is why I'm still here :/

 

I think it is moving up largely on iron ore. Champion, the new owner of Kami, is going to need large mining truck to move the bales of cash they're making around. That probably makes them more likely to spend the $$ to build Kami, which would be a huge catalyst.

 

 

 

Kami could be THE catalyst. Another 10-30 million in revenue to Altius is nothing to sneeze at (pending iron prices and volume/scale Champion builds). That being said, in the meantime, maybe prices collapse again and it doesn't get built for another 10 years. Who knows :/

 

Just waiting for this to eventually have been worthwhile.

[bizaro86]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

Yes. Waiting for it to be a good time for commodities is why I'm still here :/

 

I think it is moving up largely on iron ore. Champion, the new owner of Kami, is going to need large mining truck to move the bales of cash they're making around. That probably makes them more likely to spend the $$ to build Kami, which would be a huge catalyst.

 

 

 

Kami could be THE catalyst. Another 10-30 million in revenue to Altius is nothing to sneeze at (pending iron prices and volume/scale Champion builds). That being said, in the meantime, maybe prices collapse again and it doesn't get built for another 10 years. Who knows :/

 

Just waiting for this to eventually have been worthwhile.

 

Yeah. I'm holding a core position for a potential big win, but have been in and out here multiple times. Which has kept it from being a total disaster...

[Liberty]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

There's always an excuse. Meanwhile, the opportunity cost keeps growing, because you could've been owning something else that was up 2-3x in the meantime.

 

Weren't members of the company's exec team talking about how happy they were about the blood in the streets and time to buy and create lots of value in recent years? Isn't the model supposed to be that commodity cycles don't matter too much because they don't have the capex and have these magical royalties?

 

I don't know, I tend to think that stuff I said earlier in this thread applies and that they aren't getting a very high ROIC on overall capital employed, and because of this lack of value creation, the market is keeping the stock flat (which is losing value vs your opportunity cost, which should at least be the SP500, since you can trivially own that at almost no cost and be incredibly diversified across the whole world (US listed, but mostly global companies)).

[bizaro86]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

There's always an excuse. Meanwhile, the opportunity cost keeps growing, because you could've been owning something else that was up 2-3x in the meantime.

 

Weren't members of the company's exec team talking about how happy they were about the blood in the streets and time to buy and create lots of value in recent years? Isn't the model supposed to be that commodity cycles don't matter too much because they don't have the capex and have these magical royalties?

 

I don't know, I tend to think that stuff I said earlier in this thread applies and that they aren't getting a very high ROIC on overall capital employed, and because of this lack of value creation, the market is keeping the stock flat (which is losing value vs your opportunity cost, which should at least be the SP500, since you can trivially own that at almost no cost and be incredibly diversified across the whole world (US listed, but mostly global companies)).

 

You're right, of course, about the opportunity cost. Their business model (imo) is mid single digit ROA with attached lottery ticket/moonshot investments. As it happens none of the moonshots have hit yet, but if the commodity upcycle goes its quite possible one of their big properties could have a mine built on it. Kami getting announced doubles the stock even from here. Obviously it's been a long time to wait so far. I look at it as a heads I don't lose much, tails I win big type investment, and I don't mind the diversification and commodity price exposure for a little piece.

 

I also think using the S&P as a bogey during a period of historic multiple expansion is a bit of a tough bar. You're right that its easy to index to the S&P, but by that standard basically every company outside of big cap tech has been a failure the last few years.

[TwoCitiesCapital]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

There's always an excuse. Meanwhile, the opportunity cost keeps growing, because you could've been owning something else that was up 2-3x in the meantime.

 

Weren't members of the company's exec team talking about how happy they were about the blood in the streets and time to buy and create lots of value in recent years? Isn't the model supposed to be that commodity cycles don't matter too much because they don't have the capex and have these magical royalties?

 

I don't know, I tend to think that stuff I said earlier in this thread applies and that they aren't getting a very high ROIC on overall capital employed, and because of this lack of value creation, the market is keeping the stock flat (which is losing value vs your opportunity cost, which should at least be the SP500, since you can trivially own that at almost no cost and be incredibly diversified across the whole world (US listed, but mostly global companies)).

 

You're right, of course, about the opportunity cost. Their business model (imo) is mid single digit ROA with attached lottery ticket/moonshot investments. As it happens none of the moonshots have hit yet, but if the commodity upcycle goes its quite possible one of their big properties could have a mine built on it. Kami getting announced doubles the stock even from here. Obviously it's been a long time to wait so far. I look at it as a heads I don't lose much, tails I win big type investment, and I don't mind the diversification and commodity price exposure for a little piece.

 

I also think using the S&P as a bogey during a period of historic multiple expansion is a bit of a tough bar. You're right that its easy to index to the S&P, but by that standard basically every company outside of big cap tech has been a failure the last few years.

 

+1

 

I don't think it was ever said the commodity cycle didn't matter - it was said the company is somewhat countercyclical. The relative consistency of their cash flows allows them to buy options when they're cheap. A bull market in commodities will do wonders for that portfolio options and even a single one of them hitting could be material. That being said, we haven't seen a consistent run in commodity prices for that to quite play out yet.

 

The main thing that has made this a mediocre investment for me was the timing - I bought at the top of the prior cycle expecting that Kami would be a producing mine and justify the cost. That didn't happen. Since then, there have been multiple periods of time to pick up shares at very attractive prices that have allowed me to salvage the investment as a whole and turn something terrible into something that is mediocre/modestly good.

 

I'm certainly more comfortable holding Altius than I would be holding something like Apple at this point, so I'm content to continue waiting. 

[omagh]

Hasn't it been a horrible time for commodities though?  They seem to have done better than most commodity producers at least.  I think you will need a commodity boom to make any real money and if they can keep from losing equity while waiting they are actually ahead of the game in my opinion.

 

For me it's just a tiny position, less than 1%.  I just use it as an inflation hedge.

 

There's always an excuse. Meanwhile, the opportunity cost keeps growing, because you could've been owning something else that was up 2-3x in the meantime.

 

Weren't members of the company's exec team talking about how happy they were about the blood in the streets and time to buy and create lots of value in recent years? Isn't the model supposed to be that commodity cycles don't matter too much because they don't have the capex and have these magical royalties?

 

I don't know, I tend to think that stuff I said earlier in this thread applies and that they aren't getting a very high ROIC on overall capital employed, and because of this lack of value creation, the market is keeping the stock flat (which is losing value vs your opportunity cost, which should at least be the SP500, since you can trivially own that at almost no cost and be incredibly diversified across the whole world (US listed, but mostly global companies)).

 

Entry point: $6.65 (March 2020)

Current price: $14.50

Return: 155% annualized in 10 months

 

That seems to be better than such things as the SP500 and Consellation Software, but what do I know.

 

Some of us are doing just fine.

[Liberty]

I also think using the S&P as a bogey during a period of historic multiple expansion is a bit of a tough bar. You're right that its easy to index to the S&P, but by that standard basically every company outside of big cap tech has been a failure the last few years.

 

Yes. Sometimes, that's how the cookie crumble. I think if you change your benchmark every time you underperform, it leads to worse outcomes, not better ones. For a lot of people, the logical conclusion after a long-enough period should be: I should probably just index and forget about it.

[Liberty]

Entry point: $6.65 (March 2020)

Current price: $14.50

Return: 155% annualized in 10 months

 

That seems to be better than such things as the SP500 and Consellation Software, but what do I know.

 

Some of us are doing just fine.

 

Bragging about a short-term trade. Very nice, haha.

 

I'm no good at trading, but I'm not disappointed to instead have been owning Constellation Software for many many years instead of ALS...

[no_free_lunch]

I agree that you should comp against the S&P500 but that index is up 150% since 2012 while most other markets are up 20-40%.  I think ALS is basically inline with the TSX, depending on your start point.

 

I don't think anyone, ever, expected this to outperform a standard index during a normal bull run.  This was always about hedging against commodity risk.

 

I have no bone in this though, I had a look and apparently I don't even own it.  Sold out a few weeks ago when it bumped over $14.

[bizaro86]

I also think using the S&P as a bogey during a period of historic multiple expansion is a bit of a tough bar. You're right that its easy to index to the S&P, but by that standard basically every company outside of big cap tech has been a failure the last few years.

 

Yes. Sometimes, that's how the cookie crumble. I think if you change your benchmark every time you underperform, it leads to worse outcomes, not better ones. For a lot of people, the logical conclusion after a long-enough period should be: I should probably just index and forget about it.

 

I think the answer to the second sentence can't be determined based on one stock. I've beat the S&P by a meaningful amount the last few years with almost no correlation to the index. Altius has been a detractor to that. That doesn't make it a bad company going forward. If you buy a portfolio of lottery tickets, they won't all hit, but if the ones that do outweigh the ones that don't you're ok. A portfolio of 10 firms like ALS would have a meaningfully positive EV, even if you couldn't predict which ones would hit.

 

Taking backward looking judgements to the extreme, my biggest loser in 2020 was actually BRK.B. I sold puts early in the year, and sold the shares that got put to me in the spring to re-balance into higher beta/more undervalued names. Doesn't make BRK a bad firm, it means I bought at a bad valuation/time.

 

 

 

 

[Liberty]

I agree that you should comp against the S&P500 but that index is up 150% since 2012 while most other markets are up 20-40%.  I think ALS is basically inline with the TSX, depending on your start point.

 

I don't think anyone, ever, expected this to outperform a standard index during a normal bull run.  This was always about hedging against commodity risk.

 

I have no bone in this though, I had a look and apparently I don't even own it.  Sold out a few weeks ago when it bumped over $14.

 

The SP500 isn't the US, it's a global index. A ton of these companies get a lot of their revenues from outside the US, an the US market is by far the biggest market in the worl. So I don't think other benchmarks make a lot of sense -- they tend to be less representative of what someone who wants to diversify and index should do, actually (the home bias thing).

 

And I think the goal posts have been moved over time as ALS has done badly... If you go back earlier in the thread, it was mostly pitched as this genius company that has been compounding at a 40% CAGR for years and was going to create all these options worth billions like Kami, etc. Dazel was ridiculously bullish on it until he disappeared, a bit like Linelidn (sp? can't remember how he wrote his name) was the same and then disappeared. I guess I'm the only one still around from the beginning of the thread ¯\_(ツ)_/¯

[bizaro86]

I agree that you should comp against the S&P500 but that index is up 150% since 2012 while most other markets are up 20-40%.  I think ALS is basically inline with the TSX, depending on your start point.

 

I don't think anyone, ever, expected this to outperform a standard index during a normal bull run.  This was always about hedging against commodity risk.

 

I have no bone in this though, I had a look and apparently I don't even own it.  Sold out a few weeks ago when it bumped over $14.

 

The SP500 isn't the US, it's a global index. A ton of these companies get a lot of their revenues from outside the US, an the US market is by far the biggest market in the worl. So I don't think other benchmarks make a lot of sense -- they tend to be less representative of what someone who wants to diversify and index should do, actually (the home bias thing).

 

And I think the goal posts have been moved over time as ALS has done badly... If you go back earlier in the thread, it was mostly pitched as this genius company that has been compounding at a 40% CAGR for years and was going to create all these options worth billions like Kami, etc. Dazel was ridiculously bullish on it until he disappeared, a bit like Linelidn (sp? can't remember how he wrote his name) was the same and then disappeared. I guess I'm the only one still around from the beginning of the thread ¯\_(ツ)_/¯

 

The S&P 500 is a global index, but US domiciled firms trade at higher valuations than basically anywhere else. Its maybe representative of worldwide revenue, but not worldwide valuation. They've earned that valuation through better earnings growth in the past. But some of the tailwinds are likely to become headwinds or at least neutral going forward (corporate tax rates, regulation, dropping rates) so I doubt US outperformance can continue.

 

 

[Thrifty3000]

I agree that you should comp against the S&P500 but that index is up 150% since 2012 while most other markets are up 20-40%.  I think ALS is basically inline with the TSX, depending on your start point.

 

I don't think anyone, ever, expected this to outperform a standard index during a normal bull run.  This was always about hedging against commodity risk.

 

I have no bone in this though, I had a look and apparently I don't even own it.  Sold out a few weeks ago when it bumped over $14.

 

The SP500 isn't the US, it's a global index. A ton of these companies get a lot of their revenues from outside the US, an the US market is by far the biggest market in the worl. So I don't think other benchmarks make a lot of sense -- they tend to be less representative of what someone who wants to diversify and index should do, actually (the home bias thing).

 

And I think the goal posts have been moved over time as ALS has done badly... If you go back earlier in the thread, it was mostly pitched as this genius company that has been compounding at a 40% CAGR for years and was going to create all these options worth billions like Kami, etc. Dazel was ridiculously bullish on it until he disappeared, a bit like Linelidn (sp? can't remember how he wrote his name) was the same and then disappeared. I guess I'm the only one still around from the beginning of the thread ¯\_(ツ)_/¯

 

I’ve been following this thread since it was created in 2011. It’s one of my favorites to follow since I really like the management and since there’s so much business activity. I never made a significant investment until this year when it dropped below $7 USD per share. I don’t expect it to be a 10 bagger over the next decade from those prices, but I expect it to beat the S&P pretty solidly.

 

A couple years ago I created a ridiculous workbook attempting to trace all their investments back to inception. It’s a very different company from when Dazel first posted, attracting a different type of investor.

 

With Altius you have ultra high quality ultra long life royalties (that they didn’t own 10 years ago) pumping out tens of millions of free cash to a proven, experienced, innovative, management team that’s going to reinvest into the best likely return among:

 

- high quality royalties

- equities

- exploration projects

- share repurchases

 

I don’t lose sleep owning Altius. And I love owning a share of those cash machine royalties.

[Dazel]

 

Many took over the reins of this thread and have done an incredible job. Brian Dalton in my opinion, remains

The hardest working and one of the most talented entrepreneurs in Canada. If the cycle remains a tailwind to him

Everyone involved will be very very pleased.

 

Good luck to all.

 

Dazel

[Gamecock-YT]

Altius Announces Filing of Preliminary Prospectus for Altius Renewable Royalties Corp.

 

https://www.businesswire.com/news/home/20210119005675/en/

[reader]

 

Labrador Iron Ore Royalty Corporation (TSX:LIF) - Rio Tinto releases IOC production and sales information

 

https://labradorironore.com/news/labrador-iron-ore-royalty-corporation-tsx-lif-2121/

 

[reader]

 

Altius to acquire 3.125M(@ $0.32ps) additional shares of Wolfden Resources in a private placement for $1M.

 

"The Shares to be acquired by Altius under to the Private Placement will represent 2.28% of the issued and outstanding Common Shares of Wolfden (“Common Shares”).

 

Prior to the closing of the Private Placement, Altius owns 14,200,000 Common Shares representing 10.86% of the issued and outstanding Common Shares and 7,100,000 warrants of Wolfden (“Warrants”) exercisable into 7,100,000 Common Shares, which, if exercised, would represent approximately 15.44% of the issued and outstanding Common Shares. Following completion of the Private Placement, Altius will own 17,325,000 Common Shares representing 12.63% of the issued and outstanding Common Shares and 7,100,000 Warrants. If Altius exercises all Warrants held by it, Altius would hold an aggregate of 24,425,000 Common Shares representing approximately 16.94% of the issued and outstanding Common Shares post-exercise."

 

https://seekingalpha.com/pr/18159149-altius-resources-inc-acquires-additional-common-shares-of-wolfden-resources-corporation

 

[Dazel]

https://renewablesnow.com/news/altius-renewables-unit-submits-ipo-prospectus-728563/

 

Brian Dalton is brilliant.

[bizaro86]

I disagree that an IPO in Canada is a brilliant decision. Disagree strongly, in fact. This is an ESG poster child business with its assets in the USA. They should go public via one of the hundreds of SPACs that are looking for a deal.

[Dazel]

 

 

Really!?

I am talking about entering the space when No one else was there and taking a lot of heat for the cash he spent and a dropping Share price to do it. That smarts and balls....the type that creates value.

 

He is brilliant.

[bizaro86]

 

 

Really!?

I am talking about entering the space when No one else was there and taking a lot of heat for the cash he spent and a dropping Share price to do it. That smarts and balls....the type that creates value.

 

He is brilliant.

 

Oh sure, I agree it was a great business to buy/expand, and that Dalton is a great manager. I thought you were talking about the IPO specifically.

 

I emailed them suggesting they do a SPAC deal instead, as I think an IPO here is leaving money on the table.

[omagh]

A couple years ago I created a ridiculous workbook attempting to trace all their investments back to inception. It’s a very different company from when Dazel first posted, attracting a different type of investor.

 

With Altius you have ultra high quality ultra long life royalties (that they didn’t own 10 years ago) pumping out tens of millions of free cash to a proven, experienced, innovative, management team that’s going to reinvest into the best likely return among:

 

- high quality royalties

- equities

- exploration projects

- share repurchases

 

I don’t lose sleep owning Altius. And I love owning a share of those cash machine royalties.

Thrifty,

 

I think you're making some key points.  Indeed, the company has changed substantially from Dazel's initial post.  It has turned into a cashflow story.  Further, it has taken the royalty model into other business lines where Dalton has been able to extend into new markets,  To make a profit over time on a growing cashflow business, entry points are important for short-term margin of safety, but over time, the long-term compounding will greatly outstrip the initial margin of safety gain.  The reinvestment runway is long.

 

- O

[omagh]

I disagree that an IPO in Canada is a brilliant decision. Disagree strongly, in fact. This is an ESG poster child business with its assets in the USA. They should go public via one of the hundreds of SPACs that are looking for a deal.

bizaro...Would a SPAC build a shareholder base?  It depends on what the goal is for raising capital -- it's party about funding, but it's also about building a set of shareholders that will stick with you for the primary raise and for possible secondary raises.  Raising at inflated values via SPAC is one way to raise funds, but it could be a short-term gain that blunts the business' momentum.

 

- O