ALS.TO - Altius Minerals

[Blue Macaw]

The way I look at the share price today is something like the following:

 

After the December deal, $13-15 is the old $10-12 range for Altius (because the deal added value and brought some attention). So us hitting $15 today still does not give any credit for Alderon or Julienne events coming up.

 

I could see momentum bringing us up further in coming months to $17, then through $22 when Alderon/Julienne progress is made. Can this thing double from $15 to 30 by year-end 2016? (ie in 3 years?) - yes, absolutely. I would expect the Alderon mine to be delayed by something (operational, financing, commodity prices, I don't know) at some point however so I would add at least one year to its start date as a buffer - but that's pretty much a blip on the valuation front overall.

 

I agree with Dazel, that a lot of money is still to be made from these levels. $13-15 is the old $10-12 range. That deal in December added probably $2-3 per share in value (not including any additional attention it will bring to the stock).

 

 

 

 

 

I think you are right. We will see prices around 14-15 now for some time. You could trade between these values as you state but if not on the boat when/if Kami and Julienne gets approval they you will be left. If power line drags on then we could potentially see share price to maybe 13. If Alderon is a no go then we are back to 10

 

 

[Guest valueInv]

 

SD,

 

Thought you were gone by now...as you said you bought it for a trade.

 

I made 200% in a boring old value stock insurance company (Fairfax) that no one understood in less than a year! When they figured out what Fairfax was we made another 3 times  our money over the proceeding years. (FFH Watcher you have taken me down memory lane!!!) that was too fun.

 

We do not think the market understands Altius at all...The market is a voting machine in the short run...and to be honest Altius has not had any love for some time...it is being weighed now. There will be lots of traders in and out which is always the case...But this move to us may be quick for some but it is years since we have been here...and as our long term royalty holding this 40% move is a blip. Just like Fairfax's move from $80 to $112 ($477 is the high this year) was done in a few days for those that remember.

 

So SD Fairfax was a  whole lot more riskier at  $112 than $80 I agree...but many on this hoard bought then and made 4 times their money. Not saying they are apples to Apples but your short term trade mentality is whole lot different than our long term approach. All the power to you though you made a good purchase and you have a wonderful short term profit.

Congrats.

 

 

Dazel.

 

Dazel - congrats and thank you. I've made some money piggybacking on your posts. Hope to hold on to Altius for a looooong time.

[SharperDingaan]

As a trade, ALS has done far better than we expected; & because of that we will be leaving most of our gain invested in it - as house money. Agreed there is element of pent-up energy uncoiling; but nothing goes straight up - & this rapidly.

 

Periodic pull backs are a virtual certainty, so we expect that we will be hedging quite a bit. Sometimes we will be wrong, but caution doesn't hurt .... that much!

 

Our post was to counter some of the enthusiasm on the board; & to remind folks than a string of reds in a row does not mean that the next flip will be a red as well - it means that your weighting is growing, & if that if that flip is black ... it is going to hurt more. No big deal if you can tolerate it, but otherwise it can really screw up your day.

 

Enjoy the ride, but watch the bumps!

 

SD

 

[beerbaron]

As a trade, ALS has done far better than we expected; & because of that we will be leaving most of our gain invested in it - as house money. Agreed there is element of pent-up energy uncoiling; but nothing goes straight up - & this rapidly.

 

Periodic pull backs are a virtual certainty, so we expect that we will be hedging quite a bit. Sometimes we will be wrong, but caution doesn't hurt .... that much!

 

Our post was to counter some of the enthusiasm on the board; & to remind folks than a string of reds in a row does not mean that the next flip will be a red as well - it means that your weighting is growing, & if that if that flip is black ... it is going to hurt more. No big deal if you can tolerate it, but otherwise it can really screw up your day.

 

Enjoy the ride, but watch the bumps!

 

SD

 

I think SD has a point here, the value of Altius is up 50% since they announced their royalty deal. Indeed the value of Altius went up a little bit when their purchased those assets but not by 50%. I believe the momentum guys are trading in and that we are bound for some volatility.

 

BeerBaron

[EliG]

I believe the momentum guys are trading in and that we are bound for some volatility.

 

Either momentum guys... or the followers of this thread are bidding furiously against each. ::)

[cwericb]

Lets not lose perspective here. Yes, we have had a sudden runup from $10 to $15 but keep in mind that the $10 dollar range is actually pretty close to the low point for this stock over the past three years or more. Since 2011 we have probably averaged closer to $12.

 

In 2011 we hit $14 and in early 2013 we were bouncing around $13 for a while. So its not like we haven’t approched the mid teens in recent history.

 

However, we shouldn't be surprised to see some profit taking soon and yes, you do have to wonder if board members may be helping drive up the price.

 

Here’s Yahoo’s chart:

 

http://finance.yahoo.com/echarts?s=ALS.TO+Interactive#symbol=als.to;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

PS, I see Alderon is off 2% while Altius is up 9%. I wonder if there is some selling of Aldron to buy Altuis?

[Guest Dazel]

 

SD,

 

As always I do enjoy your rational thinking....I enjoyed both our discussion and profit in SFK...as you and I were buying 10 cent dollars...fortunately we had enough of a cushion to make 5 times our money...the problem with the other 40% was that both the business sucked and the management sucked worse! Resolute and Fairfax stole the business...

While we are certainly not even close to a 10 cent dollar....we have a great business model (more so now)....and an even better management team.

All the best you are a very knowledgable poster and I love reading your thinking....I am happy to be your partner here.

 

Dazel.

[SharperDingaan]

All that we need to get to the 10c dollars is some volatility, & couple of successful round trip hedges  :D

Nothing to it!

 

SD

[original mungerville]

My point is the stock has bounced around from 10 to 12 over past couple years. They do a deal that adds at least 2 maybe 3 to the value, and here we are trading at 14-15 wondering if that is too high?

 

I don't dispute that we are up 50% in a short time from 10 which is close to the low. But 14-15 can easily be explained by 2-3 in value added to the stock, plus gyrations around a new trading range of 13-15.

 

But if we get continued positive developments on Kami, that trading range may become 14-16, then 15-17, etc. Surely, if we don't expect Kami to go forward, then its not a great deal in the short-term at 15 (...unless Julienne goes through!). But I expect the Kami EA to go through next with pretty high probabilities.

 

If I wasn't selling at 12 why should I sell at 15 after the December deal?

[Guest Dazel]

I have received a lot of kind notes from several posters...thank you. But the reality is I am sitting on my ass sending posts on what I see....the heavy lifting and all the credit should go to the management of Altius. Great investors are capable of doing ordinary things that create extraordinary results...and that is just what Altius has done over the last 18 years. They are starting to get rewarded for their hard work and patience.

 

Dazel.

[original mungerville]

After all that, probably the stock will hit 12 in a week or two!! That's usually what happens in the short-term when I think about the long-term!

[cwericb]

SD, Dazel, I was also on that SFK/FBK ride and made a little money but not near as much as I would have if I had jumped off at $2 rather than .80 -.90, I learned some lessons in that fiasco and it still leaves a bad taste in my mouth. I appreciated the comments from from both of you on that old thread. Let's all hope for a better experience with ALS and ADV and if FFH shows any interest in ALS, I'm gone! But wouldn't this be of interest to Prem and all?

[Guest Dazel]

 

Original Mungerville,

 

I agree with your thinking on the deal adding the move in stock price but I think you are being conservative....why? Is the deal good yes...enough for $2 to 3 bucks..which is a little over $80m in market cap...we were above $13 last March...so not a big move.

 

The deal gives Altius exposure...no one knows they have a better record than Fairfax, Berkshire Hathaway and Leucadia over their first 18 years.

 

They have not  had a single analyst cover them since 2008! Why? Because they were loaded with cash and had no need for the promotion machine that is investment banking...that is coming now that they have raised cash.

 

Smart money will look to partner with them in consolidating other opportunities...

 

All of the computer programs will "pop" when they see negative cashflow to huge jump in positive cashflow

 

They will be priced as both a royalty and and great capital allocators...there is a difference...many royalty companies still hold very high premiums even though they have blown up many deals...they will get a higher multiple than the others that have bad deals working through...most royalty companies paid very high prices in the last 5 years. Altius did not.

 

They will start paying a dividend because of the consistent cashflow that the deal creates...ie wins like Kami and possibly Julienne Lake will flow through to shareholders in the form of dividends.

 

Altius will gain global respect for this deal and there will be financing available to consolidate the industry for them.

 

$12 bucks Mungerville! In your dreams bud.

 

 

 

[original mungerville]

Dazel,

 

I'm not saying its going to 12. What I am saying is there is no way I am selling here at 15 - did you read my other posts prior to the last one - I am saying this thing could easily double in 3 years? The 12 was a bit of a joke man!!!

[Libs]

I believe the momentum guys are trading in and that we are bound for some volatility.

 

Either momentum guys... or the followers of this thread are bidding furiously against each. ::)

 

Bingo! Including me. I just finished off my 4% position...I hope to hold this for 10 years. High hopes for young Mr. Dalton. If he is what I think, it won't matter much if you paid $10, $15 or $20 right now.

[FFHWatcher]

You guys are sounding more and more like a first year MBA student planning what colour he is going to paint the library in his 10,000 sq/ft house or whether he is going to order the 911 Turbo or the Cayenne.  We won't know whether Altius paid a high price or not for many years. Many years of cash flow will determine if it was a good value, certainly not before the ink is even dry.  I would argue that they paid 'market value' and that all deals are done at market value on that day, at that minute. 

Analysts, dividends, future partners, how they are priced, pop in cash flow, global respect, blah, blah, blah.....

There is no way that the Prem's, Warren's, etc. of the world think like the people on this thread are thinking and writing.  Just no way. 

Can you imagine Prem sitting down at a meeting of the investment committee saying stuff like 'all the computer programs are going to pop' or 'they are going to be priced like a royalty business and a great capital allocator...'  I just can't see their brains thinking similarly...

 

[matts]

You guys are sounding more and more like a first year MBA student planning what colour he is going to paint the library in his 10,000 sq/ft house or whether he is going to order the 911 Turbo or the Cayenne.  We won't know whether Altius paid a high price or not for many years. Many years of cash flow will determine if it was a good value, certainly not before the ink is even dry.  I would argue that they paid 'market value' and that all deals are done at market value on that day, at that minute. 

Analysts, dividends, future partners, how they are priced, pop in cash flow, global respect, blah, blah, blah.....

There is no way that the Prem's, Warren's, etc. of the world think like the people on this thread are thinking and writing.  Just no way. 

Can you imagine Prem sitting down at a meeting of the investment committee saying stuff like 'all the computer programs are going to pop' or 'they are going to be priced like a royalty business and a great capital allocator...'  I just can't see their brains thinking similarly...

 

Exactly. I tried to point out what are admittedly very minor flags and I was told to stop posting BS and focus "on the important things." As if that can be universally agreed upon.

 

Dazel I respect you. And as I stated I am long this stock, BECAUSE of your thread. That's how I discovered it. Thank you sincerely for the profit I have in Altius so far and hopefully much more in the future. But, you seem quite emotionally attached to this position and dismissive of any negative viewpoint whatsoever. Everything in this thread is being spun into a positive. Now that you have a large position, would you not be better served by trying to kill the thesis instead of reinforcing it at every turn?

 

How would you answer my observation of your emotional attachment?

 

[giofranchi]

There is no way that the Prem's, Warren's, etc. of the world think like the people on this thread are thinking and writing.  Just no way. 

 

If they do not think about the quality of the business, the quality of management, and the price they pay to purchase the business and to partner with its management, then what are the Prems and the Warrens of the world thinking about? Business is business for everyone. No matter what your name is, nor how much successful you have been in the past.

 

Gio

[giofranchi]

they are 18 years old...their compound return is 29% over that time...I am not sure of any company with that kind of record.

 

Here, Dazel, I must point at TransDigm's track-record: they are 20 years old and their compound rate is 33% over that time. :)

 

Gio

[FFHWatcher]

There is no way that the Prem's, Warren's, etc. of the world think like the people on this thread are thinking and writing.  Just no way. 

 

If they do not think about the quality of the business, the quality of management, and the price they pay to purchase the business and to partner with its management, then what are the Prems and the Warrens of the world thinking about? Business is business for everyone. No matter what your name is, and how much successful you have been in the past.

 

Gio

 

Gio - I agree.  But that can all be done in a few paragraphs, not 181 pages of posts.  Dazel has summarized it thoroughly...175 pages ago.  Most of what is written is not facts. We are getting ahead of ourselves...period.  Let's let this play out and when new facts come about, let's discuss them.  Dividend talk is nice but a waste of time.  It is just way too far off in the future and there are too many things that are unpredictable (good and bad) that WILL occur before then.  None are being discussed here because they are unknown. 

[giofranchi]

But that can all be done in a few paragraphs, not 181 pages of posts.

 

;D ;D

Well, cannot really argue with that!! ;)

 

Cheers,

 

Gio

 

[Phaceliacapital]

Yeah okay, there are 181 pages but if you go through the entire thread I wouldn't be surprised if 95% of the posts are discussions on iron ore prices and markets, the mining sector, alderon, julienne lake, other prospects, comparable deals that were taking place in the royalty space etc etc.. We even discussed the grade level of iron, manganese contents and so on.

 

It goes without saying that we are happy with the current price movement (for some Altius has already been a long ride) and the latest developments, and maybe the last pages are overdoing it but I think those investors that were already in it for quite some time (Dazel, Itsavaluetrap, myself, ...) are still well aware of the risks surrounding Altius. I only have one hat to put on everyday, my "skeptical" hat, and Altius is treated no different.

 

I do think it's a fair warning just so that some here might not fall prone to overoptimism or confirmation bias.

 

Thank you all and good investing!

[Guest Dazel]

Ffh watcher,

 

Not sure if you know how wall street works....but there are "no" investors looking through annual reports for bargains....they run financial programs to find cash flow bargains etc....their "programs" would not detect Altius ever until it "pops" up on their cash flow model. When a company goes from negative cashflow to a positive cash flow number that is sustainable....it will show up in all the financial programs.."only" that point will most professional investors see that it fits their model as they look at Altius a whole and there track record. With 10 thousand stocks to choose from...how would they find Altius? Many on this board have asked how do  you buy  Altius with negative cashflow? I am talking about exposure...to a great management and a great business model when previously they have been undiscovered.

 

Prem and most value investors are an anomaly....wall street does not think how they do...and now that Altius has stepped into the capital markets they need exposure for a lower cost of capital. Prem has very much exploited Fairfax and serially raises money through debt and common stock

offerings...he has to be public about Fairfax and he is always pitching investment banks and shareholders with his long term record...as a shareholder we  like that he does it because when you have to raise money cheaply you need to be on Wall Street's radar. Mr. Buffett is one of the best salesmen around and always has been...

 

I am talking about catalysts not investment theory...the investment theory is all over the 175 pages...

 

As for dividends FFH Watcher the are discussed in Altius investment presentation.

 

This is getting very repetitive so I will absolutely slow down on posts gladly...If sound excited...well that's because I am...it is Altius actions that will determine our outcomes...but if Wall street and Bay street jump on board it will become much easier as it was for Fairfax when they were young and had a record similar to Altius. Fairfax used their inflated share price as a currency to buy other insurers...Even now Prem is raising money above book value... is the process he has followed and it has worked well

 

 

 

 

[Guest Dazel]

 

 

I do get the point however, I will let Altius do the talking...181 pages is enough...

Everyone deserves their opinion and do your own homework as always.

 

Dazel.

[giofranchi]

I admit I have not read all 182 pages of posts… ;)

But, among Dazel’s posts, that I have read, I have found no evident flaw of logic, nor confused reasoning. When I read an investment thesis, it is some flaws of logic and some confused reasoning that I am on the lookout for: if you cannot write down your thesis on an investment clearly enough, then something must be wrong or missing.

Imo, Dazel’s ideas and points of view are sound, complete, well-articulated, and very clear. :)

 

Gio