bathtime Posted April 29, 2012 Share Posted April 29, 2012 Kuppy on FTP (http://adventuresincapitalism.com/askkuppy.aspx 4/27/12): ---- Hi Kuppy, Thanks for your wonderful site! Very useful and thought-provoking! I was wondering if you had ever looked at fortress paper (tsx:ftp) and if so what you think of it? Thanks. Fortress has one of the greatest finance minds behind it. He's kobbled together all these assets for almost nothing. That said, I'm not a huge fan of disolving paper at this point. It's a small niche market and a lot of capacity is coming. I'd guess that the era of peak margins is now behind the company and you'll go back to more normalized margins. I'd much rather bet on something like MERC which is just about to start seeing margins expand materially. ---- Link to comment Share on other sites More sharing options...
Liberty Posted April 30, 2012 Author Share Posted April 30, 2012 Not surprisingly, the workers at LSQ have voted in favor of the mill. It was a unanimous vote: http://lapresseaffaires.cyberpresse.ca/economie/energie-et-ressources/201204/29/01-4520088-lebel-sur-quevillon-fortress-paper-a-lappui-des-travailleurs.php Link to comment Share on other sites More sharing options...
keerthiprasad Posted April 30, 2012 Share Posted April 30, 2012 http://online.wsj.com/article/SB10001424052702303990604577370442448361770.html An article regarding China's reserving of cotton and short term price impact. Link to comment Share on other sites More sharing options...
Liberty Posted April 30, 2012 Author Share Posted April 30, 2012 Interesting. A recent survey by the China Cotton Association said farmers likely will reduce their planting areas by almost 17% this year because costs for labor, fertilizer and seeds are rising while domestic prices, though high, have eased from last year. Link to comment Share on other sites More sharing options...
keerthiprasad Posted April 30, 2012 Share Posted April 30, 2012 Interesting. A recent survey by the China Cotton Association said farmers likely will reduce their planting areas by almost 17% this year because costs for labor, fertilizer and seeds are rising while domestic prices, though high, have eased from last year. Indeed. I wonder if this will continue. I'm not sure if the Chinese government offers (or will offer) any incentives to these farmers besides buying some capacity. Although it seems that their long term goal is to reduce cotton dependency. Link to comment Share on other sites More sharing options...
Liberty Posted April 30, 2012 Author Share Posted April 30, 2012 Indeed. I wonder if this will continue. I'm not sure if the Chinese government offers (or will offer) any incentives to these farmers besides buying some capacity. Although it seems that their long term goal is to reduce cotton dependency. Another thing to consider: Part of Chad's thesis is that in the long-term, China's cotton yield will converge with the average yield in the rest of the world because China's won't be able to keep using so much pesticides and fertilizer because of social and environmental problems. Link to comment Share on other sites More sharing options...
keerthiprasad Posted April 30, 2012 Share Posted April 30, 2012 Another thing to consider: Part of Chad's thesis is that in the long-term, China's cotton yield will converge with the average yield in the rest of the world because China's won't be able to keep using so much pesticides and fertilizer because of social and environmental problems. I tend to share this view. One way or another the yields will come down. Link to comment Share on other sites More sharing options...
OptsyEagle Posted May 1, 2012 Share Posted May 1, 2012 I read this write up again. http://pretoriainvestment.com/2012/01/31/fortress-paper-plan-nord-is-a-deal/ Sometimes we forget what is really going on here. That LSQ deal really was amazing. With where the stock is trading these days I find that in almost every valuation scenerio one tends to just leave it off completely since it is easy to make the case for FTPs value, even without it. But it really was sweet. Link to comment Share on other sites More sharing options...
roundball100 Posted May 3, 2012 Share Posted May 3, 2012 Higher cotton costs ("Gildan profit hit by cotton costs"): http://business.financialpost.com/2012/05/03/gildan-profit-hit-by-cotton-costs/ Link to comment Share on other sites More sharing options...
Liberty Posted May 4, 2012 Author Share Posted May 4, 2012 Bought some FTP today for my wife's RSP account. Thank you Mr. Market! Link to comment Share on other sites More sharing options...
tombgrt Posted May 4, 2012 Share Posted May 4, 2012 Gratz Liberty. ;) Concerning cotton prices, where are you guys looking for the spot price? I have been following this: http://finance.yahoo.com/echarts?s=BAL+Interactive#chart1:symbol=bal;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined Is it worth anything? =x Link to comment Share on other sites More sharing options...
keerthiprasad Posted May 4, 2012 Share Posted May 4, 2012 Bought some FTP today for my wife's RSP account. Thank you Mr. Market! I remember a few months ago thinking the price could never get this low again. I wish I had more cash! Link to comment Share on other sites More sharing options...
Liberty Posted May 4, 2012 Author Share Posted May 4, 2012 I remember a few months ago thinking the price could never get this low again. I wish I had more cash! Same for me. I guess it shows just how misunderstood this company is. It reminds me of what Chad said in an interview, about how when he was first raising money for the company, investors wouldn't even let him get to the second slide of his presentation because of the word "paper" in the name. Too many will paint everything in the forestry sector with the same brush.. Link to comment Share on other sites More sharing options...
alertmeipp Posted May 4, 2012 Share Posted May 4, 2012 What would happen if DP tanks? Link to comment Share on other sites More sharing options...
Liberty Posted May 5, 2012 Author Share Posted May 5, 2012 What would happen if DP tanks? High cost producers shut down, putting a floor on DP price. Meanwhile, FTP should get at least 1200 as per their long term contracts. Link to comment Share on other sites More sharing options...
alertmeipp Posted May 5, 2012 Share Posted May 5, 2012 I've asked this before. anyone know a place where I can check DP price? Link to comment Share on other sites More sharing options...
Liberty Posted May 5, 2012 Author Share Posted May 5, 2012 I've asked this before. anyone know a place where I can check DP price? In my experience it can be hard to find. I mostly just hear about it on FTP conference calls... I think most DP is traded on long term contracts and the quality of the DP means price varies from one source to the other. Probably easier to keep track of cotton prices. Link to comment Share on other sites More sharing options...
tombgrt Posted May 5, 2012 Share Posted May 5, 2012 Liberty, what source do you use for cotton prices? I've noticed some aren't that accurate. Concerning DP spot price it's what Lib said: hard to find, very illiquid market because most of capacity is with LT contracts. Price varies depending on quality and also origin. Link to comment Share on other sites More sharing options...
roundball100 Posted May 5, 2012 Share Posted May 5, 2012 What would happen if DP tanks? High cost producers shut down, putting a floor on DP price. Meanwhile, FTP should get at least 1200 as per their long term contracts. It would be great if 1200 was indeed a floor for FTP (and that would be great for those of us long), and we certainly hope FTP would be better off than all the higher-cost producers, but as with everything else, the contract(s) are only as good as the parties behind them. Nonetheless, having long-term contracts are better than not. Link to comment Share on other sites More sharing options...
tombgrt Posted May 5, 2012 Share Posted May 5, 2012 It would probably take prices below $850-900/ton for long periods to become worrisome. Or of course much higher than projected cash costs/ton. We will maybe get any idea of the latter on the 15th or the CC, although I "fear" that analysts will project the current higher cash costs into the future. Costs will be lower after full capacity and operational improvement when everything settles down. The market couldn't handle prices under $1000/ton very long unless we get a very big mess in China that crushes demand. I also like how the debt is arranged for Thurso and LSQ, very hard to make this a big zero when all is said and done IMO. We can only accept the basic facts and projections and make an assessment of margin of safety after sensitivity analysis. For me the downside is taken care of, the upside unspoken... Link to comment Share on other sites More sharing options...
tnp20 Posted May 5, 2012 Share Posted May 5, 2012 >>> FTP should get at least 1200 as per their long term contracts. Long term contracts don't mean a thing if its the Chinese. Remember those iron ore contracts the chinese signed, when the ore prices dropped, they didn't honour them. Link to comment Share on other sites More sharing options...
lessthaniv Posted May 5, 2012 Share Posted May 5, 2012 What would happen if DP tanks? High cost producers shut down, putting a floor on DP price. Meanwhile, FTP should get at least 1200 as per their long term contracts. It would be great if 1200 was indeed a floor for FTP (and that would be great for those of us long), and we certainly hope FTP would be better off than all the higher-cost producers, but as with everything else, the contract(s) are only as good as the parties behind them. Nonetheless, having long-term contracts are better than not. Don't forget the motivation Chinese Rayon producers have to deal with the long term, stable suppliers. I heard the very same thing when I invested in Seaspan in the fall of 2008. Link to comment Share on other sites More sharing options...
Liberty Posted May 6, 2012 Author Share Posted May 6, 2012 >>> FTP should get at least 1200 as per their long term contracts. Long term contracts don't mean a thing if its the Chinese. Remember those iron ore contracts the chinese signed, when the ore prices dropped, they didn't honour them. Chad has mentioned that this was a huge priority for him and that he could probably could have gotten better prices, but he would rather make as sure as possible that his counter parties were trustworthy. Hard to be certain, but I tend to trust his due diligence. Link to comment Share on other sites More sharing options...
alertmeipp Posted May 6, 2012 Share Posted May 6, 2012 >>> FTP should get at least 1200 as per their long term contracts. Long term contracts don't mean a thing if its the Chinese. Remember those iron ore contracts the chinese signed, when the ore prices dropped, they didn't honour them. What you said is racism and show your ignorance. There are many trustworthy Chinese companies and people. And there are companies in NA that won't honor underwater contracts. Link to comment Share on other sites More sharing options...
FFHWatcher Posted May 6, 2012 Share Posted May 6, 2012 >>> FTP should get at least 1200 as per their long term contracts. Long term contracts don't mean a thing if its the Chinese. Remember those iron ore contracts the chinese signed, when the ore prices dropped, they didn't honour them. What you said is racism and show your ignorance. There are many trustworthy Chinese companies and people. And there are companies in NA that won't honor underwater contracts. In North America you have legal options to pursue someone who breaches a contract. Can a North American company be successful with legal remedies in China? If so, I am unaware of this. I don't believe the writer was being racist or ignorant. I think he was stating that when there are virtually no consequences due to the inability of our legal system in reaching across the Chinese border, than the party on the other side of a contract is much more likely to default versus a similar party in North America. It has nothing to do with them being chinese or that Chinese people/companies are untrustworthy. It has to do with living within the Chinese border and operating within their legal system and not North America's. I for one, got burned on a chinese fraud. Company is still active, has great operations but the executive transferred all the shares to himself and others. Shareholders seem to have no recourse in China. Hundreds of millions were lost and the value is still there. How can we use our legal system to seize property in China? Are non-chinese allowed to use the chinese legal system? What court does Chad file papers in if they default? Have any North American investors/compaies been successful at litigation within the chinese borders against a chinese company? Link to comment Share on other sites More sharing options...
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