FGE.to - Fortress Paper (formerly FTP.to)

[lessthaniv]

Agreed that this has been a good example of the manic-depressive nature of the market. No way that the intrinsic value of the company has changed this much in the past few weeks. Instead you probably had a large owner looking to liquidate and not enough demand, price being determined at the margin.

 

I still need to learn how to size my positions better. I snatched up a lot at $26, which I thought was a great price. (I still do.) After we fell to $17 I felt I had already allocated enough to FTP and didn't want to allocate more. At $26 I was afraid to miss out; at $17 I was sitting on my hands. Part of this is the psychology of the difficulty of catching a falling knife I suppose, but I think more of it is that when I see what I think is a good deal, I have trouble waiting for the price to fall lower before I max out my allocation.

 

Great comment.

 

I wondered about a short fund trying to prey on a company which is in transition knowing they have a tight share count. I've seen this in numerous other positions over the years. The shorting gaps the price down and given the uncertainty with Lanqart/Thurso the market panics and sells into it. Pretty risky given the short term catalysts in the stock. But the company was potentially going to have to seek liquidty if those Landqart/Thurso didn't come in on time.  Probably never know. Sure looks like a short was covering though.  ;D

[OptsyEagle]

In my continuous fascination of the stock market, I find it quite interesting that when I quote Fortress Paper on Yahoo and then look down at what other people who have obtained quotes on Yahoo, are looking at, I see only one stock ... Facebook (FB).

 

I have to assume that the majority of the people looking at the Facebook quotes are shorters (just my opinion due to its overhype and stupid valuation), so it seems to me that FTP must have come up in the short sellers screens.

 

I am probably wrong, but I did find this intersting ... and also meaningless.  A bit of a slow day for me.

 

http://finance.yahoo.com/q?s=FTP.TO

[Liberty]

Chad on BNN:

 

http://watch.bnn.ca/#clip697985

 

I like what I hear.

[bathtime]

FTP triggered a buy signal on Bill Cara's free RSI Tool on June 4, 2012 at market close at the price of $17.04. At the close yesterday that was a 39% return in less than a week. June 4th was the first time the tool triggered a buy since the stock began its fall from the $70 level.

 

http://rsi.caracommunity.com/RSIApp/RSIApp.html#ftp.to

 

"Buy alert (trig. 6 days ago [on 2012-06-04 at $17.04, +38.97% chg], after a 1 day AZ [Accumulation Zone])"

 

I will also note that the tool triggered buys on GDX (and most major gold stocks) at $39 near multi-year lows last month followed by a 20% return on GDX in three weeks. If I remember correctly it was the first time the tool triggered buys on these gold equities since the buy signal following their crash in 2008. Since 2010 I have seen the tool trigger buys for WMT in the 40s, XOM in the 50s, QCOM in the 30s, and I think BAC in the 5s. These are anecdotal recollections and of course it doesn't work every time. But even if it works just 50% of the time, it provides a huge advantage.

 

More and more I try to pay attention to this tool as it provides a safeguard against catching a falling knife - one of my greatest weaknesses. The logic of using this technical tool as an aid may not be immediately obvious to fundamentally-oriented investors. Bill Cara's description of how to apply it helps frame the logic of its utility (http://caracommunity.com/content/week-review-32-2010-0):

 

------------------

Now I would like to teach you how to apply the RSI-7 technical indicator. Ian Notley used to say it’s a bit like timing the ripening on an avocado to get the perfect texture and taste.

 

You start with the Monthly RSI-7 chart looking for the time for the stock to hit the long-term Accumulation Zone, which for a low beta, defensive stock is going to be in the low 30’s vs say a high beta, aggressive stock, which would be in the 20’s. Then when that Monthly RSI-7 appears ready – we never know because there are so many factors involved from macroeconomics, corporate fundamentals, market technicals, interest rates, commodity prices, currency market fluctuations, etc, all of which may have a minor or major bearing on the stock you are assessing – then you switch to the Weekly data series, and then the Daily and then the Hourly data series, and then when you have that avocado within minutes of peeling off the skin, you move to the 10-minute data series to find the point of reversal below the 30 level. If the broad market that day is in a downer, you can afford to wait until the RSI-7 lifts up above 30 to strike your target. But if the market is moving higher, you can go in as soon as the falling RSI-7 trendline is crossed after it has noticeably started to rise.

 

Don’t let anybody (and I mean anybody) try to convince you that trading is not an art. Yes, there is the science of simple arithmetic involved, which computers do for you, but your job is to get a feel for the price action. A long time ago you made the decision that the company is a high quality one, worthy of your investment capital, and then you decided that the industry group it’s in is also solid for fundamental reasons. Those decisions have already been made. Then you become a skeptic, knowing that the big money also knows what you know (and a whole lot more), and you wait until they pay off enough lazy reporters to publish floods of negative “news” that is intended to knock the share price down to levels they want and need to invest at for long run success. You ignore the headlines and look at the data and the guidance from management and the same for others in the peer group. You laugh at the worst of the awful headlines and rumors if, as and when the stock price is coming into your cross-hairs because at that point you are 95% certain the public is being deliberately misled, sophisticated rumormongers playing on the public’s fears. You buy into weakness, particularly when you feel the negatives have been pretty much been played out.

 

Trading is an art, backed up by science. The science plays a necessary discipline role as humans are, well, like humans. We’re emotional creatures and, when trading, we need to hold ourselves in check. Computer algorithms help us do that.

--------------

 

Cara recently commented on the tool here (note that it can also be applied in the reverse way to determine a sell signal):

 

http://caracommunity.com/content/bill-caras-blog-may-30-2012#comment-109611

 

And as Bill Cara mentions on the tool page:

 

-----------------------

A final note of advice from Bill Cara's webpage: "I use the following technical indicators every day, but in combination with fundamental and quantitative studies plus a healthy dose of intuition and common sense. I never rely on technical studies alone -- and neither should you." The point being that these RSI calculations can help inform your investing, but it would not be wise to blindly follow what they say.

------------------------

[jeffmori7]

http://finance.yahoo.com/news/fortress-paper-announces-escrow-closing-121400808.html

[Liberty]

http://finance.yahoo.com/news/fortress-paper-announces-escrow-closing-121400808.html

 

You beat me to it.  ;)

 

Great news for FTP! Looks like trading might have been stopped..?

 

Fortress Paper has completed a loan agreement whereby IQ has agreed to provide up to $132.4 million to Fortress Global to support the proposed business plan in respect of the LSQ Mill. The first tranche of $102.4 million has a term of 10 years and the second tranche of $30 million has a term of three years. The loan is secured by the capital assets of Fortress Global and accrues interest at a fixed rate of 5.0% per annum for the first five years, followed by a rate not to exceed 5.5% per annum for the remaining five years, and includes equity compensation in the form of 715,000 share purchase warrants of Fortress Paper with an expiry date of December 31, 2017. The warrant exercise price will be based on the volume weighted average price of the common shares of the Corporation over the five trading days on the Toronto Stock Exchange (the "TSX") prior to the date upon which all the closing conditions to the Purchase Agreement have been satisfied. The exercise of the warrants may not occur prior to the earlier of: (i) December 31, 2014; and (ii) the date on which the loan has been fully disbursed. In addition, IQ may only trade in the common shares obtained through the exercise of the warrants if a period of at least six months for the first 357,500 common shares and 12 months for the remaining 357,500 common shares has elapsed from the exercise date of such warrants.

 

Note that the warrants will be priced from the final closing date, which should be around June 20. By then price should be even higher.

[jeffmori7]

Yes, great news! Quite happy to have bought more at 17$ and 21$. A lot less of uncertainty from the latest bunch of news.

[Liberty]

Some new info in there:

 

Following the Corporation's press release on January 31, 2012, the Corporation has conducted additional engineering due diligence and technical reviews and has revised its planned capital expenditure program to increase the anticipated annual production capacity at the LSQ Mill from 236,000 ADMT to 250,000 ADMT. It has also determined that the technical limitations at the LSQ Mill did not warrant the previously contemplated cogeneration project to increase the power generated from 30 megawatts to 50 megawatts as the return on investment did not support the expenditures. However, management has identified certain modifications to the cogeneration facility that are expected to increase the power to 34 megawatts.

 

Too bad about bigger cogen, but extra DP production capacity sure is nice! Fixed costs can be spread over more tons, and they'll be quite valuable, especially when DP move up from its structural bottom.

[triedtestedand]

Three positive press releases, plus a candid AGM session in the past week.  Not bad, eh? 

 

That said, get Thurso to 100%, and what other near-term catalysts are there?  My own thoughts would be to see them allay any residual liquidity concerns by leveraging their Dresden operation with an increased line of credit, or something similar from other.  If such cash is not needed for buffer purposes, and if the mills' cash flows support it, renewing last year's share repurchase agreement (which I think expires this week) - and actually using it this time - might then be an option. (Especially with the share price at 2+ years low, despite the material progress in the business since then.)

[Liberty]

Funny how there's no reaction from the market. My working theory is that the market can't think further than the next quarter, so it can't conceive of 2014 :)

[lessthaniv]

Funny how there's no reaction from the market. My working theory is that the market can't think further than the next quarter, so it can't conceive of 2014 :)

 

Sunday's Greek election has the market paralyzed.

[ECCO]

Three positive press releases, plus a candid AGM session in the past week.  Not bad, eh? 

 

That said, get Thurso to 100%, and what other near-term catalysts are there?  My own thoughts would be to see them allay any residual liquidity concerns by leveraging their Dresden operation with an increased line of credit, or something similar from other.  If such cash is not needed for buffer purposes, and if the mills' cash flows support it, renewing last year's share repurchase agreement (which I think expires this week) - and actually using it this time - might then be an option. (Especially with the share price at 2+ years low, despite the material progress in the business since then.)

 

Forget about them buying back stock, they need their cash. Liquidity was a main concern 2 weeks ago and is still a (less) concern. So dont expect them to buy back stock when they will need a lot of money for LSQ. If they buy back stock, that will raise a concern for me about their capacity to manage that company.

[triedtestedand]

ECCO ... You're no doubt right, esp. in near term.  I tend to get ahead of myself.  Best get some extended period of operational credibility with all 3 mills firing first.

[jjsto]

So, a quick question regarding the Landquart order.  Any idea how long it takes to start full production after receiving the order?  For example, do they have all the materials in place and they get the order on monday, flip a switch, and start producing on tuesday?  Or, is there a significant (couple weeks - month) lag time?  Not that it matters that much in the long run, but could be significant for short term liquidity.  I think chad touched on this briefly in the last interview, but it still wasnt clear to me.  Just wondering.  Thanks.

[lessthaniv]

So, a quick question regarding the Landquart order.  Any idea how long it takes to start full production after receiving the order?  For example, do they have all the materials in place and they get the order on monday, flip a switch, and start producing on tuesday?  Or, is there a significant (couple weeks - month) lag time?  Not that it matters that much in the long run, but could be significant for short term liquidity.  I think chad touched on this briefly in the last interview, but it still wasnt clear to me.  Just wondering.  Thanks.

 

The start up period can take months but ... this order was cancelled last fall a week before production was to start according to Chad. I'm hoping much of the heavy lifting is already done. But ultimately, I guess we'll just have to wait and see.

[tombgrt]

http://finance.yahoo.com/news/fortress-paper-announces-escrow-closing-121400808.html

 

You beat me to it.  ;)

 

Great news for FTP! Looks like trading might have been stopped..?

 

Fortress Paper has completed a loan agreement whereby IQ has agreed to provide up to $132.4 million to Fortress Global to support the proposed business plan in respect of the LSQ Mill. The first tranche of $102.4 million has a term of 10 years and the second tranche of $30 million has a term of three years. The loan is secured by the capital assets of Fortress Global and accrues interest at a fixed rate of 5.0% per annum for the first five years, followed by a rate not to exceed 5.5% per annum for the remaining five years, and includes equity compensation in the form of 715,000 share purchase warrants of Fortress Paper with an expiry date of December 31, 2017. The warrant exercise price will be based on the volume weighted average price of the common shares of the Corporation over the five trading days on the Toronto Stock Exchange (the "TSX") prior to the date upon which all the closing conditions to the Purchase Agreement have been satisfied. The exercise of the warrants may not occur prior to the earlier of: (i) December 31, 2014; and (ii) the date on which the loan has been fully disbursed. In addition, IQ may only trade in the common shares obtained through the exercise of the warrants if a period of at least six months for the first 357,500 common shares and 12 months for the remaining 357,500 common shares has elapsed from the exercise date of such warrants.

 

Note that the warrants will be priced from the final closing date, which should be around June 20. By then price should be even higher.

 

Hmm, 715,000 warrants at an average price of $20-22 is a great bargain for those holders. Imagine that we could buy them on the secondary market! We should get plenty of value in return if LSQ works out, but I'm still disappointed that it has to happen at the current price.

 

Am I correct to understand that the loan is secured by all Fortress Global Cellulose assets (Thurso + LSQ) and that Thurso's loan was only secured on Thurso's assets? Or was Thuro's loan secured on all FGC's assets back then and in the future? Not that it matters much as Thurso is up and running now and should do fine but still... I also like the idea that worst case Dresden and Landqart stand alone and have less than $100m in debt.

 

---

 

I'd also like to hear more opinions on Landqart profitability if someone has experience with the sector. One should wonder why Chad invests another $50m in the mill to expand capacity if there aren't reasonable expectations to earn at least $10-20m a year.

[colinwalt]

 

Hmm, 715,000 warrants at an average price of $20-22 is a great bargain for those holders. Imagine that we could buy them on the secondary market! We should get plenty of value in return if LSQ works out, but I'm still disappointed that it has to happen at the current price.

 

 

On the other hand, the recent prices have provided an unprecedented buying opportunity for many of us, the upside of which should far exceed the impact of the related dilution on our future economic interests in the company.

[tombgrt]

 

Hmm, 715,000 warrants at an average price of $20-22 is a great bargain for those holders. Imagine that we could buy them on the secondary market! We should get plenty of value in return if LSQ works out, but I'm still disappointed that it has to happen at the current price.

 

 

On the other hand, the recent prices have provided an unprecedented buying opportunity for many of us, the upside of which should far exceed the impact of the related dilution on our future economic interests in the company.

 

Correct. I've added 60% under $21 and will buy a few hunderd more once the next paycheck comes in next week at these prices. We can't have it all!

[tombgrt]

Btw, co-generation facility at LSQ not being upgraded. Doesn't that mean that they don't have to spend the $40m (182m for LSQ and 40m for co-gen)? No mention of it in the press release.

[triedtestedand]

Saw an article yesterday which noted recent dissolving pricing being discussed at $1160-$1170.

 

http://yarnsandfibers.com/preferredsupplier/news_fullstory.php?id=34435

[Liberty]

Btw, co-generation facility at LSQ not being upgraded. Doesn't that mean that they don't have to spend the $40m (182m for LSQ and 40m for co-gen)? No mention of it in the press release.

 

Logically it seems to follow, but I wonder if the increase in capacity from 236k to 250k tonnes/year is free or if they've decided to instead spend more money there because it had a higher return than spending on the bigger cogen. Hopefully they'll shed some light on this in the next CC.

[triedtestedand]

Liberty/Tombgrt:

 

Good points.  Might be worth an email into investor relations once the deal comes out of escrow (tomorrow?).

[Liberty]

Liberty/Tombgrt:

 

Good points.  Might be worth an email into investor relations once the deal comes out of escrow (tomorrow?).

 

I already emailed them, will write here if they reply. Feel free to email them too, maybe there's a higher chance of getting a reply if the see it's something more than one person wants to know about.

[tombgrt]

Jup, would be interesting.

 

Btw, co-generation facility at LSQ not being upgraded. Doesn't that mean that they don't have to spend the $40m (182m for LSQ and 40m for co-gen)? No mention of it in the press release.

 

Logically it seems to follow, but I wonder if the increase in capacity from 236k to 250k tonnes/year is free or if they've decided to instead spend more money there because it had a higher return than spending on the bigger cogen. Hopefully they'll shed some light on this in the next CC.

 

Don't know, maybe they misjudged the total costs and "cover" their mistake a little this way.

 

Was that $40m a cost for both upgrading the co-gen AND reactivating it? If the cost for just reactivating it was already $10-20m I guess the rest of the difference could be from the capacity upgrade now, but I doubt it would cost the full $40m. Not sure if I'm making sense here, had a long day at work! ;)

 

 

Oh and I bought some more yesterday at $20.70 with some cash that just came in.  ;)

[lessthaniv]

Fortress has been halted - Pending News.

 

Fortress Paper halted at 1:07 p.m. PT

Ticker Symbol: C:FTP

Fortress Paper halted at 1:07 p.m. PT

Fortress Paper Ltd (C:FTP)

Shares Issued 14,309,693

Last Close 6/18/2012 $20.66

Tuesday June 19 2012 - Halt Trading

Fortress Paper Ltd. has been halted at 1:07 p.m. PT on June 19, 2012, pending news.

© 2012 Canjex Publishing Ltd.