wknecht Posted June 26, 2013 Share Posted June 26, 2013 I noticed Mohnish Pabrai filed a Form 4 today - he's more than doubled his position in ZINC from 2.1mm shares on March 31 to 4.8mm. I've owned ZINC in the past, but thought it's current level looked a little speculative given the price of zinc, nickel, silver, and lead (combined with the fact that I have no view on the direction these commodity prices). Anyone have thoughts on his thesis for this one? They have an interesting project underway that will push them quite a bit lower on the cost curve, but this alone doesn't do it for me given current metal prices. In the context of other investments, he's expressed some thoughts on the urbanization trend in the past. Maybe time to dive into these statistics and the zinc metal supply/demand implications. Form 4: http://www.sec.gov/Archives/edgar/data/1385544/000154692713000108/xslF345X03/pabraizincform4v8.xml Link to comment Share on other sites More sharing options...
muscleman Posted June 26, 2013 Share Posted June 26, 2013 I noticed Mohnish Pabrai filed a Form 4 today - he's more than doubled his position in ZINC from 2.1mm shares on March 31 to 4.8mm. I've owned ZINC in the past, but thought it's current level looked a little speculative given the price of zinc, nickel, silver, and lead (combined with the fact that I have no view on the direction these commodity prices). Anyone have thoughts on his thesis for this one? They have an interesting project underway that will push them quite a bit lower on the cost curve, but this alone doesn't do it for me given current metal prices. In the context of other investments, he's expressed some thoughts on the urbanization trend in the past. Maybe time to dive into these statistics and the zinc metal supply/demand implications. Form 4: http://www.sec.gov/Archives/edgar/data/1385544/000154692713000108/xslF345X03/pabraizincform4v8.xml Chinese economy is cooling down fast, and construction fad seems to be over. I wonder how much lower can these metal prices to go. Link to comment Share on other sites More sharing options...
AchilliesValue Posted June 26, 2013 Share Posted June 26, 2013 "In fact, the only investment he owns currently that is not cloned from somewhere is a small company called Horsehead Holdings. This was a business Pabrai read about in Fortune in late 2008, when the magazine published a list of 10 stocks to buy after the market had collapsed. The stocks were classic Ben Graham net-nets, which meant they were trading below cash. You could liquidate the business and just the cash was higher than the market cap. “I was intrigued by the list and looked at all 10 of those businesses. One of those businesses was Horsehead and we took a position in it. That was almost four years ago and we still own that position. So far, it is more than a triple,” says Pabrai. “Today, if you look at our portfolio there is not a single stock we own that you can say was bought after we looked at the entire universe of stocks and ran a screen and so on,” he adds.". Also I read a thesis about Horsehead somewhere recently but can't find the source. I believe the thesis was that they are low cost and have a lot of additional capacity coming on line sometime soon but don't quote me on that since I can't find the original source and haven't confirmed it myself. There is also a bull case for zinc the commodity itself “The predicted rally in prices comes as Xstrata Plc (XTA) closes its Brunswick mine in Canada this month, an operation which yielded 2.9 million tons of ore last year. About 841,000 tons of mine output will be lost by 2014 as Xstrata also shuts the Perseverance mine in Canada and Vedanta Resources Plc (VED) closes Lisheen in Ireland.” Its on my to do list but I don't know if I'll get around to it soon. I'll post if I confirm or disprove any of the above. Link to comment Share on other sites More sharing options...
PlanMaestro Posted June 27, 2013 Share Posted June 27, 2013 Some big zinc mines are depleting and are going to be closed during this decade. Brunswick mine in Canada, Century mine in Australia, Lisheen mine in Ireland and Skorpion mine in Namibia are going to be closed [Wikipedia] Also my understanding is no new discoveries in decades and excisting reserves need much higher prices to become feasible. Not an expert, so I cannot confirm or deny these reports. http://fullmetalzinc.com/wp-content/uploads/2013/03/PDAC-Technical-Session-3rd-March-2013-McLeod-Williams-Commodities-and-market-outlook-Zinc-Presentation-Slides.pdf http://www.proactiveinvestors.com/companies/news/25713/zinc-set-to-go-sky-high-as-supplies-deplete-in-medium-term-25713.html Link to comment Share on other sites More sharing options...
Guest hellsten Posted August 14, 2013 Share Posted August 14, 2013 Mohnish is adding some ZINC to his portfolio: http://www.dataroma.com/m/holdings.php?m=PI Brave man, doesn't look like he's coat tailing anyone… Long-term owner and more than doubling the position, so maybe he sees a catalyst: http://www.dataroma.com/m/hist/hist.php?f=PI&s=ZINC "Dan Moore on Why Horsehead Holding (ZINC) Represents a Compelling Investment Opportunity": My messy notes from the video: - $15 price target - very well-run company - major competitive advantages - wide moat - off the radar screen - not well understood by institutional investors - most see ZINC as a commodities producer - we see it as a leading environmental services company that provides critical value-added services to its customers - extremely difficult to displace - double or triple EBITDA in 12-18 months based on Zinc prices - business is a bit complicated - James Hensler and CFO are aggressive, opportunistic, conservative - long-term contracts - strong environmental track record - significant cost advantages - closed-loop business - long-term trends favorable for zinc prices - serving minimill customers in a growing market - $350+ million investment in a new Zinc refinery - $50-70 million EBITDA now. $150-200 million by 2014. Doesn't include Zinc price inflation. Would be trading at 2.5 EBITDA. - highly levered towards inflation - net-net Zinc is paid for removing EAF-dust, but in some cases they pay for EAF-dust. - net cash position ($180 million) - constructing new Zinc plant in NC Link to comment Share on other sites More sharing options...
Guest hellsten Posted August 14, 2013 Share Posted August 14, 2013 http://www.valuewalk.com/2012/06/canadian-akie-district-able-to-reduce-upcoming-zinc-shortage/ Scotia Bank (Toronto, Canada; March 2012): “Zinc may represent the next big base metal play. Zinc will shift into ‘deficit’ (at latest by 2014) due to ongoing demand growth in the face of significant global mine depletion in mid-decade. In 2013, the closure of the Brunswick mine in Canada, Century in Australia and Vedanta’s Lisheen mine in Ireland will shift sentiment towards zinc, with prices rallying in anticipation of tightening supplies. In the second half of this decade, zinc demand will be boosted by a recovery in G7 construction activity, particularly in the USA.” Brook Hunt (Wood Mackenzie; April 2012): “Zinc has the most promising fundamental outlook among the metals… The zinc price is expected to be rangebound for the most part of this year before starting its ascent towards the end of 2012 in anticipation of a tight market. Brook Hunt expects the zinc price to average US$1.24/lb in 2014 and steadily climb thereafter, possibly challenging the previous high of US$2.08/lb that was reached in late 2006.” Link to comment Share on other sites More sharing options...
Grenville Posted August 14, 2013 Share Posted August 14, 2013 I looked at Horsehead before. When you look at free cash flow over the last four years, the company hasn't made much money. It makes me somewhat skeptical that this new round of investment will work out. If the new plant works out as they describe than it's great, but if not, not so much. Link to comment Share on other sites More sharing options...
racemize Posted August 14, 2013 Share Posted August 14, 2013 I definitely see the catalyst and how they could have a nice moat, but I haven't been able to figure out how high the earnings can get once the new plant opens. Still doing the work on it, though. Thanks for posting the video. Link to comment Share on other sites More sharing options...
Grenville Posted August 14, 2013 Share Posted August 14, 2013 Not trying to be a pessimist, because I would like to believe the huge catalyst. Another thing that is somewhat bothersome is the CEO isn't a huge buyer of stock. If EBITDA is supposed to grow that much, why wouldn't one be buying tons of stock? Link to comment Share on other sites More sharing options...
wknecht Posted August 14, 2013 Author Share Posted August 14, 2013 It's good to keep in mind that their estimates of EBITDA improvements were based on a $30/oz silver price (now around $22) and lead around $1/lbs (which is still the case). I'm not sure the % contribution to the estimate per metal has been disclosed. Link to comment Share on other sites More sharing options...
racemize Posted August 14, 2013 Share Posted August 14, 2013 It's good to keep in mind that their estimates of EBITDA improvements were based on a $30/oz silver price (now around $22) and lead around $1/lbs (which is still the case). I'm not sure the % contribution to the estimate per metal has been disclosed. wouldn't the zinc portion matter the most though? Link to comment Share on other sites More sharing options...
wknecht Posted August 14, 2013 Author Share Posted August 14, 2013 It's good to keep in mind that their estimates of EBITDA improvements were based on a $30/oz silver price (now around $22) and lead around $1/lbs (which is still the case). I'm not sure the % contribution to the estimate per metal has been disclosed. wouldn't the zinc portion matter the most though? If I recall, the EBITDA improvement estimates with the new plants is mostly independent of the price of zinc. There is some additional premium coming from the SHG metal relative to the PW metal they currently sell. But my understanding is most additional EBITDA was coming from cost savings (energy), recovery of additional metals (lead and silver). Link to comment Share on other sites More sharing options...
racemize Posted August 14, 2013 Share Posted August 14, 2013 It's good to keep in mind that their estimates of EBITDA improvements were based on a $30/oz silver price (now around $22) and lead around $1/lbs (which is still the case). I'm not sure the % contribution to the estimate per metal has been disclosed. wouldn't the zinc portion matter the most though? If I recall, the EBITDA improvement estimates with the new plants is mostly independent of the price of zinc. There is some additional premium coming from the SHG metal relative to the PW metal they currently sell. But my understanding is most additional EBITDA was coming from cost savings (energy), recovery of additional metals (lead and silver). Ah, I see what you are saying now--I was thinking of the cost savings for zinc, so we had to assume a hold of the zinc prices for that to make sense (although they are hedged at 0.85 until 2015 at this point, so perhaps it doesn't matter for a while). Link to comment Share on other sites More sharing options...
siddharth18 Posted August 14, 2013 Share Posted August 14, 2013 In fact, the only investment he owns currently that is not cloned from somewhere is a small company called Horsehead Holdings. This was a business Pabrai read about in Fortune in late 2008, when the magazine published a list of 10 stocks to buy after the market had collapsed. The stocks were classic Ben Graham net-nets, which meant they were trading below cash. You could liquidate the business and just the cash was higher than the market cap. “I was intrigued by the list and looked at all 10 of those businesses. One of those businesses was Horsehead and we took a position in it. That was almost four years ago and we still own that position. So far, it is more than a triple,” says Pabrai. “Today, if you look at our portfolio there is not a single stock we own that you can say was bought after we looked at the entire universe of stocks and ran a screen and so on,” he adds. Source: http://business.outlookindia.com/printarticle.aspx?285693 Link to comment Share on other sites More sharing options...
txlaw Posted August 20, 2013 Share Posted August 20, 2013 Looks like the CEO bought a bit of stock. I've always been wary about this one because of the possibility of something going wrong with the new capacity. But as we are closer to the finish line for the new capacity coming online, I've started a position in ZINC. Link to comment Share on other sites More sharing options...
Guest hellsten Posted September 9, 2013 Share Posted September 9, 2013 http://www.scribd.com/doc/165444433/Horsehead-Holding-Corp-Prescience-Final Horsehead Holding Corp. (“ZINC” or “the company”) is on schedule to complete a transformational process by Q3 2013, from which the company will emerge as one of the lowest-cost producers of zinc metal products in the world. The company is only months away from opening a new plant that will increase EBITDA by 300%, independent of the price of zinc. Link to comment Share on other sites More sharing options...
Guest hellsten Posted September 30, 2013 Share Posted September 30, 2013 http://www.4-traders.com/HORSEHEAD-HOLDING-CORP-58472/news/HORSEHEAD-HOLDING-CORP--Horsehead-Update-on-New-Zinc-Plant-17303872/ - The expected benefits of the new plant remain unchanged at $90 to $110 million of incremental EBITDA. - First zinc production, while slipping slightly from our earlier estimate, continues to be forecasted to occur this year. With all of the critical processing equipment needed for start-up now on-site and with only a small number of electrical termination drawings for the zinc plant remaining to be completed, the exact start-up date now depends on the productivity of installation resources and the avoidance of significant unforeseen delays during commissioning. - Estimated project investment has been updated and more precisely quantified which now shows an increase of approximately $40 million over our previous estimate. This increase is due to increases in final quantities of piping and electrical components, use of additional installation crews to partially offset delays and a contingency factor to cover potential unforeseen installation cost increases for the co-product recovery circuit. Given the extent of completion of the zinc plant, we do not anticipate that any further significant investment will be required above the revised estimate. - The estimated start-up date for the co-product recovery circuit has been revised to the end of the second quarter of 2014. We believe that liquidity to support the completion of the project and our operating start-up needs remains adequate. However, we are exploring additional sources of capital to bolster our liquidity and to fund other potential uses. Down ~7% today… I still wonder why Mohnish has 20% in this stock. ZINC seems risky, but what do I know. Link to comment Share on other sites More sharing options...
wknecht Posted September 30, 2013 Author Share Posted September 30, 2013 http://www.4-traders.com/HORSEHEAD-HOLDING-CORP-58472/news/HORSEHEAD-HOLDING-CORP--Horsehead-Update-on-New-Zinc-Plant-17303872/ - The expected benefits of the new plant remain unchanged at $90 to $110 million of incremental EBITDA. - First zinc production, while slipping slightly from our earlier estimate, continues to be forecasted to occur this year. With all of the critical processing equipment needed for start-up now on-site and with only a small number of electrical termination drawings for the zinc plant remaining to be completed, the exact start-up date now depends on the productivity of installation resources and the avoidance of significant unforeseen delays during commissioning. - Estimated project investment has been updated and more precisely quantified which now shows an increase of approximately $40 million over our previous estimate. This increase is due to increases in final quantities of piping and electrical components, use of additional installation crews to partially offset delays and a contingency factor to cover potential unforeseen installation cost increases for the co-product recovery circuit. Given the extent of completion of the zinc plant, we do not anticipate that any further significant investment will be required above the revised estimate. - The estimated start-up date for the co-product recovery circuit has been revised to the end of the second quarter of 2014. We believe that liquidity to support the completion of the project and our operating start-up needs remains adequate. However, we are exploring additional sources of capital to bolster our liquidity and to fund other potential uses. Down ~7% today… I still wonder why Mohnish has 20% in this stock. ZINC seems risky, but what do I know. They also filed an S-3. Not sure why it's taking three separate trips to the capital markets to finance the new plant. Link to comment Share on other sites More sharing options...
JEast Posted October 1, 2013 Share Posted October 1, 2013 I had been waiting on a delay press release in the plant activities for most of the year. I guess it finally arrived, but the stock has rallied up from the $9 range too. However, if past history of any big project is prescient than another announcement will be forthcoming in 3-6 months. I would surely expect either more delays or plant start-up delays and then possible lower production numbers than anticipated for the first year. Keeping an eye open, but the current price is a little steep for a deep value investment. Cheers JEast Link to comment Share on other sites More sharing options...
wknecht Posted October 17, 2013 Author Share Posted October 17, 2013 Nucor's capacity utilization seems to be chugging along nicely (78% this quarter). Just one additional quarter of course, but still nice to see for ZINC. http://www.sec.gov/Archives/edgar/data/73309/000114420413055530/v357531_ex99-1.htm Link to comment Share on other sites More sharing options...
nikhil25 Posted October 21, 2013 Share Posted October 21, 2013 Horsehead to expand Zochem distribution network to southeast http://online.wsj.com/article/PR-CO-20131015-911596.html Horsehead Holding plans to open Mooresboro zinc plant this year http://www.bizjournals.com/charlotte/blog/outside_the_loop/2013/10/horsehead-holding-plans-to-open.html Horsehead Holding Corp. to Release Third Quarter Earnings on Tuesday, Nov 5, 2013 http://www.businesswire.com/news/home/20131015006887/en/Horsehead-Holding-Corp.-Release-Quarter-Earnings Link to comment Share on other sites More sharing options...
phil_Buffett Posted October 24, 2013 Share Posted October 24, 2013 http://www.theflyonthewall.com/permalinks/entry.php/ZINCid1905505/ZINC-Horsehead-Holding-files-to-sell-M-shares-of-common-stock 5mio more Shares -.- Link to comment Share on other sites More sharing options...
nikhil25 Posted October 25, 2013 Share Posted October 25, 2013 Horsehead Holding prices public offering of 5.5m common stock at USD12.00 per share http://www.menafn.com/19ace31d-8a35-40fc-acf7-3a96e6fd6b7e/Horsehead-Holding-prices-public-offering-of-55m-common-stock-at-USD1200-per-share?src=main Link to comment Share on other sites More sharing options...
CorpRaider Posted October 25, 2013 Share Posted October 25, 2013 Yuck. Purgatory for you management. Link to comment Share on other sites More sharing options...
racemize Posted October 25, 2013 Share Posted October 25, 2013 Yuck. Purgatory for you management. I agree, I'm pretty disappointed. Link to comment Share on other sites More sharing options...
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