jawn619 Posted January 21, 2015 Share Posted January 21, 2015 Would be seriously be talking about this company, were it not for the involvement of Pabrai? I don't think so. It has managed capital better than most peers, but somehow it feels that investors are giving this company the halo effect for the wrong reasons. this post should seriously be considered by a lot of the members. Link to comment Share on other sites More sharing options...
kfh227 Posted January 21, 2015 Share Posted January 21, 2015 10% dilution stinks. Being lazy about funding my Roth-IRA and wanting to buy some ZINC there ..... not so bad. Just added a bunch of ZINC there today. Rmeember (pre dilution): Mohnish Pabrai owns 12.% (in portfolio of 9 stocks) () RS Investment Management owns 8.2% (in portfolio of 367 stocks) Chuck Royce owns 4.1% (in portfolio of 1397 stocks) HOTCHKIS & WILEY owns 2.1% (in portfolio of 189 stocks) But Monish also has 25.3% of his assets under management in ZINC. And I don't have a link but Munger said he has never met someone that knows as much about the metals industry as Pabrai. Pretty strong conviction by Pabrai and Munger implies that this is definitely an area of competence for Pabrai. Link to comment Share on other sites More sharing options...
kfh227 Posted January 21, 2015 Share Posted January 21, 2015 Would be seriously be talking about this company, were it not for the involvement of Pabrai? I don't think so. It has managed capital better than most peers, but somehow it feels that investors are giving this company the halo effect for the wrong reasons. this post should seriously be considered by a lot of the members. Agree. Do your own due diligence. It took me 3 months to gain enough of an understanding of the ZINC industry to fathom Pabrai's interest. But I am fairly convinced that ZINC is one of the best stocks to own right now. (BBRY is the other) Link to comment Share on other sites More sharing options...
kab60 Posted January 22, 2015 Share Posted January 22, 2015 Would be seriously be talking about this company, were it not for the involvement of Pabrai? I don't think so. It has managed capital better than most peers, but somehow it feels that investors are giving this company the halo effect for the wrong reasons. Good point, definitely worth considering, but hopefully the people here have been inspired to do DD because of Pabrai and not invested because of him. Todays announcement sucks, and I have a hard time believing it would be for expansion, but we will see. They have some expensive debt, but I won't expect a refi till things are running, so I'm a bit puzzled. Link to comment Share on other sites More sharing options...
pdoak Posted January 22, 2015 Share Posted January 22, 2015 Does anyone know the price at which ZINC placed the stock yesterday? Link to comment Share on other sites More sharing options...
zenith Posted January 22, 2015 Share Posted January 22, 2015 priced 5M shares at $12.75 just announced today, see below Horsehead Holding Corp. (the "Company") (Nasdaq: ZINC) announced today that it has priced an underwritten public offering of 5,000,000 shares of common stock at an offering price of $12.75 per share. The Company has granted the underwriters a 30-day option to purchase up to an additional 750,000 shares of common stock. The offering is expected to close on January 28, 2015, subject to customary closing conditions. Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 22, 2015 Share Posted January 22, 2015 Wow, that's just amazingly poor capital allocation. I hope people will realize that Pabrai isn't all he cracked up to be. It's funny he talks a lot about cloning others' ideas, but I can't figure out who he got this idea from. Maybe it was his first original idea? Link to comment Share on other sites More sharing options...
Sportgamma Posted January 23, 2015 Share Posted January 23, 2015 I don't get it. The 52 week low is $13.20 and they price it at $12.75... Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 23, 2015 Share Posted January 23, 2015 Bankers always need a discount to current day (today's) trading price to place a significant amount of stock. Depending on demand for stock, discount can be small or large. In this case, large...given that price was $15 before offering announced. Link to comment Share on other sites More sharing options...
gjangal Posted January 23, 2015 Share Posted January 23, 2015 I don't have a position in this one, but this is not very surprising IMO. This is the only way they can raise capital. If you read the 10-k, they have pretty stringent conditions for raising money through debt because of their current indebtedness Link to comment Share on other sites More sharing options...
valueyoda Posted January 23, 2015 Share Posted January 23, 2015 Aside from the Pabrai effect, I still fail to see how there is a large margin of safety in the stock, unless management perfectly executes its expansion plans. If things go wrong - especially if they have so raise more incremental capital - the stock could easily drop below $10. Link to comment Share on other sites More sharing options...
Guest notorious546 Posted January 23, 2015 Share Posted January 23, 2015 i wonder who pabrai got this investment idea from Link to comment Share on other sites More sharing options...
OracleofCarolina Posted January 23, 2015 Share Posted January 23, 2015 If you watch his videos, Pabrai has said a couple of times that ZINC is the only idea he has not stolen from someone else Link to comment Share on other sites More sharing options...
Picasso Posted January 23, 2015 Share Posted January 23, 2015 Wow, that's just amazingly poor capital allocation. I hope people will realize that Pabrai isn't all he cracked up to be. It's funny he talks a lot about cloning others' ideas, but I can't figure out who he got this idea from. Maybe it was his first original idea? I think Pabrai has said before that his own ideas tend to do poorly. I find it sort of strange because a good cloner also knows how to identify the right kinds of stocks. I could give you a 13D for Carl Icahn but you would have a hard time picking out the winners. If you could you should call up Carl and tell him what to double down on. It's hard to identify good cloned ideas without also being good at running a simple screener and finding a good stock. It is also interesting that Barron's ran two articles on ZINC last year. That was the kiss of death in my books. Pabrai might or might not be all he is cracked up to be, but there is still a lot of time to see this stock play out. Personally I thought everyone viewed this stock from a potential upside scenario versus the downside risks. Link to comment Share on other sites More sharing options...
peter1234 Posted January 23, 2015 Share Posted January 23, 2015 It is also interesting that Barron's ran two articles on ZINC last year. That was the kiss of death in my books. This is a good observation. Link to comment Share on other sites More sharing options...
pdoak Posted January 23, 2015 Share Posted January 23, 2015 priced 5M shares at $12.75 just announced today, see below Thank you zenith Link to comment Share on other sites More sharing options...
Liberty Posted January 23, 2015 Share Posted January 23, 2015 http://y0ungmoney.blogspot.ca/2015/01/not-fan-of-horsehead-holdings.html Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 23, 2015 Share Posted January 23, 2015 Does anyone know who young money is? I really like his writing, would love to chat with him. I am in total agreement with him on ZINC. Hopefully, the shine of Pabrai will wear off once people realize he is a better marketer than an investor. Link to comment Share on other sites More sharing options...
cubsfan Posted January 23, 2015 Share Posted January 23, 2015 Does anyone know who young money is? I really like his writing, would love to chat with him. I am in total agreement with him on ZINC. Hopefully, the shine of Pabrai will wear off once people realize he is a better marketer than an investor. I just wanted to point out that Mohnish purchased ZINC back in the $2.50-$3 range in 2009 and so as of today he is up nearly 6x (stock is up an additional 10% today). Looks like quit the home run to me and story is far from over! Alex After all the trashing of Pabrai, that is an excellent point. Link to comment Share on other sites More sharing options...
Homestead31 Posted January 23, 2015 Share Posted January 23, 2015 i think the short-termism being displayed here is interesting. of course, no one likes being diluted, and we all wish the capital raise was done after the barrons article when the stock was at the highs, but what matters is not dilution in a vacuum but the results of the dilution. if the company can raise cash flow on a per share basis, then dilution is warranted. of course, it is too early to know if that will be the case here. in my opinion, the conversation should not be centered on the dilution, but rather what they will do with the money. from the 10-k: We estimate that with the increased recycling capacity, less than 10% of the EAF dust generated is now deposited in landfills. We are currently considering the addition of a fifth dust recycling facility in the U.S. of a size similar to our three current two-kiln facilities, to increase our production capacity in response to third party growth in EAF steelmaking capacity and to reduce transportation costs for us and our customers. We also believe there is potential to gain additional market share from existing customers as a result of industry consolidation. questions that should be considered: will a new dust recycling facility put ZINC in a near monopoly position for recycling on a national level? will a new dust recycling facility provide them with a local monopoly with the nearest mini mills? will they be able to raise prices for their recycling services if either of the above are the case? if they can't raise prices in the near term, can they cut prices since they are the low cost producer of zinc and create a monopoly by undercutting the competition? it sounds like a new facility would be the result of customer demand - is there a gentleman's agreement for a long term contract already in place? how much will input costs drop due to lower transportation costs provided by a new recycling facility? this of course will widen margins at mooresboro. and to young money - yes, zinc is often a buy product for miners - but flip that on its head - will mined production fall even more than expected since zinc is not the driver? in other words, if global prices of a commodity go up, ordinarily miners would produce more... but if zinc is just a secondary product, will mined production remain the same allowing the up cycle to last longer than one might expect? Link to comment Share on other sites More sharing options...
colinwalt Posted January 23, 2015 Share Posted January 23, 2015 Does anyone know who young money is? I really like his writing, would love to chat with him. I am in total agreement with him on ZINC. Hopefully, the shine of Pabrai will wear off once people realize he is a better marketer than an investor. I just wanted to point out that Mohnish purchased ZINC back in the $2.50-$3 range in 2009 and so as of today he is up nearly 6x (stock is up an additional 10% today). Looks like quit the home run to me and story is far from over! Alex After all the trashing of Pabrai, that is an excellent point. He has bought a lot more at much higher prices... Yahoo shows over 1.8 million at prices from $12 to $14 p/share so his average would seem to be a lot higher than $2.5 to $3 (I'm too lazy to go through his filings to figure out an accurate number) Link to comment Share on other sites More sharing options...
cubsfan Posted January 23, 2015 Share Posted January 23, 2015 It's not exactly a tragedy that 20% of his position is underwater by $1. If investors were pay $19 for it in the summer, without doing some homework, if they were "cloning" Pabrai, they have a problem. But in his recent interview, when he mentioned ZINC as one of his examples, he also said he wouldn't pay up at these recent prices. Easy to interpret that as a subtle warning. Link to comment Share on other sites More sharing options...
philly value Posted January 23, 2015 Share Posted January 23, 2015 It's not exactly a tragedy that 20% of his position is underwater by $1. If investors were pay $19 for it in the summer, without doing some homework, if they were "cloning" Pabrai, they have a problem. But in his recent interview, when he mentioned ZINC as one of his examples, he also said he wouldn't pay up at these recent prices. Easy to interpret that as a subtle warning. If he wouldn't pay up at the ~$20/share price that was reached a few months back, then why has he maintained ZINC as a 25% position? Seems to me that the fact Pabrai began purchasing at much lower levels is irrelevant. He has held a huge position at much higher prices, suggesting he still believes ZINC is the best place to put his money today. Link to comment Share on other sites More sharing options...
Guest roark33 Posted January 23, 2015 Share Posted January 23, 2015 I am little too lazy to try to figure out his cost basis, but he owned 1.8m shares at the end of 2012 and now owns a little over 6m shares. So, not all over those shares were purchased in 2009. Additionally, factoring in the time value, I think the final return would be a lot less than you think. That being said, I don't like it when people assume just because a stock went up, it was a good investment. I honestly think a lot of the price appreciation has been due to the halo effect created by him. The NC facility was supposed to create a long runway of profits. If they spend another 300m on another plant, when do you demand cash flow? This isn't amazon.... Link to comment Share on other sites More sharing options...
rsmehta Posted January 24, 2015 Share Posted January 24, 2015 Does anybody have a strong guess as to why they raised $60 mil?? If this was for another EAF recycling center, don't they have enough dust from the current four facilities to accommodate 420 tons of Zinc production per day at Mooresburg?? Would this be a move to corner the EAF dust consumption market further, and monopolize almost all the EAF consumption in the US?? ---------------------------------------------- What are the other alternatives, could this be for a JV in China?? Perhaps the ramp up is really going poorly and they wanted to be more liquid?? Link to comment Share on other sites More sharing options...
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