Archive for August, 2010

Elements of Investing

August 30, 2010 Leave a comment

In 1918, Prof. William Stunk from Harvard University published a little gem of a book to english students. It was a book that was suppose to teach the students about nuances of composition. The book, The Elements of Style, went on to become a classic. It has become a must read for any writer. A must have in any bookcase and a reference guide for all college students.

The investing world can now have its own version. Using The Elements of Style as an example, Burton Malkiel and Charles D. Ellis have written a short book on the key rules and principles of investing. The Elements of Investing is a quick and short book on the 5 key principles of investing. The two others are legends for their previous work. Malkiel is known for his Random Walk Down Wall Street and Ellis is a legend for his Winning the Loser’s Game. The Elements of Investing looks to be destined to be classic.

The best thing of the book is that you can’t beat the price. Download your free copy today.

Categories: Reading

Weekend reading

August 27, 2010 Leave a comment

The End of Management: Time to rethink management?

IT companies scramble to retain talent as demand builds: Even though the large global economies (US, Europe, Japan) are hurting, India’s IT sector is booming and growth is extremely strong.

Small Investors Flee Stock market: It is when others are fearful that patient investors can find some compelling buy opportunities.

China’s Economy, Too Hot or Too Cold: Two conflicting views on what is happening in China. Always good to get conflicting views.

The Pittsburg Penguins Dividend: The Pittsburg Penguins look like they have some of the magic similar to Berkshire Hathaway.

The Case for Economic Optimism: A good view of what to expect from the US economy

Fairfax’s bet on deflation: Prem Watsa makes his bet on possible long-term deflation in the US economy.

Categories: Reading

Add: CPD

August 26, 2010 1 comment

In the last couple of days I’ve been adding to the CPD position. The company’s position looks stronger daily, I’m seeing new job openings on a regular basis for CPD. The selloff on CPD shares by the market does not make sense. I think the company is very close to resuming manufacturing and anything below $6 looks extremely compelling.

Categories: Updates

Weekend Reading

August 20, 2010 Leave a comment

The Birth of the US Wind Power: Good read on the history of a major energy source.

Case Study – Indigo Books: A presentation from value investors Stacey Muirhead on their investment in Indigo Books. Recall that Tim  McElvaine bought a big stake in Indigo Books a while back (Tim has recently sold a big piece of his stake).

David Winters’ presentation on International investing: David Winters talks about two of his international holdings. I’ve been looking more towards international companies as I start looking for companies with strong potential in 5-10 years out.

Brainless slime could make decisions for humans : How ‘comparative valuation’ can lead to bad decision making

Why I’m not hiring: An op-ed piece from a president of a company, discussing the real costs of hiring.

Conversation on China, and India: A great Charlie Rose interview with James Fallows and Stephen Roach on what is happening in China and India.

Categories: Reading

YNG: Shining bright

August 18, 2010 Leave a comment

The YNG investment has been exception from the start. The shares have been on a tear recently and it will only get better as the cash starts flowing in.

YNG reported its Q2 results recently. The results were mostly a no event except for two important milestones. For any company that is going through a turnaround one of the most important things to looks for is what management has promised and how well they are able to deliver. The Q2 highlights:

  • The company had production of 18K for the quarter. This is the highest level of production in two year. The company is currently  producing 25,500, so Q3 numbers will be substantially higher on production, revenue, and cash flow basis. So I’m looking for exceptionally strong Q3 and Q4 (we should be producing around 37,500 for the quarter)  for the company.
  • The company closed on the $25M funding. Management will be looking to reinvest the funds for faster reopening of other mines. Although there will be some dilution, I think the ability for management to ramp up production will lead to strong return for shareholders.

Management had mentioned they wanted to hit 150K production in early July 2010. So far the have hit 102K and they have made modifications that should get the company to hit the 150K soon, if the company isn’t already producing at that level. Also, the funding will allow the management team to hit the goal of 400K ounces of production by 2012.

Today the company announced some exceptionally good news related to additional drilling in the Ketza river property.

This morning Yukon-Nevada Gold reported a number of encouraging assays, including 2.42 meters averaging 20.8 grams per tonne gold from 17 meters in drill hole KR-10-1471, 3.24 meters averaging 12.2 grams per tonne gold from just 4.45 meters in drill hole KR-10-1473 and 2.15 meters averaging 9.9 grams per tonne gold from 19.95 meters in KR-10-1474.

All three holes were drilled into the Bluff Zone which is located west of the Peel Zone and east of the Lab-Calcite Zone – both of which the company is planning to develop open pits.  Cleary the potential to add additional ounces at shallow depths close to two proposed pits is a very attractive proposition for Yukon-Nevada Gold.

The recent drilling will also undoubtedly bolster the size of the resource at Ketza, where the company has already defined open pit (applying 1 gram per tonne cut-off) measured and indicated resource of 3.7 million tonnes averaging 4.9 grams per tonne gold (approximately 585,000 ounces of gold) with a further small resources in the inferred category.  The resource at Ketza was last updated in December 2007.

“These recent encouraging drill intercepts in the Bluff Zone will be used by mine engineers to help determine if an additional open pit is warranted in the area,” Yukon-Nevada Gold noted.

The Ketza River Property includes the Ketza River mine which produced circa 100,000 troy oz of gold from 340,000 tons of ore between 1987 and 1990.

Again, you want to judge management on its ability to execute. For the company to hit the 400K of production, the company needs to expand rapidly. The results from the Ketza River property will allow the company to increase production quickly.

YNG has been an exceptionally sweet ride. In less than a month, we are up over 85%. And there is plenty more on the upside to come. YNG is shining bright in our portfolio.

Categories: Updates

Weekend Reading

August 13, 2010 Leave a comment

The Geography of High-paying jobs: A maps of high paying jobs in the US. Alongside this map, it would be interesting to see a similar map of the average cost of living for each region.

How LEGO revived its Brand: A great case study of how a company can turn itself around

Dakshana Foundation 2009 Annual Report: Good reading for individuals interested in Pabrai’s foundation and education in India

Tracing Oil Reserves to their tiny origins: Debunk the old theory that oil came from dinosaur fossils

Consumers find ways to spend less and find happiness: I have been seeing more of this in the US, people realizing that spending doesn’t lead to happiness. I believe there is a strong move towards less consuming and more saving.

The Great Stock Myth: Is the belief that equity have higher return than ‘risk-free premium’ investments true? What happens if it doesn’t materialize?

Categories: Reading

CPD: What needs to happen next

August 10, 2010 Leave a comment

To understand what needs to happen next with Caraco getting back in compliance, let’s look at what Sun Pharma management said in the recent conference call.

Dilip Shanghvi: I think Caraco needs to share the specific timeline, which they have not shared. I can only explain the process, explaining the timeline. The process is that Caraco has to decide whichever product it wants to revalidate and take the revalidation batches in presence of the CGMP experts, and once the experts are satisfied, a separate team of these experts is satisfied that the facility is in compliance, then they have to inform the FDA that they can come for inspection. We expect that FDA will come for inspection after this is communicated, and if the product and the facility are found to be compliant after the FDA audit then these two products will be permitted, so this will be a product-by product re-certification process.

So we could see CPD restart manufacturing of drugs sooner than expected. I think the company will likely ask for 1-2 products that they want to re-validate initially. This will increase the company’s top line, cash flow, and put the rehired employees to work. The company will slowly add additional products into compliance. For current CPD holders, I highly recommend reading Sun Pharma’s recent conference call transcript.

Categories: Updates