Why The Portfolio Has Significant Liquidity

Although HFV scans a large variety of equities across mainly european and american markets, there are times, like these that there are very few tangible opportunities to capitalize on. This is the reason of the portfolios increasing liquidity position. Although we believe the markets still have a few yards to go before being a real bubble. US markets are really showing serious improvement in terms of house building, foreclosure decline, jobless claims improvement and price appreciation on properties which all play a role in a larger recovery. However, needless to say we have shorted companies recently and will most likely intensify these operations in the future.

There are arbitrage opportunities that arise then and then but we do realize that a very dedicated approach to keep identifying companies with great advantages in terms of competitive advantages business wise or on a financial basis and setting up a fair value estimation is the best way to tackle a growing bubble. Essentially this gives you the certainty and actionability in times of excessive negativity.

If you are interested in the portfolio newsletter please email hfv@inoxus.org. For new persons interested its available for 250 dollars a quarter, with a few chosen written investment opportunities included. We are also planning to open an Q&A for current subscriber questions. Please email these to hfv@inoxus.org

Africa Oil Analysis

We are glad that the product is now finished. We’ve decided because of the comments received that the price is going to be 30 dollars for this article with a free quarterly newsletter included (250 dollars otherwise). Please read the previous posts regarding the information to be included in such a newsletter.

Remember! Its important you fill in your email-adress when you are paying through paypal. Any other questions or issues or in the need of alternative payment methods please email hfv@inoxus.org

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Shamaran Petroleum Analysis

ARGENTINA GASFirst in regards to the AOI release the testing processes have finished and we are now ready to launch it most likely on Monday. For those who are interested in reading about another oil exploration company with analysis of its valuation and prospects you are welcome to read the article on SA regarding Shamaran Petroleum.

Update On First Company Article Analysis Release

After some testing, the first article is set to be released early next week. Since we have received a comment on the pricing which we also do agree upon, we have reduced the article cost with 50 % of 70 dollars. The quarterly newsletter will be of the same price but if you buy the first article we have decided that you’ll get the whole Portfolio newsletter on the 31st. Please read the previous post regarding the details of what should be included in such a newsletter. If you’d like the content and have viewpoints on the pricing we will definitely take them into account.

However, because of the portfolio performance and the fact that a broad range of funds charge > 1 % this would therefore make sense if your total portfolio was over 100k at which point you’d pay less fee to HFV portfolio newsletter(assuming a 1% charge on your funds), nonetheless, the portfolio performance should also be addressed. Because the portfolio newsletter is done a fixed basis rather than on a variable basis this portfolio newsletter will pay off for clients that have access to a larger capital base.

We are content with our strategy of identifying stocks today and will keep our focus on the individual businesses invested in and returns should follow sooner or later. It is important to know because our strategy involves buying volatile stocks that we ascertain there is times where we do worse than index because of extraordinary events and usually take advantage of these to leverage those as opportunities. In short we cannot claim that we buy stocks at the right prices, we only buy stocks that are below what is our estimate of fair value and that its true fair value would be reflected eventually. Through keeping our strategy intact in times of negativity and having patience we managed to deliver a strong performance since the portfolios inception.

Article Focus And Newsletter Of Selected Stocks

Because there is quite large interest in the Lundin Group Companies such as SNM,Africa Oil,Lundin mining, Lupe, Lucara diamond and Blackpearl Resources the blog has decided to initiate a coverage on its own of these articles. However, other companies are also subject for publication. 

For the effort put in the articles there must be a compensation and the decision have been made for the liking of readers to either a pay per article system on the site or a quarterly newsletter which includes the authors portfolio, analysis, changes and selected companies articles. We are thinking of 70 dollars a article which you could pay directly via paypal or email hfv@inoxus.org for additional payment methods. It is hard to set the right price for everyone but my response on the article made yet is that they provide value to readers. Sample articles can be found at SA. The article in its design would be different and in a pdf format. The decision to have a quarterly newsletter instead of monthly newsletter is because there the portfolio decisions are often long term based, although there are possibilities of arbitrage opportunities that are mentioned. The quarterly newsletter would have a cost of 250 dollars per quarterly newsletter. You’d recieve the articles about prospective investments, commentary, analysis and changes to the portfolio on a quarterly basis.

As of today the portfolio since inception in late 2011 have had a total return of 86 %. The writing is fundamentally orientated and the authors often follow underappreciated stocks. The first newsletter is set to be out 31st october. There will also be a article of Africa Oil to be released in the end of this week. If you are interested of the newsletter and/or want more details feel free to email us at hfv@inoxus.org.

INTL Shipholding – Thumbs up for variable rate exposure

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I’d like to you think you are interested of the latest analysis made by this blog. The following is an excerpt from a Seeking Alpha Small Cap Insight article, follow the link at the end of the page for the whole article.

“International Shipholding (ISH) is vulnerable like a turtle without its shell in the variable rate market. But the vulnerability could easily transform into opportunities in a recovery of the shipping rates by its pure car and truck carriers (PCTCs). The company has potential and willingness to increase dividends to a yield of at least 8 %.”

 

The whole analysis can be found at SA .

 

Breeze Eastern – Defense Small Cap Is Interesting

AIR_CH-53E_HMMWV_Underslung_lgI’d like to you think you are interested of the latest analysis made by this blog. The following is an excerpt from a Seeking Alpha Small Cap Insight article, follow the link at the end of the page for the whole article.

“The article identifies a few factors which essentially limits competition and thus increases its profitability. Combine this with a OE yield of 10 % and some NOLs carryforwards makes the company an attractive purchase for the current price. However the companies exposure to US military spending could lead to a sudden stock downturn which would this stock even more of an profitable purchase for the long term.”

The whole analysis can be found at SA .

CAI International – A Growth Story

I’d like to you think you are interested of the latest analysis made by this blog. The following is an excerpt from a Seeking Alpha Small Cap Insight article, follow the link at the end of the page for the whole article.

“Finding undervalued stocks in this economic climate is harder than what it used to be. CAI International (CAP) is an organization I perceive to be undervalued, however; there are some inherent risks associated with the business. Some 70 – 110% upside for the coming two years is expected if the growth trend continues. It seems that the likelihood of further growth is both supported by their ability to raise debt and the market outlook for further container demand. With a track record of high margins and growth this is an interesting case. I expect further earnings growth from the profitable transition from management to ownership of containers which management believes is possible”

The whole analysis can be found at SA .

Tuesday Morning – One Of The Better Short Opportunities Out There

I’d like to you think you are interested of the latest analysis made by this blog. The following is an excerpt from a Seeking Alpha Small Cap Insight article, follow the link at the end of the page for the whole article.

“The market is providing a lot of short opportunities at the moment; due to large appreciation of share prices in a relatively short time period. I am quite certain that most investors will not short a Tuesday morning but that they will instead short the company Tuesday Morning (TUES). The company has a huge P/OE ratio with high capital expenditures, and little growth potential.”

The whole analysis can be found at SA .

Lundin’s Eagle Mine – Value Accretive ?

Nickel101Recently one of my favorite commodity based companies, Lundin Mining, acquired a Copper and Nickel mine from Rio Tinto. Rio Tinto and the other metal miners have been struck by the wide commodity price decline, and Rio Tinto is now focused more on their core assets and raising capital for developments of the core assets. Therefore, Lundin Mining received an opportunity and acted upon it accordingly. Lundin mining paid 315 million dollars for the Eagle Mine, and at 50 % completion an additional 400 million in CAPEX is required for the production to start 2015. Lundin have a net cash position of 214 million dollar available, per April 24 2013. The CAPEX this year will be around 360 – 400 million, where around 140 million have already been spent to date. In order to meet these requirements Lundin have to lend around 140-200 million this year, assuming the NI will be around 160-200 M, based on the uncertainty of commodity prices.  If the investment in Tenke goes beyond Phase II in 2014 then at that point in time they will have to put some additional financing, as Lundin have to spend  160 million extra over the CAPEX of 285 million per 2013. It will therefore be interesting to see if Lundin decides to halt the expansionary activities in Tenke mine until cash flow of around 300-350 (including depreciation) can be met without greater strain on the balance sheet. In a sense the mine itself is worth putting the company upon some debt. At the present price of 6 USD dollar Per Nickel Lb, the price of Nickel can decrease by 66 % to achieve breakeven. At 6 dollar per lb for 21ktpa would equal a operating profit of 185 million dollars per annum with a 2 dollar per lb cost, even at a price of 4 dollar(2008 price level) per lb of nickel, it would deliver significant returns. Even a cost increase to 3 dollar per lb or 50 % of the initially expected costs, and a price of 5 dollar per nickel lb, it would deliver significant returns.

Yes, you should count with higher costs than the company expects, because you want to ascertain that you will still do fine when things do not go as expected.  The potential lies in that Nickel is part of stainless steel and is used daily in and outside of houses and apartments. The market will continue to grow with population growth and economic recoveries. As the nickel price is very depressed partly due to increased production of nickel but also because of decreased consumption and worries of decreased consumption in Asian countries the nickel price is close to all time lows.  However, that upside is only part of the good news. Michigan State where the mine is situated taxes corporations by 6 % on the corporate income, which can create a substantial dividend increase for shareholders, by this mine alone. The copper cost has not been estimated yet, however, copper should not be seen as a burden rather a bonus of around 20 K per year if the prices are good enough. With the financing taken into account in the worst case scenario the mine would produce 90-110 M a year including the debt financing. However, there is a reason why this is a relatively cheap mine apart from the factors that commodity prices have experience significant declines, and the other significant reason being the short asset life of 8.9 years for the nickel deposit at an average production of 17ktpa. At the same time the mine is said by Lundin Mining to have some resource increase potential for a longer asset life. Although commodity markets might be shaky in the short term, I certainly believe that Lundin managed to “time” the market here and this acquisition will prove to be one of the best value drivers for Lundin Mining and for shareholders in the future.