Quick Notes
Here’s a good summary of Chinese bubble and why miners are will head lower, by Roger Montgomery. It’s based around coal due to the current M&A in that area, but does extrapolate to all miners.
In summary, China property bubble bursts, Chinese Government lowers the current 55% contribution to GDP occurring through build-out of infrastructure, demand falls, miners fall.
My view is that secular cycles last longer than most predict and commodity cycles can last twenty years, so I’m sitting on the sidelines waiting for the eventual fall to start rather than wasting time predicting when it will happen. I need to practice being alert to opportunities rather than predicting.
Random Stock News
Prana Biotech (PBT) jumped 57% today, 8 cents up to $0.22, on the dual news that they’re going ahead with their 11b trial for PBT2 and a new analysis of their 11a trial. If their 11b trial is successful then Prana’s EV should jump five fold as they’ll then be near the front of the Alzheimer’s race.
I was called on my Sandisk (SNDK) position and happy to bank the $35.80 despite a big jump in the final week when Jim Cramer pumping SNDK. Speaking of Cramer I stumbled upon an analysis of his picks on Mad Money. Coincidentally the first author is my new lecturer in Principles of Finance. In summary they confirm what we all knew; Cramer is Mr Mo-Mo. I disagree with the conclusion that “the returns over a six-month horizon provide some evidence in favor of Cramer’s stock-picking ability.” I would phrase that the returns over a six-month horizon provide some evidence in favor of momentum strategy outperforming the market.
It seems like anytime I want to ensure to be called I simply need to mention it here. So, I sold calls on MMM, $85, and AKAM, $35, last week. Can those two make it four for four?
Someone asked about Penrice Soda (PSH) a few weeks back. I placed a GTC sell for $0.80 on half our position while I went on holiday and it was executed. That act summarises my current view, though I should add if I was in need of cash I would have sold the entire position.
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Hi Dean, interesting you sold haf the PSH holding. I just don’t understand the business and the chart shows no sign of turning around. It may turn around of course as per your analysis.
WOW is getting back to interesting valuations. Low 25’s or lower would be even more interesting. This is a business I understand and the more I learn about it the more impressive I find it.
Back to the GPG valuation, it’s damn hard. They don’t have the investments at market value and sir Ron has an odd policy of giving the dividend in the form of a free 1:10 shares plus some years he gives a bonus of 1:30 or something as well. Weird. 20% CAGR over 20 years isn’t to be scoffed at though (if you take their word on book value increases). The Coats button business is their major investment and I don’t know enough about this. They also have a lot of cash on the balance sheet which would support their book value. If I was to invest in any of the LIC’s, which I haven’t, it would probably be this one.
Sean have you read Grantham’s quarterly? Brilliant stuff, which I think you’d enjoy.
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