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Jul 8

Tying up Loose Ends with the last of my June Position Changes (FFEX, IMH, MBI, TVL,)

As I mentioned in my June update, I was away on vacation for a couple of weeks and at the same time the city I live in was hit with the flood of a century, and these two events transpired to put some delays on the posting all the details of the monthly portfolio update that I put out.

In subsequent posts I have talked about the two major theme changes that I made in June, with those being that I sold all of my gold mining stocks with the only exception being Midas Gold (the decision to sell is looking rather prescient right now) and that I had bought a number of REIT’s that I believed were being sold off indiscriminately by investors lumping together all REITs into a single bucket (maybe not quite as prescient as the gold miner sell but I’m doing okay on this one so far).

There were, however, a couple of other portfolio changes that I made in the month of June that I didn’t get a chance to mention. I want to use this post to do some house-cleaning, talking about the remaining portfolio changes I made in June. Read more

Jul 4

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Reviewing the Opportunity in India presented by Niko Resources

I have been tweeting about my position in Niko for a few weeks now. I built a small position in the $7’s which I added to in the $8’s and $9’s as news on the new gas contract in India has been confirmed. As I’ve said before, I am often slow coming out with posts and updates on all of the stocks I own because it takes time to write these opuses but I do try to make fairly timely updates on twitter when I add new positions or decide to exit others. Feel free to follow me there.

Niko Resources is a pretty simple story. The stock is a former Bay Street darling that has struggled mightily with reserve write downs and exploration disappointments. The stock has been pretty much left for dead by analysts and fund managers who have watched their dollars disappear as it fell from over $100 to less than $10 (bottoming at $5 and change a few months ago).

I owned Niko briefly before Christmas. My short stint with the stock is an example of needing to own something in order to be motivated to think a bit harder about it. After having gone through that process, I sold the stock and wrote the following:

The discomfort I developed with Niko was partially the result of another batch of less than stellar drilling results, but mostly the result of my conclusion that this isn’t the right time yet. The driver of the share price will be the settlement of a new gas price contract in India. I don’t think this is likely to occur until the existing contract expires, which is not until next year. In the mean time Niko will continue to experience production declines in India, and they are open to negative news flow on drilling.

Of course you could argue they are also open to positive news flow, and that’s totally true. But the point is, its a gamble. If they report a hit then I will miss out (though I suspect that such news might get me to jump back in). Absent that, I’m going to keep watching Niko until we get closer to year-end and to where the market can begin to price in a new contract.

Since that time I have continued to watch Niko, and indeed there has been positive news flow on the exploration front (the company had a new significant discovery in India), and terms of a new gas contract were released. And honestly, with all the news that has come out, I would have expected the stock to be higher. Nevertheless, I have been pleased that the stock has traded below where I sold it back in December when, in my opinion, the uncertainty surrounding the company’s outlook was much more unclear. Sometimes the market is fickle and that has given me a chance to get back in. Read more