Posts from the ‘Atna Resources (ATN)’ Category

Oct 16

Week 15 Portfolio Update: Scratching Back to Even (again…)

My portfolio gained along with the rest of the market last week. The rollercoast on either side of par continues. The good news is, as the relative performance chart below shows, I have been outperforming the major indexes since inception.

Unfortunately the bad news is that I am still down 1% since I started the portfolio on July 1st. I’ve said on a number of occasions in the past couple of months that the best position to have in this market may be a cash one. Thus far that has turned out to be the case. Even though I have picked stocks and sectors that have generally outperformed the market, the fact remains that it is very hard to make money in a bear market without being short.

Speaking of shorts, I do want to point out once again that while I am not allowed to short stocks in the practice account that I post on this blog, I am short a number of stocks in my actual account. These stocks are entirely in the banking sector. Right now I am short BAC (Bank of America), UBS, and HBC (HSBC). I have been short HCG.to (Home Capital Group) but covered that recently on the suspicion that the market was going to rally. These banking shorts amount to about 1/3 of my longs, and they are there entirely as a hedge against the possibility of a systemic collapse brought on by some European catastrophe.

Also of note is that while I mentioned that I had began to buy Newmont this week, exchanging some of my gold junior shares for the shares of the gold senior, you will note there are no Newmont shares in the account displayed. I’m not entirely sure what happened here; I think I may have put the USD limit price for Newmont on the CDN dollar share order. At any rate, I didn’t get the shares I thought I got, and I didn’t realize that until I checked my portfolio this weekend. I’m not entirely sure what I am going to do about this now, as Newmont is a good 5% higher than when I had anticipated buying the shares. I think I will just sit in cash until the opportunity arises to buy the stock at the price where I actually bought it in my real accounts.

For the upcoming week, I would like to pare back some of my positions further if given the chance. D-day in Europe is coming up quickly, and god only knows what that day has in store for us. I have seen the market turn downwards on a dime too many times in the past couple of months to have any faith in the sustainability of this rally. If Europe actually comes to a workable solution, I will buy back stocks with a vengence, but until that time has clearly arisen, I will continue to exercise extreme caution.

The one stock that I might look at adding to is Atna Resources. I did a lot of work this weekend with another, more familiar, gold producer called San Gold. San Gold is an interesting story and I will try to write up a short piece on the company some time soon. I don’t anticipate buying and SanGold in the near term though; while the production and exploration potential of the company is interesting, it seems to be that a lot of this upside is already in the stock. Which brings me to Atna. What Atna has at Pinson seems fairly analogous to what SanGold had at Rice Lake before they began to ramp up production. Lots of high grade underground gold and a mill that was mostly commissioned and ready to go. The difference between the two companies is that Atna has a market capitalization of less than $100M, whereas Sangold at one time was a $1B company, and even now with recent production disappointments (which I have to say are not as disappointing as the share price performance would suggest) is a $600M company. There are differences to be sure, but nevertheless $500M is a lot of wiggle room to play with.

Oct 2

Crisis-Weary and I Why I still own some Gold Stocks

I’ve gotten tired of reading about Europe and sovereign debt and under-capitalized banks. I think I have read all I need to know to be able to make the decisions I have to make. I’ve already gotten out of most everything but my very core positions, with those being a couple of oil companies, a special situation REIT, and a few gold stocks.

Its the gold stocks that I am most interested in understanding better. While the gold stocks, particularly the junior and mid-tier one’s, performed terribly last week, I remain somewhat suspicious as to whether this under-performance can be maintained.

The gold stocks have a few tail winds in this environment that very few other stock groups have:

The price of the commodity they sell has risen dramatically in price. Keep in mind that at this time last year we didn’t even have $1400/ox gold. Many of the stocks I am investing in are trading at valuations cheaper than they were at that time.
The costs of production and the costs of construction have come down and, if this is going to turn into a recession, likely will continue to come down. This goes not only for oil, rubber, steel, but for labor too, as in most mining districts gold companies are competing with the gambit of base metal producers that will be less able to bid up for workers
For gold companies operating outside of the United States, in particular those in emerging economies like Brazil and Mexico, the currency headwinds that they have faced have subsided, and these companies should be able to enjoy falling cash costs in USD.
As I have said ad nauseum, the likely endgame for the euro-crisis remains likely to be the end of the euro. It is hard to imagine how the traditional store of value will not do well in an environment where the second largest currency ceases to exist in its present form.

So with those points in mind, and being somewhat euro-ed out from the past weeks of non-stop reading, I sat back this weekend and listened to conference calls and presentations from gold companies. There were a few that piqued my interest, many that provided nothing new, and a few that stood out. I’m going to spend the next few posts, which I will put out over the next few days hopefully, talking about 3 companies that stood out for me: