My missives on FSM
When buying a stock not what came before but rather buying future earnings, growth. FSM should see significant increases. New mine and new mill. Rich resource. It must look attractive to bigger companies looking to add to production. It is not cheap here but ... they do not need cheap at the moment.
Pluses
Cash flow and earnings growth should go ‘nuts’, little debt to worry about, cash on hand and available capital look good. My accounting skills are poor when it comes to filings but that is my take.
Cash flow had been being used to finance new mine, this expense gone.
Comparable metrics in sector imply undervalued
New mine is Gold not silver which changes profile of company to the better, more diversified and gold is hot right now, momentum factor.
Silver a key component in solar panels, and many other components used to ‘transition’ from oil.
Platinum and now palladium prices reflecting this demand in exemplary fashion.
Management has so far executed quite well
See as a prime buyout target with healthy premium, around $6, low market cap, rich resource, majors need/want to add production/reserves to maintain growth and share price
Negatives
Most important is political risk Argentina which is hard to evaluate. Share price has lagged companies like CDE and HL because of this geopolitical financial risk.
Noticed charge for VAT last quarter and wish I knew more about this, some help ???
Will this be a recurring issue and what does it really mean?
Weak Zinc and Lead prices which increase costs per oz silver at their other two mines.
CRB as a whole and metals in particular look dicey (Copper still a bellweather, so watching)
Small company so more susceptible to short term glitches disproportionately impacting earnings and production, like we just saw with CDE
Hence high beta and more speculative relative to lets say NEM (NEM since recent lows up ~~14% versus 33% FSM)
Conclusion
Worry/Think about to get away price wise as did CDE and HL and I will miss out as not willing to chase it.
Have core position but unwilling to add until confirmation of breakout which is so far illusive upon my read of chart and volume.
Sit on hands for now but think should be buying,
Re COP my read 57.50 looks like capitulation chart wise. ??? I guess watch chart patterns and volume.
Could sell more ECA here and buy FSM etc and potentially take away risk of dead money
This is the reallocation I am pondering.
Any comments very welcome and appreciated. |
