Good morning to you all. For quite some time, we have been very
patient with respect to AGORA portfolio additions. In fact, our last
purchase came back on August 12, when we purchased IMG.TSE at $2.75 and
subsequently sold at $4.60 for a 67% return in only 35 trading days. We
may not trade often but when we trade, we make sure the risk:reward ratio
is heavily tilted in our favour.
At this time, we feel very comfortable with making another portfolio
addition and we are on the verge of making a second addition.
KINROSS GOLD CORPORATION (K.TSE; KGC.NYSE)
Kinross Gold Corporation needs no introduction. Despite gold market
turbulence over the last year, it has been very difficult to purchase
Kinross below $4.00 on the TSE. In fact, with the exception of the
general stock market meltdown on August 31, Kinross spent very little
time below $4.00.
As of Thursday's close, Kinross closed at $3.72 and went as low as $3.62
for the day. Much of this can be attributed to the fact gold has been
weakening and the stock market has been strengthening. Having said that,
we feel very comfortable in the future of gold and major companies within
the industry. This is especially true when they become cheap relative to
the last 12 months of trading and for no apparent fundamental reason.
Given the fact tomorrow is a Friday and that Kinross has been on a steady
down trend over the last few days, we believe the time is right to add a
Kinross trading position to our portfolio. We will be shooting for a
price of 3.50 but will go as high as 3.70. Kinross volume is very brisk
and presents no liquidity issues.
ATI TECHNOLOGIES INC. (ATY.TSE)
ATI may not be a household name but it will be soon. As such, they do
need some form of introduction. If you want to see impressive, pay
attention to the following. This is a world class corporation.
ATI Technologies Inc. is <underline>the world's largest
supplier</underline> of 3D graphics and multimedia technology, designs,
manufactures and markets innovative and award-winning multimedia
solutions and graphics components for personal computers. ATI is
<underline>the world's leading supplier</underline> of video and 2D/3D
graphics accelerators to OEM and retail customers.
In the last couple of months, ATI chips and processors were chosen to be
used in new systems from <underline>Apple, AST, Dell, Compaq and
Hewlett-Packard.</underline> These join
the list of notebooks from <underline>Fujitsu, NEC, Samsung and
Siemens-Nixdorf </underline>which had been already shipping with ATI
graphics. <underline>ATI's second quarter 1998 market share in 3D
notebooks was 30 percent </underline>according to Mercury Research.
<underline>ATI's RAGE technology has been selected to populate systems of
the world's top 15 computer makers,</underline> as well as, being
selected by General Instrument Corporation to provide graphics chips for
their next-generation digital cable set-top terminals.
On Thursday, ATI released their 1998 4th quarter and year end financials.
The highlights are as follows:
1] Revenues - Up 92% to $1.15 Billion versus $603 Million for 1997;
2] Earnings - Up 253% to $168 Million (.79/share) versus $48 Million
(.24/share)
As of Thursday's close, ATI trades at $12.75 or 16 times earnings. In
fact, despite meeting all street expectations, ATI was down 85 cents on
the day. Our contacts indicate much of this is due to the fact ATI also
announced acquisition of a company, from which revenues are not expected
to commence until 2001.
Having said that, ATI is trading at a very low multiple for a world
leader in this industry. Moreover, many analysts have 12 month
projections in the $22 range for this company. At the current time, we
are going to keep a very close eye on ATI and anticipate adding it to the
AGORA portfolio at levels closer to $12, or around tax-loss selling
season in December, whichever comes first.
Anyway we look at it, ATI is a keeper. Due to the fact mergers,
acquisitions and licensing agreements can occur at anytime, we will
monitor ATI very closely for any developments.
The Investor's Investor. Published by Agora International Enterprises Corp.
© COPYRIGHT 1997-1998 by Agora International Enterprises Corp. ALL RIGHTS RESERVED
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