Tonix Pharmaceuticals (TNXP) thinks it has a drug that can treat fibromyalgia. TNX-102 is an oral tablet that delivers cyclobenzaprine. NIH's page on cyclobenzeprine notes that its commercial names are Amrix and Flexeril, both prescribed short-term to treat muscle spams. The regulatory pathway through the FDA's "pain division" is known thanks to work by competitors. FDA approval for chronic therapy in fibro patients means longer exposures to possible side effects.
The most impressive factor in this company's story right now is the background of their management team. Dr. Seth Lederman has extensive experience in immunology and pharmaceuticals. Other key people on the team have decades of experience with leading drug developers.
The market for fibro drug treatment is quite large. Decision Resources estimates the fibro pain management drug market will grow to US$1.8B in 2018, with the caveat that the entry of a generic version of pregabalin (brand name Lyrica from Pfizer) will drop that figure to US$1.4B immediately thereafter. Tonix's real competition for TNX-102, assuming it passes all FDA hurdles, is therefore a low-priced generic. Pfizer has been milking Lyrica for all it is worth after winning patent exclusivity in 2012, and will continue to do so especially if it can treat epilepsy.
Tonix does have other drugs in its development pipeline. Investors should watch the company's news releases for progress with its FDA studies. It would be relevant to know whether TNX-102 is more effective at suppressing fibro symptoms than pregabalin, with fewer side effects, at lower costs. Two out of those three would give it a marketable case against a generic.
Full disclosure: No position in TNXP or other companies mentioned at this time.
Sunday, July 07, 2013
Greenwashing a Business Into Sustainability
Greenwashing isn't just for Fortune 500 megacorporations anymore. Now small and medium-size enterprises can do it too. Aspiring entrepreneurs need a roadmap.
Andrew Savitz wrote The Triple Bottom Line to argue that corporations should endogenize the environmental impact of their operations. That's my fancy way of saying that environmental costs should be transparent on a company's financial statements. This first wave of thinking about sustainability eventually begged the question of measuring environmental and social costs. The desire to calculate a social return on investment gave rise to the SROI Network of member companies committed to meeting sustainability metrics. Startups that adhere to their SGAAP standards may perk up the ears of VCs (just a hunch, worth a shot).
SROI isn't the only family of metrics clamoring for attention from the business community. The ICLEI consensus in favor of Agenda 21 development guidelines will require developers and business owners to be very cognizant of municipal codes. Most startups will fall below the emissions thresholds of the Carbon Disclosure Project but they can still join the Global Reporting Initiative so they can target milestones for mention in their fundraising pitch.
Businesses get more than brownie points for locating in a building that is LEED-certified or ENERGY STAR compliant. They may be eligible for grants, tax breaks, loan guarantees, and subsidies. Some property appraisers may be more generous with property valuations for such buildings. The SBA has a whole slew of sustainable tips.
For-profit companies can certify themselves as B-Corporations with proof that they offer a greater societal problem-solving value. Don't confuse this certification with a benefit corporation, which is a different type of corporate structure. The State of California offers a Green Business Certification Program that probably helps a business' image. Not to be outdone, the Bay Area has a green program too. I considered submitting Alfidi Capital for some of these certifications for about half a second. It would add nothing to my sarcastic image and reduce the time I commit to blogging.
Greenwashing doesn't deserve a bad rap. New habits eventually drive changes in core values. Getting companies to think like sustainable enterprises might actually make them sustainable. Starting somewhere is better than never starting at all.
Andrew Savitz wrote The Triple Bottom Line to argue that corporations should endogenize the environmental impact of their operations. That's my fancy way of saying that environmental costs should be transparent on a company's financial statements. This first wave of thinking about sustainability eventually begged the question of measuring environmental and social costs. The desire to calculate a social return on investment gave rise to the SROI Network of member companies committed to meeting sustainability metrics. Startups that adhere to their SGAAP standards may perk up the ears of VCs (just a hunch, worth a shot).
SROI isn't the only family of metrics clamoring for attention from the business community. The ICLEI consensus in favor of Agenda 21 development guidelines will require developers and business owners to be very cognizant of municipal codes. Most startups will fall below the emissions thresholds of the Carbon Disclosure Project but they can still join the Global Reporting Initiative so they can target milestones for mention in their fundraising pitch.
Businesses get more than brownie points for locating in a building that is LEED-certified or ENERGY STAR compliant. They may be eligible for grants, tax breaks, loan guarantees, and subsidies. Some property appraisers may be more generous with property valuations for such buildings. The SBA has a whole slew of sustainable tips.
For-profit companies can certify themselves as B-Corporations with proof that they offer a greater societal problem-solving value. Don't confuse this certification with a benefit corporation, which is a different type of corporate structure. The State of California offers a Green Business Certification Program that probably helps a business' image. Not to be outdone, the Bay Area has a green program too. I considered submitting Alfidi Capital for some of these certifications for about half a second. It would add nothing to my sarcastic image and reduce the time I commit to blogging.
Greenwashing doesn't deserve a bad rap. New habits eventually drive changes in core values. Getting companies to think like sustainable enterprises might actually make them sustainable. Starting somewhere is better than never starting at all.
Saturday, July 06, 2013
The Haiku of Finance for 07/06/13
Home improvement store
Profit tied to home building
Boom-bust together
Profit tied to home building
Boom-bust together
Lowe's Chops Down Orchard
Orchard Supply Hardware (OSHWQ) is bankrupt. Lowe's (LOW) is buying most of OSH's assets in a bankruptcy auction for $205M. The risk of this transaction breaking up is small unless Home Depot (HD) jumps in with a bid. Lowe's intent is to increase its California presence and Home Depot is already strong in that state. I'd like to know how Lowe's and Home Depot stack up right now.
LOW
Market cap: $45.88B
P/E: 24.49
Profit Margin: 3.91%
ROE: 13.86%
HD
Market cap: $114.37B
P/E: 24.85
Profit Margin: 6.21%
ROE: 27.5%
Investors are paying almost the same P/E for these two big home improvement competitors even though Home Depot is clearly more profitable and making better use of its invested capital. Home Depot has about 50% more market share than Lowe's (judging from their gross revenues), so Lowe's will need all the Orchard retail space it can get. Lowe's same-store sales have been all over the map recently, and Lowe's seems to trail Home Depot in both cost-cutting flexibility and penetration of the professional builders' sector. Lowe's margins will suffer further in the short term after it converts Orchard's stores to its own layout and absorbs the accounts payable that it agreed to take in the buyout deal.
Full disclosure: No positions in any company mentioned at this time.
LOW
Market cap: $45.88B
P/E: 24.49
Profit Margin: 3.91%
ROE: 13.86%
HD
Market cap: $114.37B
P/E: 24.85
Profit Margin: 6.21%
ROE: 27.5%
Investors are paying almost the same P/E for these two big home improvement competitors even though Home Depot is clearly more profitable and making better use of its invested capital. Home Depot has about 50% more market share than Lowe's (judging from their gross revenues), so Lowe's will need all the Orchard retail space it can get. Lowe's same-store sales have been all over the map recently, and Lowe's seems to trail Home Depot in both cost-cutting flexibility and penetration of the professional builders' sector. Lowe's margins will suffer further in the short term after it converts Orchard's stores to its own layout and absorbs the accounts payable that it agreed to take in the buyout deal.
Full disclosure: No positions in any company mentioned at this time.
Friday, July 05, 2013
The Haiku of Finance for 07/05/13
Sell that solar cell
Should make more than energy
Must make money too
Should make more than energy
Must make money too
Natcore Technology Using LPD in Solar Things
Natcore Technology (NXT.V / NTCXF) is trying to do interesting work in thin-film solar. It's appropriate enough for me to cover them since I'll attend the SEMICON West 2013 / Intersolar North America conference next week, so this is how I get psyched up for solar action.
Natcore's CEO is a former Wall Street executive, not a solar industry executive. That's understandable if their most important challenge right now is to raise capital, but at some point they will need an experienced solar hand in charge. They do have some smart science folks on the team who understand electrical engineering and material science.
Their approach rests heavily on the application of liquid phase deposition (LPD) to "grow" solar cells. They are developing other technologies whose solar efficiency gains appear to be cumulative: LPD manufacturing, black silicon (licensed from NREL), tandem cells, and flexible cells. They also propose to commercialize other technologies like a shielding fabric. It's difficult for a layperson like me to parse the advantages or disadvantages of these approaches. Natcore apparently outsourced the development of their LPD processing station to MicroTech Systems.
Black silicon has been around for three decades and NREL indicates it can generate over 18% efficiency in solar cells. Curiously, independent research in Finland has confirmed this finding. Natcore has competition from Black Silicon Solar.
Natcore's thin film cells will have to be cheap if they're going to beat First Solar's thin film cells. First Solar's weakness in thin film is its dependence on tellurium, so Natcore needs to demonstrate that its processes are not hostage to rare earth element supply shortages. I wonder whether Natcore's estimate of $40-50M in capital outlays for a thin film production line is realistic. I'll have a better idea once I talk to some experts at SEMICON.
Natcore is just getting started with commercializing these scientific developments, so they really ought to be considered a startup. I don't know why they went IPO without proven revenue streams. The Harvard Business Review case study on Natcore mentions their strategy to manufacture in China. It's worth noting that China is offering new export quotas on solar panels to settle a trade dispute with the EU. I would want to know whether this quota will affect Natcore. They need to export something from somewhere if they're going to be viable.
Full disclosure: No position in Natcore Technology (or other companies mentioned) at this time.
Natcore's CEO is a former Wall Street executive, not a solar industry executive. That's understandable if their most important challenge right now is to raise capital, but at some point they will need an experienced solar hand in charge. They do have some smart science folks on the team who understand electrical engineering and material science.
Their approach rests heavily on the application of liquid phase deposition (LPD) to "grow" solar cells. They are developing other technologies whose solar efficiency gains appear to be cumulative: LPD manufacturing, black silicon (licensed from NREL), tandem cells, and flexible cells. They also propose to commercialize other technologies like a shielding fabric. It's difficult for a layperson like me to parse the advantages or disadvantages of these approaches. Natcore apparently outsourced the development of their LPD processing station to MicroTech Systems.
Black silicon has been around for three decades and NREL indicates it can generate over 18% efficiency in solar cells. Curiously, independent research in Finland has confirmed this finding. Natcore has competition from Black Silicon Solar.
Natcore's thin film cells will have to be cheap if they're going to beat First Solar's thin film cells. First Solar's weakness in thin film is its dependence on tellurium, so Natcore needs to demonstrate that its processes are not hostage to rare earth element supply shortages. I wonder whether Natcore's estimate of $40-50M in capital outlays for a thin film production line is realistic. I'll have a better idea once I talk to some experts at SEMICON.
Natcore is just getting started with commercializing these scientific developments, so they really ought to be considered a startup. I don't know why they went IPO without proven revenue streams. The Harvard Business Review case study on Natcore mentions their strategy to manufacture in China. It's worth noting that China is offering new export quotas on solar panels to settle a trade dispute with the EU. I would want to know whether this quota will affect Natcore. They need to export something from somewhere if they're going to be viable.
Full disclosure: No position in Natcore Technology (or other companies mentioned) at this time.
Thursday, July 04, 2013
McDonald's And Burger King In The Land Of The Free
I rarely patronize fast food chains because I dislike lowest-common denominator products. Today is Independence Day and I have no backyard grill, so I felt like sampling the burnt beef offerings of the most widely available grills in our country. That would be McDonald's (MCD) and Burger King (BKW).
The silliness of fast food as a lifestyle choice astounds me. Chains are perpetually tweaking their menus to bring watered-down flair to customers whose taste buds have never ventured more than a few blocks from home. The breakfast offerings at McDonald's now include white cheddar and egg whites on the McMuffin. I tasted zero difference between that version and the normal McMuffin but many Americans aren't known for their taste anyway, so I don't expect the typical McDonald's customer to care. "Mickey Dee's" also has smoothies for those who pretend to be concerned with their health and chilled coffees for those who pretend to be European sophisticates.
Burger King takes the fast food carnival to another level. Their summer sandwich specials have cute Southern names. The brightly lit picture menus are now on HDTV panels. The drink dispenser is pure genius, with a touch-sensitive LED screen where you can mix and match about two dozen different combos of heavily sugared sodas and lemonades. Man, that self-serve fountain is sugar heaven for every obese American.
I think these menus and eating arrangements are funny. San Francisco has spoiled me with a plethora of fine dining establishments. Dipping into the trough of fast food on rare days is enough to remind me of what I'm not missing by eating healthy. Comparing the hilarity of the menus and dining concepts of America's most well-known lowbrow eateries is very subjective. Let's compare their fundamentals instead, with all glory to Yahoo Finance.
MCD
Market cap: $100.6B
P/E: 18.61
Profit Margin: 19.79%
ROE: 36.59%
BKW
Market cap: $6.84B
P/E: 50
Profit Margin: 8.07%
ROE: 12.07%
Mickey Dee's is more than twice as profitable as the King and the market cap reflects this success. The Golden Arches are absolutely blowing out same-store sales records this year. Meanwhile, Burger King tries hard to catch up. Casting the King as a growth story would be a sad take on that incredibly high P/E ratio. Burger King has always been an also-ran in the fast food sector and their management knows it. The company has had several ownership changes over the years thanks to private equity shops who thought they could make it more competitive. Nice try. I've always wondered why Burger King has consistently fumbled its non-US franchising strategy. Burger King penetrated the Australian market with Hungry Jack's but lost control of the master franchise agreement in court.
People who love fast food have forgotten how to love themselves. Ronald Mc-Gall-Dang-Donald is the high priest of faux self-actualization for the masses all over the world. He reigns supreme because the cheap thrill of salt, sugar, and fat appeal to our evolutionary biological preference for energy. We have not evolved beyond our basest desires. America leads the way in obesity because people in the land of the free are still free to eat themselves to death.
Full disclosure: No position in either MCD or BKW.
The silliness of fast food as a lifestyle choice astounds me. Chains are perpetually tweaking their menus to bring watered-down flair to customers whose taste buds have never ventured more than a few blocks from home. The breakfast offerings at McDonald's now include white cheddar and egg whites on the McMuffin. I tasted zero difference between that version and the normal McMuffin but many Americans aren't known for their taste anyway, so I don't expect the typical McDonald's customer to care. "Mickey Dee's" also has smoothies for those who pretend to be concerned with their health and chilled coffees for those who pretend to be European sophisticates.
Burger King takes the fast food carnival to another level. Their summer sandwich specials have cute Southern names. The brightly lit picture menus are now on HDTV panels. The drink dispenser is pure genius, with a touch-sensitive LED screen where you can mix and match about two dozen different combos of heavily sugared sodas and lemonades. Man, that self-serve fountain is sugar heaven for every obese American.
I think these menus and eating arrangements are funny. San Francisco has spoiled me with a plethora of fine dining establishments. Dipping into the trough of fast food on rare days is enough to remind me of what I'm not missing by eating healthy. Comparing the hilarity of the menus and dining concepts of America's most well-known lowbrow eateries is very subjective. Let's compare their fundamentals instead, with all glory to Yahoo Finance.
MCD
Market cap: $100.6B
P/E: 18.61
Profit Margin: 19.79%
ROE: 36.59%
BKW
Market cap: $6.84B
P/E: 50
Profit Margin: 8.07%
ROE: 12.07%
Mickey Dee's is more than twice as profitable as the King and the market cap reflects this success. The Golden Arches are absolutely blowing out same-store sales records this year. Meanwhile, Burger King tries hard to catch up. Casting the King as a growth story would be a sad take on that incredibly high P/E ratio. Burger King has always been an also-ran in the fast food sector and their management knows it. The company has had several ownership changes over the years thanks to private equity shops who thought they could make it more competitive. Nice try. I've always wondered why Burger King has consistently fumbled its non-US franchising strategy. Burger King penetrated the Australian market with Hungry Jack's but lost control of the master franchise agreement in court.
People who love fast food have forgotten how to love themselves. Ronald Mc-Gall-Dang-Donald is the high priest of faux self-actualization for the masses all over the world. He reigns supreme because the cheap thrill of salt, sugar, and fat appeal to our evolutionary biological preference for energy. We have not evolved beyond our basest desires. America leads the way in obesity because people in the land of the free are still free to eat themselves to death.
Full disclosure: No position in either MCD or BKW.
Asanko Gold Used To Be Keegan Resources
Keegan Resources is now Asanko Gold. Name changes do not change the underlying fundamentals of a company. Asanko Gold used to trade as KGN.TO but now trades as AKG. It's still a gold explorer in Ghana, an African country that ranks 64th on Transparency International's Corruption Index (above the median) and 77th in the Heritage Foundation's Index of Economic Freedom (above the median). Ghana also ranks 108th on the World Bank's 2012 Logistics Performance Index. Noting country risk is always important when evaluating investments in emerging markets. Ghana is less corrupt and more stable than its peers but its infrastructure is still immature.
I had noted in my analysis of Cayden Resources last year that some of that company's management team also had responsibilities with Keegan. That is no longer the case with Asanko's present management. The Asanko team looks like they have a lot of experience with a variety of mining projects plus experience specific to Ghana.
The last time I checked on these folks when they were called Keegan, their Esaase project had MII resources. They now have a 43-101 pre-feasibility study dated June 2013 that shows 2P reserves of 1.41 g/t Au. That's not bad at all these days. Good work, folks. The PFS estimate for initial capex is US$286.5M with a total cash cost of production (I always ignore tax adjustments) of almost US$813/oz Au.
I like that their IRR estimated ranges at different market prices for gold have been fairly consistent at various stages of the Esaase project's development. Yes, I've been tracking them for some time and I kept their previous estimates for comparison. I'm concerned that the cash cost of production is significantly higher than gold's long-term average market price of US$615/oz. Gold prices will have to remain significantly higher for the ten-year life of this mine for it to maintain its projected production.
Asanko's most recent quarterly statement dated March 31, 2013 shows cash on hand of about US$197M. That is a phenomenal war chest but they will still need to raise more money to start production at Esaase. The good news is that they seem to manage their burn rate quite well, which increases their chance of surviving until they can find a larger partner to help fund full production.
I like Asanko but I'm not buying the stock just yet. I want to see whether a major producer finds the Esaase project attractive enough to make Asanko an offer they can't refuse.
Full disclosure: No position in Asanko Gold at this time.
I had noted in my analysis of Cayden Resources last year that some of that company's management team also had responsibilities with Keegan. That is no longer the case with Asanko's present management. The Asanko team looks like they have a lot of experience with a variety of mining projects plus experience specific to Ghana.
The last time I checked on these folks when they were called Keegan, their Esaase project had MII resources. They now have a 43-101 pre-feasibility study dated June 2013 that shows 2P reserves of 1.41 g/t Au. That's not bad at all these days. Good work, folks. The PFS estimate for initial capex is US$286.5M with a total cash cost of production (I always ignore tax adjustments) of almost US$813/oz Au.
I like that their IRR estimated ranges at different market prices for gold have been fairly consistent at various stages of the Esaase project's development. Yes, I've been tracking them for some time and I kept their previous estimates for comparison. I'm concerned that the cash cost of production is significantly higher than gold's long-term average market price of US$615/oz. Gold prices will have to remain significantly higher for the ten-year life of this mine for it to maintain its projected production.
Asanko's most recent quarterly statement dated March 31, 2013 shows cash on hand of about US$197M. That is a phenomenal war chest but they will still need to raise more money to start production at Esaase. The good news is that they seem to manage their burn rate quite well, which increases their chance of surviving until they can find a larger partner to help fund full production.
I like Asanko but I'm not buying the stock just yet. I want to see whether a major producer finds the Esaase project attractive enough to make Asanko an offer they can't refuse.
Full disclosure: No position in Asanko Gold at this time.
Wednesday, July 03, 2013
The Haiku of Finance for 07/03/13
Striking BART unions
Lust for even more money
Take them off the trains
Lust for even more money
Take them off the trains
Advisors Add Little Value With Higher Fees or Smaller Clients
My loyal readers know that I used to be a financial advisor. No one wanted to pay for my advice or trust me with their assets. I have often wondered why some investors pay "professionals" who abuse their trust and underperform benchmarks. Some investors are just stupid, and their trusted advisors are just crooks.
The financial advisory profession is increasingly throwing away smaller investors. Advisors make little money from smaller accounts and believe they seldom grow into larger accounts. I saw this attitude a lot in the office where I worked. Top-producing brokers considered non-millionaire clients to be worthless and several layers of management discouraged new advisors from pursuing such prospects. I would have loved to have had a bunch of six-figure net worth clients just to prove that someone considered me trustworthy. "Trust" in finance means a verifiable track record of work, no matter how unfavorable the result of said work. Smaller investors just won't timely service or good advice from full-service firms anymore because their advisors want them to go away.
It's no prettier at the institutional end of the advisory spectrum. A Maryland study of state pension funds shows that plan sponsors are overpaying and getting poor performance. The higher the fees they pay, the worse their returns. These clients are not amateur investors with $100K in assets that advisors don't want. No ma'am. These are retirement plan sponsors with tens of million of dollars in assets to manage. They've been screening advisors for years using very detailed investment strategies. They still get ripped off by professional advisors who can't outperform benchmarks.
The shop talk around the offices of institutional investment managers is much the same as it is in the retail wealth management world. I worked for a large institution that specialized in managing retirement plan money. The team leads in the client relationship management division were just as arrogant and clueless as top-performing wealth managers.
None of the pros are looking out for investors. It doesn't matter whether they say they are. Some clients are stupid and some fiduciaries are crooks. The rest of both groups may just not know enough or care enough to do the right thing. That's why it doesn't bother me that none of them want anything to do with me.
The financial advisory profession is increasingly throwing away smaller investors. Advisors make little money from smaller accounts and believe they seldom grow into larger accounts. I saw this attitude a lot in the office where I worked. Top-producing brokers considered non-millionaire clients to be worthless and several layers of management discouraged new advisors from pursuing such prospects. I would have loved to have had a bunch of six-figure net worth clients just to prove that someone considered me trustworthy. "Trust" in finance means a verifiable track record of work, no matter how unfavorable the result of said work. Smaller investors just won't timely service or good advice from full-service firms anymore because their advisors want them to go away.
It's no prettier at the institutional end of the advisory spectrum. A Maryland study of state pension funds shows that plan sponsors are overpaying and getting poor performance. The higher the fees they pay, the worse their returns. These clients are not amateur investors with $100K in assets that advisors don't want. No ma'am. These are retirement plan sponsors with tens of million of dollars in assets to manage. They've been screening advisors for years using very detailed investment strategies. They still get ripped off by professional advisors who can't outperform benchmarks.
The shop talk around the offices of institutional investment managers is much the same as it is in the retail wealth management world. I worked for a large institution that specialized in managing retirement plan money. The team leads in the client relationship management division were just as arrogant and clueless as top-performing wealth managers.
None of the pros are looking out for investors. It doesn't matter whether they say they are. Some clients are stupid and some fiduciaries are crooks. The rest of both groups may just not know enough or care enough to do the right thing. That's why it doesn't bother me that none of them want anything to do with me.
Fire All Striking BART Workers Now!
The unionized employees of BART are on strike. They are under the delusion that their skills are irreplaceable. I've got news for them. They are as irreplaceable as this hole I just punched in the air with my fist.
The skill required to drive a BART train is about as elementary as it gets. I've peeked inside the BART train control cabin several times in my many years of riding the trains around the Bay Area. You know something? I'm convinced I could drive the train myself with a couple of hours' worth of instruction. It's nowhere near as difficult as driving a two-axle, four-tire, single unit automobile, which any teenager can do after passing a written test and a few minutes of live evaluation. The BART train operator has a couple of buttons to push and a speed control. That's about it. Oh yeah, they have to look out the window briefly while approaching or leaving a platform to ensure some crazy idiot doesn't jump onto the tracks seeking martyrdom. That is not a six-figure job by any stretch of the imagination.
The mechanics do not deserve to make six figures either. Armored vehicle mechanics in the military work on systems much more complex than an electric train, making a fraction of the salary. If the spoiled union mechanics don't want their jobs, there are plenty of ambitious military veterans who would love to take those jobs. How unpatriotic of those striking union slobs to stand in the way of veterans' development, and on the cusp of our nation's Independence Day no less.
Here's a searchable database of BART employee compensation. Look at these wasteful pay levels. It's bad enough to see station agents making $62K for an entry-level job requiring no skill beyond pushing a couple of buttons. It's totally abhorrent to see "assistant managers" making $200K for pushing paper. Perhaps the out-of-control stupidity on pay isn't entirely the union's fault if the greed starts at the top. Across-the-board pay cuts for managers and workers would solve that in a jiffy.
Here's the very generous retirement plan available to BART employees. They get both a deferred compensation plan and a money purchase plan (i.e., much like a 401(k) plan). That is comparable to the plans available to highly-compensated professionals in financial services whose occupations are far more intellectually demanding than running trains.
Every day this strike continues causes enormous disruption to the Bay Area's economy. People need to get to work, for crying out loud. The taxes levied on the private sector pay these BART idiots' salaries.
These striking transit workers make me sick to my stomach. None of them deserve jack squat. Fire them all immediately. They can then have the life-enhancing experience of finding productive jobs with no cushy breaks. They deserve no more sympathy for their union-induced greed than the union musicians of the San Francisco Symphony whom I so rightfully took to task during their own strike. Both of these groups serve the public. Both of them have widely held skill sets that are easily replicable. Neither of them have garnered any public sympathy with their immature tantrums. Neither of them deserve to be rewarded with employment for their greed.
The skill required to drive a BART train is about as elementary as it gets. I've peeked inside the BART train control cabin several times in my many years of riding the trains around the Bay Area. You know something? I'm convinced I could drive the train myself with a couple of hours' worth of instruction. It's nowhere near as difficult as driving a two-axle, four-tire, single unit automobile, which any teenager can do after passing a written test and a few minutes of live evaluation. The BART train operator has a couple of buttons to push and a speed control. That's about it. Oh yeah, they have to look out the window briefly while approaching or leaving a platform to ensure some crazy idiot doesn't jump onto the tracks seeking martyrdom. That is not a six-figure job by any stretch of the imagination.
The mechanics do not deserve to make six figures either. Armored vehicle mechanics in the military work on systems much more complex than an electric train, making a fraction of the salary. If the spoiled union mechanics don't want their jobs, there are plenty of ambitious military veterans who would love to take those jobs. How unpatriotic of those striking union slobs to stand in the way of veterans' development, and on the cusp of our nation's Independence Day no less.
Here's a searchable database of BART employee compensation. Look at these wasteful pay levels. It's bad enough to see station agents making $62K for an entry-level job requiring no skill beyond pushing a couple of buttons. It's totally abhorrent to see "assistant managers" making $200K for pushing paper. Perhaps the out-of-control stupidity on pay isn't entirely the union's fault if the greed starts at the top. Across-the-board pay cuts for managers and workers would solve that in a jiffy.
Here's the very generous retirement plan available to BART employees. They get both a deferred compensation plan and a money purchase plan (i.e., much like a 401(k) plan). That is comparable to the plans available to highly-compensated professionals in financial services whose occupations are far more intellectually demanding than running trains.
Every day this strike continues causes enormous disruption to the Bay Area's economy. People need to get to work, for crying out loud. The taxes levied on the private sector pay these BART idiots' salaries.
These striking transit workers make me sick to my stomach. None of them deserve jack squat. Fire them all immediately. They can then have the life-enhancing experience of finding productive jobs with no cushy breaks. They deserve no more sympathy for their union-induced greed than the union musicians of the San Francisco Symphony whom I so rightfully took to task during their own strike. Both of these groups serve the public. Both of them have widely held skill sets that are easily replicable. Neither of them have garnered any public sympathy with their immature tantrums. Neither of them deserve to be rewarded with employment for their greed.
Tuesday, July 02, 2013
Balmoral Resources Down But Not Out
Balmoral Resources (BAR.V / BALMF) is one of those junior resource explorers you just can't count out. The stock has taken a pounding, dropping from a 52-week high of US$1.27 to around $0.30 these days. That kind of fall from favor is a fairly common story among junior resource companies.
Their CEO is a geologist who has previously sold a gold mining company. Several other officers were from that same deal. That's nice, although this company has tons of advisors and board members but has yet to run a producing mine or make a fully compliant discovery.
Balmoral has four projects clustered together in Quebec. Martiniere is in exploration with a recent 43-101 report that does not provide evidence of 2P or MII grades. Their 2011 technical report recommended a total exploratory budget of $8.8M (I'm unclear whether it's Canadian or US dollars, so I'll assume Canadian). Fenelon is in exploration; their 43-101 report from 2010 recommended a total exploratory budget of over $4.6M. Grasset is in exploration with no 43-101 visible on their website. Detour East has no data available.
They have another notable project at Northshore with a 43-101 report recommending a total exploratory budget of C$2.6m (finally, a specific currency). Northshore has a lot of historic data but that's not something I weigh in my analysis. The other projects they name have no data available.
The total identified exploration budgets for the above projects come to roughly C$16M, assuming they're all denominated in the same currency. Balmoral's most recent quarterly report dated March 31, 2013 shows that they have cash on hand of almost C$9M and a burn rate of about C$600K/month. They can survive for another 15 months at this rate (assuming they're executing their drill programs on some of those properties) but they do not have enough cash reserves to complete their full exploration plans for all of their most well-explored properties, let alone the unexplored ones. I suspect they'll have the best luck if they focus on Northshore (where GTA Resources and Mining is helping to subsidize their exploration) and Fenelon, which together are within the company's present financial resources. I'm not running or advising the company, so I don't expect anyone to listen to me.
Balmoral needs to raise a lot more capital (and dilute its shareholders) to fulfill all of its ambitions, or else sell some of its less promising properties to live within its present means. There's too much uncertainty in either course of action for me to want to invest.
Full disclosure: No position in Balmoral Resources at this time.
Their CEO is a geologist who has previously sold a gold mining company. Several other officers were from that same deal. That's nice, although this company has tons of advisors and board members but has yet to run a producing mine or make a fully compliant discovery.
Balmoral has four projects clustered together in Quebec. Martiniere is in exploration with a recent 43-101 report that does not provide evidence of 2P or MII grades. Their 2011 technical report recommended a total exploratory budget of $8.8M (I'm unclear whether it's Canadian or US dollars, so I'll assume Canadian). Fenelon is in exploration; their 43-101 report from 2010 recommended a total exploratory budget of over $4.6M. Grasset is in exploration with no 43-101 visible on their website. Detour East has no data available.
They have another notable project at Northshore with a 43-101 report recommending a total exploratory budget of C$2.6m (finally, a specific currency). Northshore has a lot of historic data but that's not something I weigh in my analysis. The other projects they name have no data available.
The total identified exploration budgets for the above projects come to roughly C$16M, assuming they're all denominated in the same currency. Balmoral's most recent quarterly report dated March 31, 2013 shows that they have cash on hand of almost C$9M and a burn rate of about C$600K/month. They can survive for another 15 months at this rate (assuming they're executing their drill programs on some of those properties) but they do not have enough cash reserves to complete their full exploration plans for all of their most well-explored properties, let alone the unexplored ones. I suspect they'll have the best luck if they focus on Northshore (where GTA Resources and Mining is helping to subsidize their exploration) and Fenelon, which together are within the company's present financial resources. I'm not running or advising the company, so I don't expect anyone to listen to me.
Balmoral needs to raise a lot more capital (and dilute its shareholders) to fulfill all of its ambitions, or else sell some of its less promising properties to live within its present means. There's too much uncertainty in either course of action for me to want to invest.
Full disclosure: No position in Balmoral Resources at this time.
Monday, July 01, 2013
Financial Sarcasm Roundup for 07/01/13
The year is half over. I predict the second half of 2013 will require a record amount of sarcasm.
The EU is pretending to be angry that the US might have been reading its mail while it was vacationing in Cyprus. Really? Come on. There is no way that heads of state don't know what's really going on. The frustration that Europe's left-leaning blocs are venting could be bought off if Europe weren't so indebted. Negotiations for trans-Atlantic trade deals may be delayed but they won't be cancelled. Trade deals benefit business elites who underwrite political campaigns. That's why they get done.
China continues to miss its growth targets. Even China's official statistics, false as they are, can't hide the slowdown anymore. I ignore alarmism over China setting export quotas for rare earth elements. Industrial output will easily fall under any material export targets it sets.
The bond market is slipping as the Fed starts to lose control of the long end of the yield curve. Investors are responding predictably by fleeing to cash. Fleeing to cash now is not a bad move unless investors stay there when policymakers start pushing inflationary solutions.
Student loan interest rates just doubled. This is good news because it will price a whole bunch of non-intellectuals out of worthless college degrees that they should not be pursuing. America needs STEM graduates but not everyone is smart enough to handle the work. America also needs plumbers, carpenters, mechanics, and electricians who do not need college degrees. Cheap trade schools have better ROIs than expensive liberal arts colleges.
I didn't spend my whole day today looking up sarcastic things on the Interwebs. I got out of the Alfidi Capital headquarters complex to hear some expert wisdom. The Urban Land Institute's San Francisco chapter held a seminar with a noted local developer. His best point on financing was the importance of a long-term, fixed-interest, self-amortizing, non-recourse loan. That's important to remember whether you're buying your first home or launching a 400-unit residential development. His other lesson was the importance of timing. He began his most successful developments when the real estate market was soft, and they were ready for occupancy by the time the local market had turned favorable. That's a lot like buying low and selling high in the stock market. Some things never change.
I also went to a Commonwealth Club lecture on FDR's pre-WWII diplomacy. He didn't trust the State Department's professional diplomats or even his own ambassadors' cables. He relied on the personal diplomacy of hand-picked aides, all of whom had long Establishment family pedigrees and sharp political sensibilities, to develop relationships with potential European allies before America entered the war. There isn't much room for sarcasm there, except to note that the American hereditary aristocracy will never relinquish its hold on policymaking.
The EU is pretending to be angry that the US might have been reading its mail while it was vacationing in Cyprus. Really? Come on. There is no way that heads of state don't know what's really going on. The frustration that Europe's left-leaning blocs are venting could be bought off if Europe weren't so indebted. Negotiations for trans-Atlantic trade deals may be delayed but they won't be cancelled. Trade deals benefit business elites who underwrite political campaigns. That's why they get done.
China continues to miss its growth targets. Even China's official statistics, false as they are, can't hide the slowdown anymore. I ignore alarmism over China setting export quotas for rare earth elements. Industrial output will easily fall under any material export targets it sets.
The bond market is slipping as the Fed starts to lose control of the long end of the yield curve. Investors are responding predictably by fleeing to cash. Fleeing to cash now is not a bad move unless investors stay there when policymakers start pushing inflationary solutions.
Student loan interest rates just doubled. This is good news because it will price a whole bunch of non-intellectuals out of worthless college degrees that they should not be pursuing. America needs STEM graduates but not everyone is smart enough to handle the work. America also needs plumbers, carpenters, mechanics, and electricians who do not need college degrees. Cheap trade schools have better ROIs than expensive liberal arts colleges.
I didn't spend my whole day today looking up sarcastic things on the Interwebs. I got out of the Alfidi Capital headquarters complex to hear some expert wisdom. The Urban Land Institute's San Francisco chapter held a seminar with a noted local developer. His best point on financing was the importance of a long-term, fixed-interest, self-amortizing, non-recourse loan. That's important to remember whether you're buying your first home or launching a 400-unit residential development. His other lesson was the importance of timing. He began his most successful developments when the real estate market was soft, and they were ready for occupancy by the time the local market had turned favorable. That's a lot like buying low and selling high in the stock market. Some things never change.
I also went to a Commonwealth Club lecture on FDR's pre-WWII diplomacy. He didn't trust the State Department's professional diplomats or even his own ambassadors' cables. He relied on the personal diplomacy of hand-picked aides, all of whom had long Establishment family pedigrees and sharp political sensibilities, to develop relationships with potential European allies before America entered the war. There isn't much room for sarcasm there, except to note that the American hereditary aristocracy will never relinquish its hold on policymaking.
Subscribe to:
Posts (Atom)