Instant Gratification (also Dow 14,000)

TGB up 9.91% Am I a market mover or was it coincidence? Well, in honesty only about 80 people read my blog yesterday, so unless they have lots of friends or lots of money, I gotta believe it was coincidence. But a happy one.

Two new stocks on my Just Listed List today, HHS and MEDW. I haven't had a chance to even look at 'em, nor do I plan to invest right now. But I'll toss them in my JL portfolio, which was down today due to NPLA and CYDS (the stock I bragged about on Monday).

I had a great day on the back of TGB, up 1.02% overall. TGB is my biggest holding with their 86% gain. Speaking of mining companies, I always scratch my head when they get penalized in a quarter because of bad weather or a fire at their mine which shut down production for 6 weeks. They still have the assets. They will mine the metals and sell them. It isn't like they lost anything (except the time value of money).

I have watched Cramer the last couple of days. He really tries. Every now and then he has a good idea but sometimes he talks out of both sides of his mouth. And then the people watching immediately bid his ideas into the stratosphere. He (unlike me) is a market mover.

Seller's Regret - while I have certainly done well in the market the past two years (overall portfolio easily beating the averages), one major regret is DRYS. This was a stock I bought at around $12 last summer, a bulk shipping company. I wrote about them in this blog about a year ago and said I was selling as I felt they were mismanaged. I made about $2 per share on the trade and felt good about it. I checked today... they are at $64!!! Aughhhh!! I also sold them because the Motely Fool really dissed them, all but said they felt management was self-dealing.

Oh well, you can't take it with you.

My Mines

Wild day wasn't it? My portfolio ended up down 0.15%, pretty much par with the averages. A couple of MFI stocks I glance at from time to time really moved around.

USNA - they announced their auditor was resigning and the stock dropped over two days from above $50 to $41 and change. But last night they released earnings and the stock bounced back 12%. Whoa!

BVSN - this stock first appeared on MFI lists last fall. You would have done well to have bought them for about 60 cents a share. They closed yesterday at $2.23 for a quick three bagger. Then today they jumped up 23%! Anyone who bought under MFI back in Novemeber must be smiling as most people would have sold with the three bagger, which today became a four bagger.

Now the title topic. I have two mines in my MFI portfolio (NXG & TGB). And while they seem similar, Canadian mining companies, that is not the case. Check out their 3 month graphs below:

You can see that TGB is up about 30% in the past 90 days while NXG is down about 20%. That is a big difference for two companies in the same space. Why the difference? I certainly do not have the answer and ask people to post comments. Here are a few observations:

• The last quarter for NXG was poor with Operating income 1/4 of the prior quarter while TGB showed steady growth.
• NXG seems to be about 50% copper and 50% gold. Taseko is mostly copper. Of course copper prices have escalated much faster than gold.
• NXG appears to have sold much of the copper via futures at what may not be an attractive price. I don't understand the accounting for this. In the 1st Q TGB sold copper at $3.13 per pound. NXG sold at $2.69 per lb... quite a difference.

But put all of this aside. My question is what are the companies worth? Is NXG a better buy right now? If you go to NXG website, they have a presentation talking about their gold and copper reserves. They have three mines, one is producing and the other two are under development.

1. Kerness South (in production). It has about three years left. Annual production is about 285,000 ounces of gold and 72 million pounds of copper.
2. Kerness North - 4 million ounces of gold and 1.4 billion pounds of copper.
3. Young-Davidson - 2 million ounces of gold.

So let's see. That is about 7 million ounces of gold. At $600 per ounce that is worth $4.2b. Then about 1.6b pounds of copper. At $3 per pound that is about $4.8b. So gold and copper together = $9b. Obviously it'll cost money to get the metals. But even if the margin is 33%, you're talking about a value of $3b. Then you have to consider that it'll take time to get everything, so one should calculate the present value (of course, gold and copper prices could go higher).

I don't know, say cut it in half. That still gives you a value of $1.5b. How much could you buy all of NXG for? 830m.

How about TGB? They have the Gibraltar mine (in production). It looks like it has 1.6b pounds of copper. Then the Prosperity Mine (looks well-named) has proven/probable reserves of 2b pounds of copper and 4.5 million ounces of gold. Wow! So the copper at $3 per pond is worth about $11b and the gold is another $2.5b. Using the same parameters, 33% margin and the 50% present value you get about $2.2b value. How much could you buy TGB for? 571m.

Hmm, perhaps the divergence of the two graphs is sensible. Makes me want to buy more TGB on dips!

Rough numbers yes, but you can bet that the mega mining companies are running their own numbers. The nice thing is the mines are in nice safe Canada, as opposed to Peru.

CHCG for $5.60!

Down 0.15%, led by my basic resource stocks (NXG, FTO & FDG). CHCG didn't help matters either, down another 6%. They had an odd news release today (China 3C Group Enters Into Agreement to Sell Approximately $11.74 Million of Common Stock ).

Not that $12m is that much, but what is weird was they sold it at a fire sale price of $5.60 per share (they closed today at $7.05). Here is what the CEO said about the sale:

"We believe this new sale of China 3C's equity will enhance shareholder value by providing the company with a cash infusion that will enable it to pursue certain business opportunities in China that are currently being considered by management. Although the sale price of the shares was at a discount to the current trading price of the company's common stock, we believe that management's ability to act swiftly to negotiate this transaction without the assistance and associated fees of a placement agent demonstrates the company's desire to maximize the benefits of the capital investment in light of a discounted sale price."

It looks to me that they needed some cash quickly. I hope the opportunity does enhance shareholder value. I will continue to watch the stock closely, another drop tomorrow and I may be a buyer.

LRCX went up sharply today, over 10%. It looks like Novellus had some good news, but I am not sure why LRCX out-performed peer semi equip companies... not that I am complaining.

I did buy some USHS today. It isn't part of my MFI, nor am I calling it a sidecar. But it is a fallout from my reading the Dhandho investor and my desire to make some bigger "bets" when I feel the odds are in my favor. I went back and reviewed times I had made out-sized purchases in the past on stocks I followed closely and saw I had done well.

Quickie Study - I took a look at the 30 stocks I have sold since beginning MFI. If I had held them at $10,000 value, I would have had about a 40% annualized IRR. If I pull out the two stocks I sold early because I felt they no longer had MFI qualities (PTSC & AVCI) the IRR would increase to 50%. This illustrates that the 1 year rule is extremely arbitrary and there is potential upside beyond the year.

OT - terrible plane crash in Brazil today. For all of you who travel, make sure you hug your family before you leave.

Stock Thoughts

Not a great day, down 0.56% compared with benchmark down 0.18%. Strange day as DJ was up but broader market down.

CHCG is sure a yo-yo stock. Down over 8% today. If it drops back under $7, I may have to buy some more... it'll bounce back.

WSTG was my big mover today, up over 6%. I've now made about 20% on these guys. No idea what caused the pop, but it was on 8x volume, that seems positive. This is another of those neat stocks that this system finds.

• They have had 15 straight quarters of double digit growth.
• This past quarter revenues were up 33%
• CEO says they "continue to take market share"
• Pay a 3.3% dividend

I am watching USHS closely. It is now at $9.32, down from $14 just a short month ago. I can't figure out any reason for the drop. They do a lot of business with Home Depot, so perhaps that is it... but here is what they said last quarter:

"We are working with The Home Depot on a number of new growth initiatives for 2007," stated Mr. Bulger. "We are currently planning the opening of new sales and installation centers in the second and third quarters of 2007 to serve The Home Depot customers in the Nashville, TN, Birmingham, AL, and Buffalo and Rochester, NY markets. In March 2007 we launched a pilot program for the introduction of counter top products in the Boston market. This product offering consists of laminate and solid-surface tops, including Corian, Silestone and granite. In addition, we reached an agreement with The Home Depot to roll out countertop products in the Chicago, New York and Connecticut markets, and to extend our laminate countertop product offering in all markets where we offer our kitchen refacing products. We plan to begin this roll out in the second quarter 2007. We had previously offered countertop products under other brand names and we believe we are well positioned to offer these products to The Home Depot's "do-it-for-me" customer. "

Mr. Bulger concluded, "Lastly, we are working with The Home Depot to introduce Designer Deck Ceiling Systems. This new product offering is designed to cosmetically improve and present a finished-look to the underside of an elevated deck as well as to capture and direct water away from the outdoor living area directly below. We anticipate our pilot program will be launched late in the second quarter of 2007 in our Atlanta and metro-Washington, D.C. markets."

So is the huge drop due to fear or reality? Buffett says to buy when others are fearful. I may buy some tomorrow, write down the $9.32 price.

CYDS - remember I mentioned this stock over the weekend as it made my just listed list (seems redundant)? Up a sweet 12%. Sadly, it is only hypothetical sweet.

Hit The Road

On March 26th, I started a tracking portfolio I called Hit the Road. It was just the top 50 over 101m. So far it is up over 14% (exclusive of dividends). Sometimes it becomes obvious this isn't rocket science. Some big winners (TGB and WNR) are not even on this list.

Symbol	Shrs	Price Paid	Trade	Gain
-	-	36.75	272	11,508.32$11,508.32	ACN	272	36.75	42.31	1,512.32 $1,512.32	15.13%
-	-	30.63	326	9,004.12$9,004.12	AEO	326	30.63	27.62	-981.23 $981.23	9.83%
-	-	18.88	530	10,854.40$10,854.40	AMAT	530	18.88	20.48	848.05 $848.05	8.48%
-	-	21.47	466	9,403.88$9,403.88	ASPV	466	21.47	20.18	-601.09 $601.09	6.01%
-	-	18.11	552	9,549.60$9,549.60	AVR	552	18.11	17.30	-447.12 $447.12	4.47%
-	-	16.51	606	11,841.24$11,841.24	AXCA	606	16.51	19.54	1,836.18 $1,836.18	18.35%
-	-	28.41	352	9,951.04$9,951.04	BJS	352	28.41	28.27	-49.28 $49.28	0.49%
-	-	1.63	6,135	20,000.10$20,000.10	BWLRF.PK	6,135	1.63	3.26	10,000.05 $10,000.05	100.00%
-	-	8.62	1,160	12,992.00$12,992.00	GIB	1,160	8.62	11.20	2,992.80 $2,992.80	29.93%
-	-	25.31	395	10,597.85$10,597.85	CSGS	395	25.31	26.83	600.44 $600.44	6.01%
-	-	33.95	295	12,266.10$12,266.10	DLX	295	33.95	41.58	2,250.85 $2,250.85	22.47%
-	-	37.65	266	12,236.00$12,236.00	EFX	266	37.65	46.00	2,221.10 $2,221.10	22.18%
-	-	23.02	434	15,033.76$15,033.76	FDG	434	23.02	34.64	5,043.08 $5,043.08	50.48%
-	-	64.70	155	14,607.20$14,607.20	FCX	155	64.70	94.24	4,578.73 $4,578.73	45.66%
-	-	33.19	301	14,595.49$14,595.49	FTO	301	33.19	48.49	4,605.36 $4,605.36	46.10%
-	-	55.97	179	9,914.81$9,914.81	GCI	179	55.97	55.39	-103.82 $103.82	1.04%
-	-	19.98	501	9,574.11$9,574.11	GVHR	501	19.98	19.11	-435.87 $435.87	4.35%
-	-	31.37	319	11,327.69$11,327.69	HAL	319	31.37	35.51	1,320.66 $1,320.66	13.20%
-	-	39.77	251	10,604.75$10,604.75	HLF	251	39.77	42.25	622.48 $622.48	6.24%
-	-	60.81	164	12,977.32$12,977.32	HOC	164	60.81	79.13	3,004.48 $3,004.48	30.13%
-	-	27.94	358	7,381.96$7,381.96	IVAC	358	27.94	20.62	-2,620.56 $2,620.56	26.20%
-	-	24.74	404	12,382.60$12,382.60	JAKK	404	24.74	30.65	2,387.64 $2,387.64	23.89%
-	-	28.22	354	9,940.32$9,940.32	KSWS	354	28.22	28.08	-49.52 $49.52	0.50%
-	-	19.67	508	10,708.64$10,708.64	KG	508	19.67	21.08	716.28 $716.28	7.17%
-	-	23.12	433	11,214.70$11,214.70	KFY	433	23.12	25.90	1,203.74 $1,203.74	12.02%
-	-	18.87	530	12,608.70$12,608.70	LRW	530	18.87	23.79	2,607.60 $2,607.60	26.07%
-	-	48.08	208	11,296.48$11,296.48	LRCX	208	48.08	54.31	1,295.84 $1,295.84	12.96%
-	-	59.59	168	7,751.52$7,751.52	LXK	168	59.59	46.14	-2,259.60 $2,259.60	22.57%
-	-	51.28	196	12,747.84$12,747.84	MRO	196	51.28	65.04	2,696.98 $2,696.98	26.83%
-	-	57.95	173	10,644.69$10,644.69	MDP	173	57.95	61.53	619.34 $619.34	6.18%
-	-	17.91	558	9,988.20$9,988.20	MOT	558	17.91	17.90	-5.58 $5.58	0.06%
-	-	33.86	295	14,862.10$14,862.10	NTG	295	33.86	50.38	4,873.40 $4,873.40	48.79%
-	-	3.57	2,801	9,187.28$9,187.28	NXG	2,801	3.57	3.28	-812.29 $812.29	8.12%
-	-	65.56	153	9,756.81$9,756.81	NUE	153	65.56	63.77	-273.84 $273.84	2.73%
-	-	13.80	725	13,782.25$13,782.25	OVTI	725	13.80	19.01	3,777.25 $3,777.25	37.75%
-	-	27.99	357	8,657.25$8,657.25	PACR	357	27.99	24.25	-1,335.18 $1,335.18	13.36%
-	-	23.66	423	10,591.92$10,591.92	PTEN	423	23.66	25.04	583.74 $583.74	5.83%
-	-	25.67	390	10,104.90$10,104.90	PFE	390	25.67	25.91	93.60 $93.60	0.93%
-	-	12.03	831	11,218.50$11,218.50	PBH	831	12.03	13.50	1,221.57 $1,221.57	12.22%
-	-	49.72	201	11,105.25$11,105.25	DGX	201	49.72	55.25	1,111.53 $1,111.53	11.12%
-	-	71.15	141	15,541.02$15,541.02	PCU	141	71.15	110.22	5,508.87 $5,508.87	54.91%
-	-	35.80	280	13,902.00$13,902.00	TCK	280	35.80	49.65	3,878.03 $3,878.03	38.69%
-	-	40.30	248	11,112.88$11,112.88	THO	248	40.30	44.81	1,118.51 $1,118.51	11.19%
-	-	19.74	507	13,785.33$13,785.33	USMO	507	19.74	27.19	3,777.15 $3,777.15	37.74%
-	-	17.88	559	9,050.21$9,050.21	VCI	559	17.88	16.19	-944.65 $944.65	9.45%
-	-	23.83	420	11,869.20$11,869.20	VRGY	420	23.83	28.26	1,860.60 $1,860.60	18.59%
-	-	14.06	711	10,458.81$10,458.81	VPHM	711	14.06	14.71	462.15 $462.15	4.62%
-	-	17.60	568	12,087.04$12,087.04	WDC	568	17.60	21.28	2,090.24 $2,090.24	20.91%
-	-	6.70	1,493	8,808.70$8,808.70	WON	1,493	6.70	5.90	-1,194.40 $1,194.40	11.94%
-	-	-	-	561,386.88$561,386.88	Total (USD):	-	-	-	71,206.60 $71,206.60	14.53%