Thursday, February 17, 2011
Ranking | Company (Ticker) | Potential Upside | Country/Region
1 Prana Biotechnology Limited (ADR) (NASDAQ:PRAN) 488.2% Australia
2 Rosetta Genomics Ltd. (USA) (NASDAQ:ROSG) 447.9% Israel
3 Majestic Capital, Ltd. (NASDAQ:MAJC) 365.1% Bermuda
4 Alpha Pro Tech, Ltd. (AMEX:APT) 258.3% Canada
5 China Education Alliance, Inc. (NYSE:CEU) 257.1% China
6 NF Energy Saving Corp (NASDAQ:NFEC) 198.3% China
7 Seabridge Gold, Inc. (USA) (AMEX:SA) 193.9% Canada
8 Exeter Resource Corp. (AMEX:XRA) 187.6% Canada
9 Biostar Pharmaceuticals, Inc. (NASDAQ:BSPM) 185.7% China
10 SkyPeople Fruit Juice, Inc. (NASDAQ:SPU) 180.2% China
11 ZST Digital Networks Inc (NASDAQ:ZSTN) 179.7% China
12 Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) 176.6% China
13 China Ritar Power Corp. (NASDAQ:CRTP) 175.5% China
14 NIVS IntelliMedia Technology Group Inc (NYSE:NIV) 148.2% China
15 AgFeed Industries, Inc. (NASDAQ:FEED) 146.9% China
16 China Xiniya Fashion Ltd (NYSE:XNY) 146.4% China
17 China TransInfo Technology Corp. (NASDAQ:CTFO) 142.8% China
18 China Valves Technology, Inc. (NASDAQ:CVVT) 140.6% China
19 Anooraq Resources Corporation (USA) (AMEX:ANO) 137.1% South Africa
20 Chinanet Online Holdings Inc (NASDAQ:CNET) 134.2% China
21 Shengkai Innovations, Inc. (NASDAQ:VALV) 132.1% China
22 Nymox Pharmaceutical Corporation (NASDAQ:NYMX) 132.1% Canada
23 Guanwei Recycling Corp. (NASDAQ:GPRC) 131.8% China
24 China Information Technology, Inc. (NASDAQ:CNIT) 129.8% China
25 Oilsands Quest Inc. (AMEX:BQI) 128.6% Canada
It is easy to make a bunch of "perfect storm" references to the dry bulk shipping industry these days. Serious floods in Australia, Indonesia and South Africa have created major problems for suppliers, as have commodity export bans in countries like Russia and India. On the flip side, China's desire to control inflation has investors worried about the state of iron ore demand. If that all was not enough, shipping companies continue to order new vessels and refrain from scrapping older ones, and a major chartering partner (Korea Line) recently declared bankruptcy.
IN PICTURES: 9 Simple Investing Ratios You Need To Know
All of this has wreaked havoc on shipping prices. During the week of Chinese New Year, spot rates for the monstrously large Capesize vessel class troughed at around $5,000 a day - a level that is below the daily operating costs of even the most efficient operators and dramatically lower than the average of approximately $33,000 seen in 2010. And it is not just the Capesize vessels seeing tough times - Capesize is down the most, but every category is down from fourth quarter levels (with Handysize faring the best). (For more, see Is Dry Bulk Shipping All Dried Up?)
What Is An Investor To Do?
Investors should probably invest with an eye towards safety. It is all well and good to own riskier operators when rates are climbing (in fact, lower-quality companies tend to seriously outperform then), but this troubled environment could last for a few years and the halcyon days of $100,000+ spot rates for Capesize vessels is a long time ago (2007, to be exact). If daily spot rates are low, it makes sense to gravitate towards companies with more of their vessels under contract and/or those who can profit even in low-rate environments. By the same token, debt can become a lethal deadweight during market troughs, so investors should keep an eye on the balance sheet.
Genco (NYSE:GNK) is fairly efficient as an operator, with relatively low operating costs. It does have more than 60% exposure to spot rates, but less than 10% of that in the Capesize category. This could be an interesting play for aggressive investors wanting a company with strong earnings leverage to an eventual recovery.
Eagle Bulk Shipping (Nasdaq:EGLE) had about 25% of its charters exposed to Korea Line and the company has been taking on debt to expand its fleet. The company has about half its fleet exposed to spot rates but no Capesize exposure - Eagle specializes in running the ultra-versatile Supramax class of vessels and rates here have held up better (though are still down severely). (For related reading, see Size Matters In Shipping.)
Diana Shipping (NYSE:DSX) might be the relatively safer play - the company has very low financial leverage and can use that to take advantage of low asset prices and other operators' distress. Moreover, a low spot exposure (17% total, 7% Capesize) adds some safety.
Baltic Trading (Nasdaq:BALT) is the high-risk play. Managed by Genco, the company's balance sheet seems in good order, but it is solely a spot-rate operator and has significant exposure to Capesize rates.
Navios Maritime (NYSE:NM) is not the most efficient operator, but the company has good liquidity and good time charter coverage for 2011. Navios presently operates only a few dry bulk ships (in the Panamax class), with a slew of Handymax on order; the bulk of Navios' business is in tankers.
DryShips (Nasdaq:DRYS) is in a challenging spot. Though the company has low spot exposure (less than 20% total, and only 2% in Capesize), the company's operating costs are high and the company's ultradeepwater rig business (drillships) is unproven. Then again, aggressive investors could look on this name as a chance to leverage bounces in both shipping and offshore drilling.
Safe Bulkers (NYSE:SB) boasts very low operating costs and low spot exposure for its relatively young fleet, while Excel Maritime (NYSE:EXM) has a higher spot exposure (more than 60%), but relatively low in the Capesize class.
The Bottom Line
A strong global recovery will be good for shippers, but only if new supply growth stays below a level that can allow rates to rise. Aggressive investors can certainly place their bets today on spot rate recoveries, but should keep an eye on operating costs and debt levels.
According to the World Federation of Exchanges, there were 45,358 publically traded companies worldwide at the end of 2009. That's a lot.
Asked years ago how he finds gems when so many companies exist, Warren Buffett said he "starts with the A's."
Impressive -- but impractical for most of us. We need a faster, more efficient way to find good investment ideas.
One smart approach: Copy the masters. Watch what they do. Get your ideas from them, then dig a little deeper.
That's what we do several times a year, when the world's greatest investors are required to disclose what they bought and sold in the previous quarter. Here's what six of them have been up to recently.
1. John Paulson
Fresh off a $5 billion payday last year, hedge fund dominator John Paulson upped his bet on the energy sector last quarter, buying 7.8 million shares of Anadarko Petroleum.
This isn't terribly surprising, since the bulk of Paulson's fund is already positioned to wrestle with inflation. As he recently wrote to investors: "While we know there is very little inflation today, we are concerned about the impact quantitative easing could have on future inflation. Accordingly, we have put in place numerous portfolio strategies that could both protect capital and provide high absolute returns with minimal risk if inflation becomes an issue in the future."
2. Warren Buffett
Berkshire Hathaway's (NYSE: BRK-B - News) quarterly filing spread confusion, after several positions were liquidated by former Berkshire employee Lou Simpson, not Buffett himself. But one transaction very likely came directly from Buffett: The purchase of 6.2 million shares of Wells Fargo, already one of Berkshire's largest holdings.
When Wells traded below $9 per share two years ago, Buffett said that if he had to put his entire net worth into one stock, he'd choose Wells. Shares apparently still look attractive at more than three times that price.
You probably forgot that airlines could make good investments. So did everyone else. But in truth, the airline industry cut out so much excess capacity during the recession that its pricing power is now returning. Seats are full. Ticket prices are rising. The end of 2010 was the first time in more than 10 years that the industry had a profitable fourth quarter.
Admittedly, this was already known. Einhorn revealed his Sprint position to CNBC in December, saying:
Sprint has been a disaster stock. It's practically gone from a high number to a low number. The Nextel acquisition absolutely killed the company. They almost went bankrupt. But we think they're in a good spot for a turnaround right now. The churn has improved. The customer service has improved. Their reputation has improved. Their lineup with handsets has improved. But that's more short term. What's interesting is, as telecom expands, these new devices use more and more bandwidth. And Sprint along with its partner Clearwire has much, much more spectrum than most of the competing companies that are out there ... So I think there's an opportunity for Sprint to gain market share over time.
5. Bill Ackman
Ackman more than doubled his stake in J.C. Penney over the quarter, buying more than 19 million shares. His fund now owns roughly 16% of the company.
Like Einhorn, Ackman's J.C. Penney stake has already been known for a while. He said in an interview last week: "The margins are lower than where they could be, I think the revenues are lower than where they could be, and I think the business has an opportunity. It's got a very strong balance sheet, and it's got a very strong position in the minds of consumers."
6. David Tepper
Tepper, who made billions riding bank stocks as the economy recovered, more than doubled his position in Citigroup (NYSE: C - News), buying 66 million shares last quarter. He also bought 1.4 million shares of GM, 2.6 million shares of Bank of America, and 3.2 million more shares of Microsoft.
Tepper's economic bullishness was rekindled last year after the Fed began a second round of quantitative easing. "What'd the Fed [just say]?" he asked in September. "They want economic growth. And not only do they not care if there's inflation, but they want a little inflation. Have they ever said that before? No. They say they want the market up. So what, am I going to say, 'No Fed, I disagree with you? I don't want to be long?'"
North Sea oil output will fall by 8.6% in March from a year earlier, illustrating the gradual drop in supply from the home of the Brent benchmark used to value two thirds of the world's oil.
News wires 15 February 2011 18:04 GMT
Supply of nine North Sea crudes will average 2.033 million barrels per day, down from 2.225 million bpd a year earlier, data compiled by Reuters showed.
Month on month, supply will rise 1% from 2.012 in February.
North Sea traders and analysts said the small increase in output was unlikely to dampen sentiment in the market.
Prices of West African and North Sea crudes have been rising partly due to robust demand.
"We're seeing quite a strong physical crude market at the moment," said David Wech, analyst at JBC Energy in Vienna.
"Strong prices in Europe are partly a reflection of declining production and tight availabilities, so a slight monthly uptick will not do much to change that."
Output of Forties, the crude which normally sets the dated Brent benchmark, is set to be slightly lower, while daily supply of all four benchmark crudes – Forties, Brent, Oseberg and Ekofisk – will fall 90,000 bpd or 7.4%.
The slight rise in supply of North Sea oil in March from February is driven by higher volumes of Norwegian crudes Statfjord and Gullfaks, and an increase in supply of Denmark's DUC crude.
Gullfaks output is set to rebound after pumping less crude than planned this month. Norway's Statoil has closed 50 wells at the Gullfaks field over safety concerns.
North Sea oil supply is generally believed to be past its peak as the larger and easier-to-access deposits are pumped out.
Last March, the same nine North Sea crude streams were expected to load 2.225 million bpd, figures compiled by Reuters at the time showed.
Bob Chapman wrote on the International forecaster of the 12th February 2011 :"....Today in China inflation rages, but it varies from province to province. Some areas have a net 5% inflation and some average 35%. Subscribers returning from China have varying and differing accounts of what is happening there financially. China like the US has negative real interest rates, particularly when matched up with real inflation. The government says inflation is 4.6%. That should average out to about 12% and we might add that is a guess. Either way, whatever it is, it is not good....."
The numbers for silver demand are starting to make some market-watchers nervous. The U.S. Mint sold over 6.4 million silver Eagles in January, more than any other month since the coin’s introduction in 1986. China’s net imports of silver quadrupled in 2010, to 122.6 million ounces, roughly 13.7% of global production. Meanwhile, mine production can’t meet worldwide demand; the only way demand gets fulfilled is from scrap supply.
That is some very hungry demand. Which raises the question, how long can this pace continue?
This is important for various reasons, starting with how demand contributes to price. If demand falls off, our investments could, too.
While I’ve discussed the concern regarding the lack of supply before, which has its own implications for the silver market, let’s focus on investment demand. Frankly, is there room for it to continue to grow? After all, how long can investors continue to set records?
There are a number of ways to measure this – the amount of money available to invest, its percent of total financial assets, its contrast to demand in the last bull market, etc. – but I think the bottom line to answering the question is to compare the biggest silver investments to some popular equities. If they rival that of the stocks we always see on the news and analysts constantly talk about and every fund manager wants to own, then it might be reasonable to assume demand could be nearing its pinnacle.
So how do the world’s largest silver ETF and one of the biggest silver producers compare to the more fashionable equities?
The largest silver ETF, iShares Silver Trust, has net assets of $9.6 billion (as of February 4). This pales in comparison to the more popular stocks trading in the U.S. In fact, SLV has roughly 3% the market cap of Apple. It would have to grow over 43 times to match Exxon Mobil.
Pan American Silver, the largest pure silver producer trading on a major U.S. exchange, has a market cap of $3.72 billion. This is 4.7% the size of McDonald’s. The market cap would have to increase more than 53 times to match Walmart. It is over 62 times smaller than Microsoft.
This isn’t to suggest SLV and PAAS will match the market cap of these other companies, but clearly the masses are still demanding much more of them than the biggest of silver’s investment vehicles.
So how much more demand can silver handle? As much as it takes to make it the household name I’m convinced it will be before this is all over. When SLV is a favorite of fund managers. When Silver Wheaton is a market darling of the masses. When Pan American is Wall Street’s top pick for the year.
Imagine what those bars on the right will look like when most everyone you know is talking about poor man’s gold. The rise could be breathtaking.
Remember that silver rose over 3,646% from trough to peak in the last precious metals bull market; it’s up about 630% in our current run. A return matching the 1970s advance would push the price to $152. This price level is further supported by the fact that this is about where it would be when inflation-adjusted for its 1980 peak.
When you look at the potential growth in market cap of the world’s biggest silver investments, it becomes easy to view any downdraft in price as nothing but a buying opportunity. I know I do.
By Greg Brown
Strategist David Rosenberg is warning investors not to jump into stocks at this point. He calls the 90 percent run from the bottom since March 2009 “an intense bear market rally, which is likely at the very late stage” and suggests that a correction is ahead.
The market is “seriously overextended,” the Gluskin Sheff chief economist writes in the Financial Times. While it “hurts” to miss such a huge run, Rosenberg says, it is much harder to withstand the sharp move downward that can follow.
Rosenberg argues that the market is simply missing the impetus that pushed stocks higher over decades, like the postwar boom from 1949 to 1996 and the transformative effects of disinflation from 1982 to 2000.
What we have now is a Federal Reserve bent on making inflation, “surreal public sector intervention” which cannot continue and is no recipe for real growth, Rosenberg contends.
He believes that the Fed and the government are out of tricks and that stock buyers will soon recognize that fact, ending the bear really.
“How the Federal Reserve and the federal government in the future manage to redress their pregnant balance sheets without creating a major disturbance for the overall economy is a legitimate question and, sorry, does not deserve a double-digit market multiple,” he says.
However, Bernanke said, even critics of the Fed agree that the error was small, not enough by itself to upset the entire global economy.
“And so then the question is, you know, how can you have — if you have a situation where a relatively small mistake — if it was a mistake, I’m just accepting that hypothesis — leads to the biggest financial crisis since World War II, I mean, what does that say?” Bernanke told member of the Financial Crisis Inquiry Commission in November 2009 in a private session.
“They say that the system itself was inherently unstable and that a relatively small shock was enough to knock it off the pedestal,” Bernanke said.
The clock is ticking...The End of America as we know it is near, according to Porter Stansberry, founder of Stansberry & Associates Investment Research.
As he discusses in depth in another clip (See: "The End of America”: Porter Stansberry Sees the Future ... And It's Grim), it won't be the end of the Republic but it will mark the end of the U.S. as the main economic power and the end of the dollar as the reserve currency. With this future will come higher taxes, less freedoms and more hardship.
But if you act now, Stansberry says you may minimize your pain.
TIP No. 1: Open a Foreign Bank Account – Soon
Stansberry predicts stashing money will become increasingly difficult in the near future. "There are already laws on the books that go into effect in 2013 that will make it much more difficult for Americans to open overseas bank accounts," he tells Aaron Task in this accompanying video, referring to portions of the HIRE Act that impose a 30% withholding tax on certain types of U.S-source income and gross sales proceeds to foreign financial institutions.
"Nothing I'm saying is about avoiding taxes or about any kind of tax shelter," he is quick to point out. "It's just about getting your money outside the U.S. dollar as a currency and getting it to a place where the government can't seize it."
If that sounds too complicated, Stansberry recommends buying gold bullion and storing it somewhere that isn't a bank.
TIP No. 2: Buy a Little Bit of Land
"Foreign real estate is not required to be reported to the IRS," he says. The other advantage: It also allows one to invest more than $10,000 without reporting it, something you can't do with a foreign bank account.
The other reason is to hedge: "Food prices could absolutely go to the moon if the dollar collapses like I think it's going to." Another and simpler way to hedge food costs, he suggests, is to buy into a local co-op which offers access to food at a reasonable price.
TIP No. 3: Create a Trust to Protect and Build Wealth
This only applies to people with the means. "There's no doubt that politicians are going to try to radically increase our taxes, so if you have assets you want to pass onto your heirs, there are some things you can do right now that are still legal that can help you avoid the possibility of vastly higher taxes in the future," he says.
TIP No. 4: Gold in the Bank
Instead of investing in the GLD ETF based in the U.S., Stansberry recommends buying into the ZKB, an ETF based in Zurich, Switzerland.
The Arab opposition is brought together by practical issues and concerns rather than ideological impulses or even a strong aount of political consciousness. It has been the case, after all for decades that the leaders of the region ignore the political beliefs and aspirations of the populace. What spurs the crowds to action now are family and survival issues in contrast to religious themes or political demands, even if these complaints tend to be heard the loudest due to the sophistication of those voicing them.
Among the nations in focus today, Libya is perhaps one of the most suitable candidates for turmoil and revolutionary upheaval in light of the fact that the country has been ruled for almost 40 years by Colonel Muammar AlQaddhafi who reains unaccountable to any person or institution. Arguably the grip of the Libyan regime is far more brutal than those in Egypt or Bahrain. The leader`s idiosyncratic beliefs and philosohical stance that puts him in opposition to the traditions of Sunni Islam make the regime at least as unpleasant as any other Arab dictatorship. In addition, Libya, unlike for instance Syria, cannot reference the costs of a long-standing confrontation with Israel as a justification for its failure to improve the lot of the citizens in economic life, or the long list of expenditures that prevent the country from modernizing.
Just as interesting is Iran, although it is not an Arab nation, and has far greater sophistication and experience in dealing with this kind of demonstrations than its inept peers in the Middle East. There have been some attempts by Iran`s opposition groups to occupy Tehran`s main streets through demonstrations and protests, but with little effect so far as the security forces employ their expertise to stay one step ahead of the demonstrators. In the Iranian Parliament some voices were heard calling for the execution of the opposition`s most influential leaders Mahdi Karroubi and Zakariya Moussawi.
Events, in short, are continuing to progress with unpredictable speed, and chaotic movements.We believe that the Arab World`s revolutions are headed to their second phase now, with the most powerful, brutal and deeply entrenched regimes under the greatest threat as opposition movements gather moral strength from the success of the opposition in Egypt. We believe that the Middle East will remain a dominant theme for much of this year, implying better than average performance for commodities, with oil and gold in particular benefiting from the uncertainty.