Barrons - other random questions

[Zeno]

Is this a reliable investing magazine or just a trendy rag that is best used for fireplace starter?

I've been checking out some mining/mineral companies. I like earth raping companies and want some of the action. I have been looking at First Majestic Resource Corp. with mines etc in Mexico, mainly Silver. And First Narrows Resource Corporation, a Cheesehead operation with Gold and other precious metal mines and interests. Both have low share value at the moment. I wanted to shy away from the bigger companies, Atlas and Newmont etc. Just starting my research into this and would appreciate any special tips about the metals/mining industry and what to look for apart from the norm. As per my SOP on individual stocks, I’m looking for longer term investing, say 3-5 years. I’m also interested in energy companies from oil to coal. I hope to cash in on the next upcoming war or two.

-Zeno

[Cazz]

While I don't read Barrons, some of their downgrades last year were terrible. I think they panned two stocks that I owned either for too high of P/E or a strong price movement. Both of these stocks were my big winners for the year. I was considering using them as a reverse indicator.

I don't know anything about minerals.

I owned (and wish I kept) Apache (APA). They are a well run smaller company. They always manage their debt ratio well, so they tend to have less risk in that regard.
Their price seems to trade with NatGas instead of oil. I haven't looked at them in a while, so I will not make any recommenadations on the stock. Love the company, not sure about the stock.

Cazz

[Ray Zee]

they rape the earth as well as their stock holders. forget about mining companies. the money gets taken out by the owners.
your late on the band wagon with the energy companies. but oil services might still have value left as they are long term plays. with halliburton out of favor in the worlds eye, schlumberger might get the best oversees contracts. thats an overlooked idea of mine that may or may not pan out.

[Zeno]

It’s a funny coincidence with you mentioned Schlumberger. I worked with a Canadian from Vancouver BC a little over one year ago and the small company he worked for had been bought out by Schumberger a year previously. He was lamenting that the $85+ stock had gone down to $35-38 a share (this was late January of last year). I interrogated him about the prospect of the company (he was a smart and knowledgeable guy), and he said that in the long run it was good, they took on too much debt he said but that would be overcome, the company was fairly sound and good things would come about and the upswing would be good. I never bought the stock however; I threw more money at Motorola instead. Which has turned out fine. Still, Schlumberger is now at ~$61.50.

Tesoro Petroleum is something that I may buy. It is in your neck of the woods I think. They have shed much of their debt and the company took off like a weed. It still may go some but I am late on the upswing. It’s now at ~$18 a share after bogging along a $6-7 for a long while. They recently received some government contacts for beefing up the Strategic petroleum reserve. Anyway, this would be money left over after my purchase of the yearly Roth IRA I have committed myself too. So its gambling money, and the pot-limit game has left the area so I have to either go to Reno for NL or spend it on frivolous stock.

I may ask Scalf to look into this company for me. He knows a lot, right?

Thanks for the response. You have not steered me wrong, yet.

-Zeno

[AceHigh]

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with mines etc in Mexico, mainly Silver.

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Think copper not silver. I don't understand mining companies that well so I don't have any money in them but there is worldwide shortage of copper. And it's going to get worse. I'm looking at PD, FCX and PCU. A friend recommended PD to me, but I don't understand it well enough to invest in it yet.

On the oil front I have some PKZ and it has done well. But it has run up and is probably not a buy right now.

[Wildbill]

I don't get copper mining at all. Unless you are literally just dragging it out of a shallow hole how long can it be profitable? The amazing thing too is so much of it comes from the Southern Hemisphere, namely Chile and the costs of shipping such a bulky, yet relatively cheap material make the economics just seem bad to me. What I like in the world of minerals and such are the service companies. They don't take the risk of the activity as much as they just take the risk on their being a market for the product. If you invest in a refiner then all you need is a normal oil/gas market. If you invest in an explorer you worry about the same thing PLUS their ability to find what they are looking for. Just bad economics in risky situations if you ask me. This is what you invest in with you last 3-5% of your portfolio hoping to hit an occasional home run amongst your many strikeouts.

[Ray Zee]

very good bill. great insight.

but a few years back ia bought a large amount of freeport mc. gold $silver. fcx. my reasoning was that they kinda controled the govt. in indonesia malaysia where they had their operations. so i figured it was a no brainer. i bought low. but then the muslems started their crap and soon the stock which had gone way up went the other way. well now its back to glory somewhat. i probably will do somemore reasearch on it again and maybe take the profits and run.

[AceHigh]

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Unless you are literally just dragging it out of a shallow hole

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It's not that cheap! And demand for copper is increasing dramatically, while silver demand is decreasing (not sure about that). Anyway the point is there is a worldwide shortage of copper and it is going to get worse, because of it's unique properties.

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and such are the service companies.

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OK, but I don't know of any companies that only refine copper.

[Wildbill]

Copper has risen all the way to $1.65/pound. Maybe it goes higher, but still how much money can a company make digging for something that costs less than a cheap cut of meat at the supermarket? Even silver at least fetches more than double that. Yes there is demand, but I just can't see the economics in digging for it being good for too long. And of course no refinery for copper, but when I look at metals the services are the people that sell the equipment to the miners and the engineers that do the survey work. Maybe it is hard to find ways to invest in this trend, but so be it.

I never believed in the theory of find a trend, then try to profit from it. Unless you really think your intelligence is well above that of some PhDs and people that spend all day researching and thinking about this things, you are unfortunately likely to be humbled.

[AceHigh]

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Copper has risen all the way to $1.65/pound. Maybe it goes higher, but still how much money can a company make digging for something that costs less than a cheap cut of meat at the supermarket?

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Oil costs a lot less than 1.65 a pound doesn't it?

I don't understand mining companies. I said that it my first post, so I don't own any, unless you count PKZ. I look at company fundamentals and one reason I don't like mining companies is it takes a lot of equity to pull stuff out of the ground.

But the poster said he liked mining companies and he liked silver. I think copper is going to be better than silver. I don't know what is likely to happen with these companies, so I haven't invested in them.

[AceHigh]

Basically I agree with you. But...if you like a copper stock it seems very likely these companies will increase in value in the near future.