Taking Profits on Half of Sandstorm Metals

By Travis Johnson, Stock Gumshoe, January 6, 2011

I picked up Sandstorm Metals and Energy about three weeks ago, as I shared with the Irregulars at the time, and essentially lucked into a, well, sandstorm as the shares shot up by better than 50% in the couple weeks after my purchase (I could claim prescience, of course, but that claim would ring rather hollow — I saw them make their coal deals that turned the company from an empty spinoff into a real business and saw some potential thanks to that, but certainly didn’t expect the stock to move so quickly). I still like the business model, but since I have a hard time getting a real handle on a reasonable valuation with their coal streaming deals just barely signed, I can’t resist taking some profits on a move like that.

So I sold half my position — what was a small position is now quite a tiny one, but I’ll keep holding it and may add more back to the position if I get a better understanding of their potential cash flow from these coal deals or from any future streaming/royalty deals they sign. Momma Sandstorm Resources, for now focused solely on gold and with five streaming deals and still trading around an estimated (by me) 10X expected revenue for 2011 and 2012, continues to be one of my largest portfolio holdings.

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