Some Gold for the Brits, Medical Records, My Recent Buys, and yet another look at Sandstorm Gold
by Travis Johnson, Stock Gumshoe | April 1, 2011 5:13 pm
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Source URL: https://www.stockgumshoe.com/2011/04/and-a-little-gold-for-the-brits/
Thanks for your description of Sandstorm Gold Ltd. and also your comments on investing in foreign currencies.
I’ve been doing quite nicely with Silver Wheaton. SLW. Sandstorm Gold Ltd sounds like an interesting speculation. Access to shares is clear enough thru TSX or pink sheets, but where’s a good source for information and purchase of the warrants?
nice write-up travis, i agree with you about sandstorm gold’s management and business model and I own some shares as well.
What are your thoughts on sandstorm Metals and Energy , ticker SND in Toronto, I am looking closely at this one now. Their first few deals were in coal, but they just announced that they are going to start doing streams in oil and gas. I think, that given time, this stock could be a home run in the making, simply because the energy industry is so much larger than the mining industry. Thoughts?
Very informative and in a down to earth way that we non- financial experts can understand. I have one small anal suggestion- get a proof reader and use spell check Travis. I noticed at least 4 mistakes without even trying. You have kids- get them to do it , or heck, e-mail it to me and I will proof read it for a very nominal charge!
Roger Conrad’s canadian edge is teasing that one can be an internet millionaire within 18-36 months and at the same time pocket 10.7% dividend yield. what does thinkolator say about this…
Ok saw your write-up SND, disregard my above post lol.
Travis
Disagree with you regarding your premise about baby boomers selling off their gold/silver in exchange for annuites or dividend stocks. Here’s why:
1. What percent of baby boomers actually own any significant amount of gold and silver today? Less than 10% for sure and maybe less than 1%.
2. Those baby boomers that diversified in gold/silver would likely not have done that as their first investing steps but will have done this only after already buying dividend stocks. I am hard pressed to think of them doing it the other way around.
3. Finally the average baby boomer has not put away sufficient assets of any kind other than their house which many are now way down on equity.
Do you really think baby boomers have a lot of gold and silver? Not likely……..
Fifty-one percent of my portfolio is held in Canadian Stocks. Of that 7.8% are held on the Toronto exchange in Canadian dollars, the balance on US exchanges. I also hold 10% in European stocks, 2.9% in South American stocks, and 30.5% are in US stocks. I am preparing for times getting worse.
/ * Phil */
I think we might see a correction starting on Monday.
The excuse being that the federal funding agreement on the weekend achieves 2 things.
1. No govt shutdown for now
2. The appearance that the pendulum for fiscal responsibility may be starting to swing the other way.
It’s an excuse to boost the dollar which is very crowded on the sell side, UUP and UDN are both making nice wedges that would fit nicely with a $ bounce which would help bonds, QE the whole lot.
Commodities would take a hit, Silver is way overbought. ( look at a 10 year chart of SLV and look at the nasty corrections that have happened over and over. SLV July puts are dirt cheap, I have a few).
My take on what has been going on these past 2 years is that hot money is looking for a place, well, where?
Not bonds because the yields suck and there is this fear of monetizing the debt, so commodities and stocks have been getting tons of infusions, but is it serious investing or just momentum plays? I put my money on hot money and momentum, so the correction will be fierce (if it happens).
So I’m curious to see if Monday brings a reversal and the start of a nasty correction because the US is “getting it’s act together”. The euro and this Portugal business was ignored, but if the US shows it is starting to think austerity (or at least one segment of the US), how does that reflect on the euro, and the yen (which has it’s own problems)? This could cause a pop in the $ and some serious corrections in commodities. How big a correction, I don’t know, but it would present a good entry point eventually for those who want to pick up shares at a better price.
Can anyone point this novice to an article or explain the ratio Travis show in his valuation of sandstorm. What does 10 X future sales mean? What is a typical ratio for a healthy company? Does anyone have a book value on Sandstorm and is that relative for a company like them? Any help would be greatly appreciated.
Thanks
Very high volume on Sandstorm Gold SNDXF 6/4/11. Could not find any info as to why. Any ideas?
Sandstorm Gold, meant 6/3/11
I’m new to warrants and am trying to understand your post Travis. If you buy a warrant at .55 for 2014 the stock would have to increase to what for you to make a profit? If you pay .55 does that mean the stock would have to move past 1.65 by 2014 if it was currently at 1.10? Elementary stuff for the thinkolator, but any help would be grand.
What are the tickers on the warrants (I’m assuming their are American and Canadian priced warrants)?
Thank you,
Russ
Russell, the basic spiel with warrants is this: They are somewhat similar to stock options, with two major differences: they don’t automatically exercise if “in the money”, you have to proactively exercise or sell your warrants to get any money out of them; and they usually, but not always, have a several year time frame. Sometimes there are other rules about when or how the warrant can be exercised, but that’s the basic idea.
Warrants generally give you the right to buy a particular stock at a particular price before a specific date. The Sandstorm warrants I was mentioning above (SSL.WT in Toronto, SNXXF on the pink sheets) give you the right to buy one share per warrant (SSL in Toronto, SNDXF on the pinks) for US$0.60 up to the expiration date of April 23, 2014.
The stock last traded for C$1.05 (which is about US$1.08), so the warrant is “in the money” — it is worth at least 48 cents at the moment (if we ignore commissions) because you could buy it now, exercise the warrant to get shares at 60 cents, and sell the stock for over a dollar.
Warrants last traded for about US$0.57, so that means if you bought the warrant right now you’re effectively betting that the share price will be over $1.17 eventually (before 2014). The warrants are much less liquid than the shares, though, so sometimes that price gap narrows, for a little while the shares were over US$1.10 and the warrants were in the low 50-cent range, so you came within a few cents of getting the option to 2014 “free.”
One downside of warrants, incidentally, though it usually applies more to “out of the money” or “near the money” warrants (warrants that have an exercise price that is above or very close to the stock price), is that takeovers can wipe out much or all of the value of a warrant. As an example, Sandstorm has a second warrant trading as well, the series A (SSL.WT.A in Toronto, I don’t think it trades on the pinks). That warrant gives you more time, to October 2015, but it also has a much higher exercise price at US$1. It is currently trading at about 42 cents — but if for some reason (I don’t expect this, but anything is possible) Sandstorm agreed to be taken over by Franco-Nevada for US$1.30 per share, a 30 percent premium to today’s price, than anyone who had that series A warrant would be out of luck — they would have effectively paid $1.42 for their right to a share and had the time value of the warrant evaporated by the takeover, so they’d have to accept losing roughly 12 cents per share in the sale.
That’s a rough overview — I find the website CanadianWarrants.com to be a useful resource for this kind of thing, their page on SSL is here: http://www.canadianwarrants.com/company/s/SSL.html and they also have some educational material and pretty complete listings of the publicly traded warrants. Their quantitative formulas say that both SSL warrants are “fairly valued” — I disagree, I think the Series A are overvalued and the regular warrants are undervalued, but that’s just my opinion.
Sandstorm (both common and warrants) remains the largest individual holding in my personal portfolio, for full disclosure, and represents about 2/3 of the “gold” exposure in my portfolio (most of the rest is in physical gold).
What do you do to exercise the warrants? Maybe a question for my broker?
Thanks a lot Travis. I own Sandstorm gold, but think this warrant play is very interesting.
I think Sandstorm Gold is the company Stansberry’s Phase 1 is teasing right now. Many of the clues match facts found in the slide presentation on Sandstorm’s website.
http://www.sandstormresources.com/i/pdf/Presentation.pdf
I just spotted the Friday File from Travis.