by Travis Johnson, Stock Gumshoe | March 6, 2015 4:01 pm
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Source URL: https://www.stockgumshoe.com/2015/03/altius-and-callinan-interest-rates-and-a-new-one-for-the-watchlist/
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Travis, why would you not buy Alaris instead?
Good question… I thought it was too pricey when I looked at it a year or two ago, but haven’t dug into the details on it. I’ll have to compare them closely with Grenville when I dig in deeper.
It is hard to be enthusiastic to exchange shares in a profitable dividend payer into shares in a loss making non-dividend payer with such a miserable price premium that falls within the ‘stock price noise’. Altius is a big company widely praised by the newsletters and it is thus to be presumed to be fully priced by the speculators and thus it could be supposed to have limited upside potential compared to the smaller Callinan.
I disagree on Altius’ valuation, but it likely won’t rise dramatically in a low-commodity-price environment. Callinan made some moves late last year to give hope for extending the life of 777, but there are no guarantees so Callinan shareholders are holding a stock with a chance (not a certainty, by any means) that 777 is a depleting asset that disappears in less than a decade. They sell out to Altius for the equivalent of seven more years of $10 million/year from 777, so they reduce the risk of that not materializing in exchange for losing some of the upside if 777 does expand and mine for another decade… and owning a piece of a company with a dozen 30-100 year royalties. I suspect Altius will have a dividend at least equivalent to Callinan’s within a few years, but yes,
Callinan shareholders do give that up — I wonder if that’s why they included 20 cents of cash payout in the deal, that’s two years of dividends at their current rate.
Travis,
Great article as always. I sold my shares of MIL and ARCO last summer as both were under performing in my view.
V/R
Tom
Glad you beat me to it!
I have both altius and corsite at your recommendation …and have been satisfied with them both; i plan to hold them as core stocks in my portfolio. Thank you again for your informative and entertaining articles.
“Alderon’s metaphorical Death Star is China” – Lol! And agree. Thanks for another great article, plenty to chew on. Due to the market drop Friday, I wonder if we’re going to hear something a little soothing/reassuring (for traders anyway) from the Fed next week. I hope not, they need to let the markets deflate a little in advance of needed rate hikes (be they this year or next) since too large a drop all at once would trigger fear. They are really caught between a rock and a hard place – their only real hope is that the economy really does start to grow at a decent rate (not just more growth – enough growth).
Overreaction to the Fed might be our only real hope for finding investing bargains in this environment — keep your fingers crossed!
Hi Travis.
Thanks for the informative article. I am trying to decide where to invest some money. Not a lot. I see you have talked about Altuis Minerals as one you are investing in more. It has two options: (ALS.TO, ATUSF). What would be the difference and is there one you would invest in first, just as a preference?
Thanks much!
Todd
They are the same shares in the same company, just listed in different exchanges and traded in different currencies. I always prefer to buy on the home exchange where volume/liquidity is almost always better, so Toronto is better for trading Altius… You tend to have to pay a hair more to buy and accept a hair less to sell over-the-counter versions of foreign-listed stocks (like ATUSF), though that’s far less extreme with Canada than with other foreign exchanges and in this particular case pricing is usually extremely close so if you don’t need trading liquidity or anticipate the need to sell in a hurry the difference will probably be minimal.
Ah. I didn’t pay attention to that. Thanks for the clarification. Great information. Thank you!
Well, that turned out to be bad timing on the selling front — East West Petroleum and Arcos Dorados both popped today on good news. I still have very low expectations for them for the next year or two, but ARCO’s earnings were better than expected and East West’s mediocre New Zealand operations are continuing to be decent enough to keep cash flow going, both of which were good enough news points to drive the shares up dramatically from their very depressed levels.
I have just subscribed to Gumshoe but am finding it very educational already. I do have a subscription to Harry Dent’s research and wonder if anyone has any experience with it. It is pretty negative T present
Hi Nancy,
What does he say ? I stayed away when he went all-out calling for gold to crash…he may be right, of course, but that isn’t how I see it…
My Chiropractor has a major broker who told him about Grenville Royalty last year and he paid 0.80 cents a share. I am Canadian and recently subscribed to Gordon Pape’s wealth newsletter (a Canadian who writes about Canadian financial stuff) and Grenville Royalty is still considered a “buy”. I bought some shares and paid 0.68 cents. I am watching it and my Chiropractor said he would let me know if his high end broker sends him any warning signals about Grenville.
Grenville’s been a wild ride, there have been some good opportunities to buy at lower prices after they had to write off a couple failed investments — all the pieces I’ve written about Grenville (which I still own, and have added to a couple times since this first note) are here: http://www.stockgumshoe.com/tag/grenville-strategic-royalty-grc-v-grvff/
Do note that they haven’t reported their fourth quarter yet, they’re reporting much later this year than they did last year, so the story could change pretty abruptly when they release earnings… whenever that might be. I don’t think they’ve announced a date, but we should see those results sometime in the next few weeks.