I have a little hodgepodge of updates and thoughts for you today about a few of the companies I own or have covered for the Irregulars… no real changes in my personal portfolio this week, though I have boosted cash reserves a bit by trading parts of a couple equity holdings for call options going about six months out, and I have been unable to resist speculating a bit on some other options. Let’s jump right in.
On that equity-for-options point, there’s a good Barron’s piece from last week that explains what the opportunity has been in some stocks that have extra-low volatility priced in to their options — the options are pricing in no change in the stock, so replacing Verizon shares with October in-the-money call options, which I did, means sacrificing a couple dividends but also provides full upside exposure and boosts my cash balance — really more of a way to be specific about my risk exposure and build cash than anything else, but sometimes making a trade with low impact like this keeps me from doing something aggressive and/or stupid.
Sandstorm Gold (SAND) reported this week, and there was quite a bit of worrisome chatter back and forth on the interwebs about whether or not they had “disappointed” the market. The presentation that accompanied their conference call today gives the basic results and outlook if you want to look for yourself, and the detailed annual report filing is, of course, much more comprehensive.
On a basic front, if we assume that gold stays roughly where it is now and averages $1,200 an ounce for the year, then Sandstorm Gold should have a pretty solid financial performance in 2016 and, if the market stays stable enough that future production plans remain on schedule with their partners, their top line numbers might double over the next five years. That is, of course, highly speculative because it depends both on the progress of their partners at getting mines permitted and developed and on the price of gold (and, in a few cases, other commodities — including diamonds and silver).
Sandstorm has not lost their head under founding CEO Nolan Watson, despite the collapse in the gold markets over the past couple years. They have used those years to acquire a lot of smaller royalties and to make a couple of larger royalty and streaming ...