Saturday, November 30, 2013

German Government Relies On BlackBerry, Pretium Resources Proves Seabridge Gold Underpriced, Oil Stocks (CPE)

         BlackBerry (bbry) gains on rumours that German government and possibly others remain more committed than ever to BlackBerry devices - a few months ago they ordered 40,000 q10/z10 units.  Apparently NSA snooping isn't being tolerated at all in Germany, and that has led to a government-wide ban on the iPhone.  Two reasons for this 1) Germany-based firm secusmart has created a micro sd card that, when used on a BlackBerry device, renders the phone impenetrable (enhances BlackBerry security via encryption technology) .. would take a minimum of 149 years to hack.  2) Apple's iPhone servers are located in the US where NSA has governmental authority .. unrestricted access to private information  3) Germany's federation office for information security (BSI) has developed software that must be used in government employee phones.  Apple's devices aren't compatable with secusmart software.
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on the flipside
Could the NSA access BlackBerry servers via relationship with government ? The Canadian government helped the NSA collect information during the 2010 Toronto G8 summit.  This leads to other concerns:  Does the Canadian government have unrestricted access to BlackBerry servers in Ontario ? We know that a big reason BlackBerry is off the market is because the government won't ok such a deal if it involves a foreign company such as Lenovo, this leads us to believe that the government of Canada does have a certain level of influence over BlackBerry.

Gold Silver stock doubles on news of higher than expected pre-production

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Nov 21-22 Pretium Resources (tsx|pvg) stock climbs 80% on news that initial ore samples taken from the area known as 'Valley of the Kings' within the company's flagship Brucejack gold mine in British Columbia, yielded higher than expected gold grades:  19% higher to be exact (16g vs expected 13g per ton).  That translated into 4200 ounces of gold, 3500 ounces of silver.  The mine won't begin commercial production until 2016.  Reserves estimated at 7 million ounces of gold, 35 million ounces of silver.
That makes my favorite gold mining stock Seabridge Gold (SEA) even more enticing.  You see, Seabridge has 5X as much gold and silver at neighbouring mine Kerr-Sulphurates-Mitchell.  Higher gold grades at Brucejack probably means higher gold grades at KSM !  Either way, Seabridge Gold has to be on your stock radar .. has much more gold than Pretium Resources at a property that is only miles away .. any company looking to develop Brucejack is going to take an interest in KSM.  Future news regarding development at KSM will have a huge impact on Seabridge stock.  With Brucejack prepping for 2016, it's only a matter of time until the focus shifts to KSM.

Watch Out: New tax on gold in India will affect gold demand

Two months ago, in September India raised the duty tax on imports of gold jewelry from 10% to 15%.   Unsurprisingly Thailand, a major source of India's gold (3% of Thailand -India trade) initially objected to the tax hike however by the end of October, Thailand agreed to abide by the new rules after India threatened to suspend imports of gold jewelry from the country.  India also introduced a tax of 10% on gold bullion.
The new tax on Indian gold imports will eventually have a significant affect on world gold consumption:  Last year, India was the primary driver of gold demand - the country accounted for a fifth of gold consumption worldwide (864 tonnes out of 4405 tonnes total; 11% more than China).

Sears Canada being run into the ground by parent Sears Holdings ? (owns 51%; Sears Canada closes)

Over the last five weeks, Sears Canada raised $695 million in two seperate deals that saw the 61 year-old retailer sell a number of its core, revenue generating stores.  In the $380 million October 29 deal, Sears gave up its most profitable location in Toronto's Eaton Centre (335 employees there alone, store is so big mall gets its name from previous tenant Eatons) and one of its biggest stores in Western Canada (Richmond BC).  What's most alarming about the deal is this:
Sears loses four of its most reliable stores for sales at a time revenue (9mo2013: $2776.6m 9mo2012: $3002.7m) and earnings (excluding cash gained from lease terminations: 9mo2013: -$(112.9)m 9mo2012: -$(105.8)m) aren't growing, and instead of reinvesting the money to help the company gain traction in Canada's increasingly competitive retail market (Nordstrom launches as does Target) Sears gives it away (November dividend payment totaled $483 million).  Last decade Sears annual revenue fell -34%, and the company continues to sell off vital pieces of its business:  November 24 - Sells 50% stake in eight properties including ones that house Sears department stores, for $315 million.

Shareholder-beware :  this company is not "unlocking the value of assets" in a constructive way as CEO Doug Campbell claims. Hudson Bay company IS doing that, Sears Canada IS NOT.  Sears USA CEO Eddie Lampert owns 55% of Sears Holdings which owns 51% of Sears Canada.. that makes him the recipient of $135 million in Sears Canada dividends this month alone.  

Seraphim's advice :  retail stocks are hot right now and as long as Sears Canada keeps unlocking value and giving it back to shareholders one way or another the stock is a weak buy.  Note: retailers get 40% of their yearly sales during the Christmas holiday season, so this is the time to buy retail stocks.

Canadian Oil Company Stocks

The rest of Canada's biggest oil companies released third quarter reports earlier this month and the results are a bit surprising - biggest increase in output (and earnings: $2.35m -> $87.88m) goes to Canada's ninth largest overall producer, Crescent Point Energy (cpg).  Though organic growth was there, a lot of the increase in output stems from key acquisitions (over a dozen major deals completed last year valued at $3 billion including a single deal worth $861m completed exactly one year ago on November the 29th +8th bpd).
Dividend oil stock prize goes to Suncor Energy 13 cents to 20c : +54% vs 1q2013, same as 2q2013.  2nd largest oil company Canadian Natural Resources dividend up only 2c or 20% to 12c.  Only dividend adjustment for most of Canada's major oil companies occured in the first quarter of the year.  Exxon's largest Canadian investment, Imperial Oil recorded the worst results (profit -68% to $327m attributable to lower crack spread, closure of fourth largest refinery in Dartmouth, Nova Scotia.

Canadian Hotel Occupancy at 65%, up from 59% in 2009

Toronto-based Fairmont Hotels could go public with ipo in 2014.  Growth both in revenue at Fairmont and hotel occupancy rates in Canada (2006-2013: 59-> 65%) and the United States (55-> 64%) has major shareholder Prince Al-Waleed of Saudi Arabia optimistic about an ipo:  he's pressuring the company to speed up its efforts to go public.
In 2006 Prince Al-Waleed was part of a consortium that took over Fairmont.  Four years later he sold a 40% interest to Voyager Partners.  Today, the company owns 100+ high end hotels in 21 countries.  Qatar Investment Authority officially the largest investor.  Seraphim's advice :  Hilton Hotels is prepping to go public, hotel occupancy rates are up in North America and Asia so Prince Al-Waleed is right !  If Fairmont Hotels plans to eventually go public there's no better time than 2014.

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