Back on March 27, 2015, I had thought my 30-year career of speaking and writing about individual stocks had come to an end. I had already shifted away from being a compensated consultant in the metals and mining industry and noted my business life would now be solely doing an alternative to traditional financial planning for professional athletes and the general public (In the U.S. only through my two companies, www.trinityfsem.com and www.petergrandich.com).
Despite some pleads otherwise, and an occasional inter-nut posting in cyberspace being totally off-base as usual, I remained true to my plan.
Then on June 26, 2016, thinking I was somehow doing something good, I added this to the end of my Mid-Year Outlook:
Finally – Old habits die hard. I’m down to just owning personally two stocks. One is a complete speculation (remember, speculation and gambling are the same thing, only Wall Street doesn’t like to use the word gambling).
With bias and conflict of interest noted, if one had a few dollars they could speculate with (and be fully prepared to lose part or all of their capital and suffer the financial and mental anguish that surely shall bring), the other company I own is also the company I help finance at its beginning over 20 years ago, Nevsun Resources (NSU $2.80 yield 5.71%), appears worthy of a flyer. The dividend may be cut in order to help fund a new development in a company they just acquired so don’t buy for yield. But I think NSU themselves could be acquired long before they make the first pour at their new project.
I/family own around 500,000 shares.
Apparently, there are still more than a few people who read this blog as if it was still the old “Grandich Letter”. I assumed there were none left since hate emails stopped and voodoo dolls of me sold on Internet had disappeared.
Since my June 26th comment, several people have asked for my latest opinion on NSU.
Here’s the good news – I’m about to give it. The bad news – never, ever, ever, ever again shall I speak about any individual stock – so help me God!
After this absolute last comment, you can try these two friends of mine who I’ve worked for (and with) going back 25 years. Both are extremely well verse on NSU:
Ben Johnson First Securities NW 503 224 1234
Martin Saltzman AFM Investments 732-905-8100
If you know me, you could ask, “Wasn’t one Eritrea related nightmare enough?” Fortunately, the major players at the past nightmare couldn’t carry the bags for the real professionals who have been at the day-to day helm at NSU for years. The fact that they then secured the purchase of what I believe could end up a world class mine, made me take a big plunge.
Because the purchase of this potential world class asset was done with paper, some of that paper appears to be coming back into the market from the day the deal closed. Because the shareholders of the company acquired already had some nice big gains and were in that deal for some time, it’s not shocking that they are soaking up the liquidity of a previous tight deal. Also, I’m told a money manager who own lots of shares and had a following, suggested they do so too. The previous company was mostly a retail owned shareholder base, where as NSU is far more institutional. They usually don’t chase and are content to pick up shares until no more sellers show before moving up.
This is not a short term trade opportunity. I fully anticipate it could underperform for several more weeks or even months. But if someone’s long-term is what it used to be when I first began buying stocks 30 years ago – more than a year, I would be delighted to be buying shares around these levels.
I suspect the market is awaiting to see how its transfer to zinc production goes and we should get some news on that in the next few weeks.
If I was NSU, I would wait until after Labor Day before beginning any hardcore institutional promotion. By then, Bisha zinc production should start to show itself, a better understanding of their new project should begin to take hold, and most of the selling should have been gobbled up by then.
One last thought on the attractive dividend. Bisha is a cash cow. The only way I anticipate a cut in the dividend is, if and when it makes sense to use that cash to advance the potential world class project into production versus dilution. However, that may be for naught IMHO, as I believe NSU can be taken over before the end of 2017. If correct, my biggest disappointment could be its share price didn’t get close to the level I think it can in the next three years – which is multiples from its current price.
My sense of humor calls on me to make my final comment ever on an individual stock this way.