Rockstar on Molycorp, China’s Slowdown and Geomega’s Stellar Growth
InvestorIntelReport Month-in-Review (January 2014): After dissing “Wolf on Wall Street” yesterday for being understated, I called a famous day trader I like to call ‘rockstar’ for some Intel to enhance our January month-in-review update. Having heard all I can take from self-described industry experts, analysts and journalists alike on what’s happening in the rare earth sector; I have over the years come to the same conclusion on this group of professionals, to which I so humbly belong – and that is, most of us do not belong to the super rich club.
Started by asking rockstar whether or not he would buy rare earths today. His response, is as long as we do not see a death spiral in the equities market — he’s in. Asked him who and what he would buy* and he said “Molycorp”. I asked him why. He said that the street likes the new management changes and that “they are the only producer and that they are highly undervalued with the Chinese controlling 85% of the market.” “What do you know about rare earths” I said. His response: “I knew enough to short the stock at $76.” (*Disclaimer: Rockstar is a day trader for his own portfolio, not a licensed investment advisor. This is not a buy recommendation.)
Rockstar also told me to expect a rise in the yen, everyone’s waiting for U.S. job numbers Friday and that he’s anticipating the Twitter earnings call on Thursday. He described this as arguably one of the most historic earning calls to date, given Facebook and the social media sector’s market capitalization. Asked him about cannabis, and he said that he’s investing in medicinal marijuana as this is going to be a ‘massive’ opportunity and agreed with me that 3D printing will be ‘astronomical’ once the market can establish their valuation footing. Of course he reminded me that investors like the large caps, blue chips “blue chips of the chippest” and then confessed that he was selling his bonds short term as they were overpriced today. He was not enthralled with potash or phosphate and changed the subject by telling me to expect a nice movement in the oil & gas sector (referenced Syria) and thought that uranium “may” profit from this sector’s movement.
I tell you, I cannot get my head around numbers from China and constantly scratching my head – shot Hongpo an email this morning, to which he graciously replied to my question: “Is there really a slowdown happening in China or is this CNN’s translation of reality for me?” He responded with the following to which I have summarized for you after he agreed that this was reflective of his position.
Hongpo Shen replied: “The Chinese economy grew by 7.7% from a year earlier in 2013 according to a report released by the National Bureau of Statistics (NBS) on January. The country’s gross domestic product (GDP) amounted to 56.88 trillion yuan ($9.31 trillion) last year, beating market expectation of 7.6%.
Regarding industries, the added value of the primary industry (includes agriculture, horticulture, agribusiness, fishing, aquaculture, forestry and all mining and quarrying industries) stood at 5.70 trillion yuan in 2013, up 4% year-on-year. The added value of the secondary industry (incudes the industries that converts raw materials provided by primary industry into commodities and products for the consumer; manufacturing industry) came in at 24.97 trillion yuan last year, and tertiary industry (the service industry) added by 8.3% to 26.22 trillion yuan.
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The official PMI, released on Saturday by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), dropped to a six-month low of 50.5% in January, from 51.0% in December (The manufacturing activity index, or called purchasing managers’ index (PMI), is so far the first and important indicator to measure China’s factory activities and the country’s manufacturing-based economy at the start of 2014 (click here).”
I just had to ask, when did 7.7% growth become a slowdown? As for the PMI numbers, the sources I have reviewed claims that the Chinese New Year skews these numbers and translations, so I continue to watch and wait for the next PMI that comes out on the second of every month.
Speaking of slowdowns, we have discussion on a U.S. market correction that I referenced in yesterday’s piece from a source that I spoke to last night that identifies himself as the “black knight”. Black Knight of BK as I am calling him reminded me that he called a 15% correction in the U.S. market 2 weeks ago. In his forecast, he said that it would start in 3 weeks and was based on margin debt numbers from brokerage houses that he had been tracking. All I know, is that there always exceptions, so I would like to start with the InvestorIntel list of star performers with a quick overview on the market as we see it for January 2014.
Starting with the Technology & Critical Materials (rare earths, lithium, graphite, graphene) which was up +9.95%, Agribusiness (potash, phosphate) was up +7% and while we do not represent enough clients in these sectors to give what we deem an accurate percentile, we did see upward trending in Uranium & Nuclear Energy, and downward movement in our Gold & Silver, Oil & Gas and Cleantech clients for January 2014.
Proving that news can affect market valuation in any market, Geomega Resources Inc. averaged up the entire rare earths or technology & critical materials sector for January 2014 with TSXV: GMA up +190% with 3 critical pieces of news. I am getting phone calls on their Breakthrough in Physical Separation of REE announcements as it sounds quite revolutionary. Then of course their dysprosium results at Montviel and the expansion of the update on their heavy rare earth zone. Certainly Jack Lifton should be onside with this one…after all this all about ‘the heavies’.
Triton Minerals ASX: TON was up +114.29% after ‘making the grade’ with their High Grade Graphite Discovery at Nicanda Hill news this month…to read the rest of this InvestorIntelReport log-in to your IIR membership, or subscribe by clicking here
An accomplished entrepreneur and corporate finance professional, Tracy Weslosky is the CEO for InvestorIntel Corp. and the VP of Business Development for Bellotti Capital Partners ... <Read more about Tracy Weslosky>