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Silver Wheaton Corp. Message Board

  • Doppelganger4 Doppelganger4 Oct 11, 2005 8:42 AM Flag

    SLW Leverage to POS

    I've been watching (not buying, much to my chagrin) SLW since it was spun off, and I've always wondered about the attraction of SLW on a fundamental basis . . . . Using their own cash flow sensitivities to the price of silver, and applying a reasonable cash flow multiple to the stock price, I can't come up with more than about a 1:1 leverage for the stock price ($1 move in silver, $1 move in the stock).

    Can anyone here convince me it's a better play on the price of silver than this? I'd like to own SLW--I'm just not sure I see why everyone is enamored with it . . . .

    Dopp

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    • Dude, there are 3 private investors and 25 institutional investors, who try to shake out weak hands. Does this impact the stocks performance?? Will see, I will reply to this message again when it hits $20. Besides, stop using "dude" in every sentence, sounds retarded, but hey lets talk about this when I post the $20.00 message (in a month or so).

    • <<Dude, run those very same stocks on your charts from one year ago, 10-12-2004 to 10-12-2005. The very same stock, SVM.V, that you have an unusual dislike of ran from......70 cents to $3.46.>>

      Dude, I am not interested in meaningless outdated numbers. I am interested in whether a stock can bring profits if I buy it NOW. Conditions became fundamentally different when the private placement changed the entire market for SVM.V. Millions of cheap shares now lurk to pounce on whatever gains may come in a few months. Other stocks had nice runups but did not torpedo their advances by a poisonous form of dilution that threatens to repress performance for a long time. Silver rose by more than a dollar and broke several tough long-standing resistances, but SVM.V dropped. ANY silver stock without a healthy gain during the past six weeks has some serious problem(s) -- maybe Venezuela, maybe a bad private placement, maybe something else. Dude, read the subject line of the message -- we are talking about leveraging silver's upward moves -- not happening with SVM.V.

      Dude, the market has voted on Silvercorp's action. The market disapproves.

      SVM.V also started dropping some time before the private placement happened. Somebody probably knew it was coming. Nobody told us. I sold and kept my profit. If you have been silly enough to hang on to SVM.V in spite of getting screwed and screwed again, then dude, continued losses are what you deserve.

      Dude, I ain't about to bid this stock back up for you.

      [[Before the accusations start, I am not a paid basher. I am not short SVM.V. The only thing I am short is the US Dollar. I am disappointed in Silvercorp's management decisions, but maybe they had no choice. Whatever their reason, I think it has made their stock a lousy buy. Many more attractive stocks are available.]]

    • Dude, run those very same stocks on your charts from one year ago, 10-12-2004 to 10-12-2005. The very same stock, SVM.V, that you have an unusual dislike of ran from......70 cents to $3.46. It's only natural for a stock that ran from 70 cents to a 52 week high in the $4.20's to pullback and consolidate its huge gains. You don't have to like SVM.V or buy it, but get realistic when running charts. Any chart covering just a short period of weeks can easily give a distorted view of any stock.

    • <<Everbody to their own opinion>>

      What I reported included actual percentage gains (losses in the case of SVM.V and only one other) during a period when POS increased. This is FACT, not opinion.

      SVM's losing performance during a time when almost every other silver junior was making strong gains is not just some whim of mine. It is not subjective opinion. It is what actually happened. It is evidence that your praise for SVM.V is unjustified.

      <<you are dealing with a business friendly country, CHINA, unlike CANADA & US & Ven.>>

      Speaking of opinion, your opinion equates US and Canadian government policies toward businesses with those of Venezuela. You opine that the Chinese regime would be reliably friendly to North American extraction of its scarce resources in the event of possible international conflicts. These opinions are simply ludicrous.

      You are likewise free to invest as you desire, but such opinions as you express cannot go unchallenged.

    • <<Outside of SLW one of the two best silver plays, other FVI.V up from 76 cents a couple months ago to $1.50 today. Do your own DD. >>

      Don't mind if I do. You sure didn't.

      FVI.V has been doing okay, but have you actually checked out SVM.V? I dumped it weeks ago.

      Look at their private placement and its effect on the stock price. Then consider its future implications.

      The PP was a sweetheart deal, 2mil shares, at ~80% of the current market price you and I had to pay. The PP stock can't be sold for six months, so it's always hanging over the market during that time. Each share got half a warrant exercisable at ~15% premium to market price: another million shares of dilution.The warrants' low premium weighs on gains.

      And . . . check out the news: "Mining Permit Process is Well Underway"

      Not "Permit awarded today." Not "Permit expected soon." Not even "All Permits applied for." "Well Underway" doesn't tell us much. SOOOOooooo . . . if you take some fraction of a second to click on a link Yahoo offers along with quotes of this wondrous stock, you find among the fine print: "Once all these documents are collected the mining permit application will be filed with the Ministry of Land and Resources in Beijing."

      THE BLEEDING PERMIT APPLICATION IS NOT EVEN FILED. VITAL REPORTS MUST STILL BE PREPARED BEFORE IT CAN BE FILED.

      CZN.TO, though, priced its recent PP at or above market, and is farther along in its permitting. It also has advanced facilities already in place. Uh, oh yeah, it's in Canada, not in China.

      The CEO of TRE (not a silver stock), takes an interesting approach to PP's. He buys them all himself at market price and does not (cannot, actually) sell them. He is rich enough to finance the whole company himself, and he's honest. He has $15 mil of his own money invested. His assets rolled over into TRE were valued at cost, not market, which was much higher.

      How's SVM.V doing, anyway?

      I jthrew together some usual suspects among silver juniors (plus SLW) and ran a perf chart:

      stockcharts dot com
      /webcgi/perf.html?slw.to,svm.v,mgn,ssr.v,czn.to,fr.v,ggc.v,bcm.v,fvi.v,fsr.to

      and another with EDR.V,MFN,ASM.V,CSG.TO,IPT.V,$SILVER,SRLM,SVL.V,TRE

      Setting the left end of each chart's slider to Aug 30, when silver started waking up, shows the following action:

      ssr.v +90.9%
      fvi.v +45.0%
      ggc.v +39.0%
      fsr.to +39.0%
      TRE +35.2%
      mgn +33.7%
      MFN +31.0%
      slw.to +31.0%
      czn.to +25.3%
      CSG.TO +21.3%
      SVL.V +20.3%
      $SILVER +15.4%
      ASM.V +13.1%
      EDR.V +12.5%
      SRLM +9.0%
      fr.v +8.1%
      bcm.v +4.2%
      svm.v -5.5%
      IPT.V -6.2%

      svm.v looks to me like it belongs to a <*barf*> VERY select group.

      This is just a start on DD, with a free charting site, MS-Excel, and a few clicks in a basic Yahoo screen. I might be crazy, lying, senile, drunk, drugged, or all of the above. I own TRE and CZN.TO. Anybody thinking of investing, especially in silver juniors, should use play money for a while until consistently making profits.

      AND CHECK OUT HOT TIPS AND DRAMATIC CLAIMS -- it took about five minutes to give SVM.V the horse-laugh.

      =========================

      Quoth Yahoo:

      These messages are only the opinion of the poster, are no substitute for your own research, and should not be relied upon for trading or any other purpose. . . . For more information regarding investments and the Internet, please visit the SEC Web site.

    • Thanks--I'm familiar with Silvercorp, and the drill results are indeed astonishing. I was keeping the discussion to the US exchange listed silvers . . . .

      Dopp

    • > Can anyone here convince me it's a better
      > play on the price of silver than this?

      I will try. in each metals sector there is usually one company that outperforms the base metal index, e.g. Peru Copper (CUP). Comparing SLW and GoldGorp (GG, but could also use Glamis Gold -- GLG) with the Philly Gold and Silver Index (^XAU), here is what you get:

      http://finance.yahoo.com/q/bc?s=SLW&t=6m&l=on&z=l&q=l&c=%5EXAU,GG

      Seems like a no brainer unless there is some type of Refco blow up!

      • 1 Reply to lkarlet
      • >>> I will try. in each metals sector there is usually one company that outperforms the base metal index, e.g. Peru Copper (CUP). Comparing SLW and GoldGorp (GG, but could also use Glamis Gold -- GLG) with the Philly Gold and Silver Index (^XAU), here is what you get: <<<


        There will be lots of PM companies that outperform the ^XAU in a gold uptrend . . . There's no denying that SLW's got some mo right now . . . . However, I'm not just looking for mo, I want the best leveraged play on silver, on some kind of reasonable valuation basis, and with reasonable liquidity.

        I think the regular SLW warrants are probably more to my taste--more bang for your buck, and a easy choice over the common if you think silver is going higher . . . . I just hate using the 5-letter dummy symbol trade-through vehicles, as the executions are seemingly random, the spreads sometime stink, and they make for terrible traders . . . .

        Thanks for your thoughts, SLW Board.

        Dopp

    • "I can't come up with more than about a 1:1 leverage for the stock price"

      First, let's agree that Mr Market is stupid and that, although we can play with numbers and do the math, there is no guarantee that Mr Market will agree, lol ...

      A $1.00 rise in the POS adds $10 million to the bottom line ...

      With 167 million shares outstanding, that works out to an increase of $0.06 per share ...

      With a PE of 30, the stock price "should" rise about $1.80 on a $1.00 rise in the POS ... as a ballpark rule-of-thumb type of ratio, use 2:1 ...

      Please note that I used the "PE" multiple whereas you asked for the "cash flow" multiple and the reason for this is because they are virtually identical the way SLW is set up ...

      Please also note, in conjunction with the dumb Mr Market, I believe trying to use my above leverage ratio as a serious investment tool is equally as dumb as there are so many other metrics that can and definitely will affect the stock price of SLW which are completely independent of the POS and thus completely independent of that ratio ...

      That ratio is a "static" measurement and you should never use a "static" measurement to guage a "dynamic" force ...

      Good trading ...

      jc

      • 2 Replies to JohnnyCanuk
      • An astute analyst also recognizes that a $1.80 rise on a $4.60 stock is a significantly higher percent increase than a $1 rise on a $7.70 commodity.

      • >>> First, let's agree that Mr Market is stupid and that, although we can play with numbers and do the math, there is no guarantee that Mr Market will agree, lol ... <<<


        Agreed. Certainly, SLW is quickly becoming a pretty liquid trading derivative on the POS, and there's no reason that speculative fervor won't infect it. . . .


        >>> A $1.00 rise in the POS adds $10 million to the bottom line ... With 167 million shares outstanding, that works out to an increase of $0.06 per share ... With a PE of 30, the stock price "should" rise about $1.80 on a $1.00 rise in the POS ... as a ballpark rule-of-thumb type of ratio, use 2:1 ... <<<


        Yeah, that's about what you come up with up, except I threw in the 33M shares for the warrants, giving you about an even 200M shares, and an increase of $.05 per share for every $1 in the POS. I also applied a slightly lower CF multiple of 20 (or whatever metric you want to use) because SLW has no "exploration" budget per se, and must grow instead via future purchase contracts.

        This gave me the 1:1 ratio. . . . I agree that SLW is really easy for Mr. Market to understand as a leveraged play on silver . . . . I just don't see it as all that leveraged.

        Dopp

 
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