25% return with low volatility in a world where a 5 year CD is paying 2%? I just don't see the problem with either of our choices. The common stock will be good and the bonds will be good. I still have 7k of common :-)
In this market I will take the 13.5% return with low risk and worry about reinvesting when the bonds are called. The yield for next call 5/2016 is 25% right now (calling bonds at 106.5)
Actually I am looking at buying even more bonds today, because for some reason they are trading at 95.5% of par (down today)
I dunno, that is pretty weak. I am sure there are many clauses in that ownership guideline which allow an out or at least an extended timeframe to comply.
Nope, when you told me to get out, I got out. (Why didn't you mention also getting out of TC at the time? :P
Just kidding. Sort of.
I am there with you private! Perron could make us rich the next time he changes jobs.
I think it is too late to employ on this stock but what about this idea?
Next time you find a miner who takes out high interest rate loans, buy the bonds and buy puts on the stock. The idea here is to rape the company and rape the shareholders.
Obviously we can back test this on Thompson Creek with great success. Someone buying the 12.5% bonds and buying $2 puts when TC was $3 last year is sitting so pretty right now. The risk had TC gone up or gotten bought out was losing the put premium but gaining on the bond price.
I now wonder what future opportunities are out there with other poorly run companies who leverage to oblivion supported by dumb shareholders like I was. Perhaps this strategy can be implemented in some shale oil plays...
The stock is around $0.60 but they are 100% headed toward bankruptcy. Who buys these stocks at that price and why? It can't be speculation, TC is in much much better shape and years away from debt problems compared to MCP.
The $0.50 puts on MCP are trading at $0.25 or so. That means people value the company at about $0.25 a share but the stock is $0.60.
I first got into Claude around $2, but only a few thousand shares. I sold out at $0.60 and rebought at $0.20 and $0.125. Am just about even now. A lot better off than my TC stock.
Oops. Well maybe you can buy in at 14 soon.
Nice post. Likely anyone who buys shares in the $0.80s is going to look like a genius in a few years. Copper should go back above $3 with world recovery.
It sneaks up on you doesn't it? I was like that last year (I can pull up some of my posts to show how foolish I was), buying on the 10 cent dips when it was in the mid $2 range. I got up to about $100,000 in TC.
I think/hope you will be fine. More than likely we have seen the all time low somewhere around here. Definitely we are within a dollar of the all time low.
I have 20 right now ($20,000 face value) with plans to add more as I see signs of this high grading. If they are called away early (with the small bonus you get from that) then I will also be happy.
I could put $200,000 in these bonds easy. The yield is far above other similarly rated bonds and I know more about this company and the money they could generate if their back is against the wall.
I agree with Ultra that the share price is an over-reaction but I do not know how much more it can over-react. I think TC is solvent and the 2019 bonds are a great deal as TC has to want to refinance those ASAP. My money is being put into bonds...I am not greedy and will be happy with my 13.5% return (ok, a bit greedy and would like some at 80% of par)
They haven't totally turned things around but they are doing better.
New mining method (Alimak? something like that) and higher grades. A pretty harsh winter resupply deal (gave away 3% of the gold) and selling other property.
I do not know how TC can high grade, but you indicate they can. They can give away more gold via streaming if Royal agrees (or do they have to agree?) and they certainly can sell other property. During all of these events, Claude share price dropped. It was only when they started becoming wildly profitable that it took off.
$0.90 might seem like a steal, but once these stocks go sub buck, anything is possible. $0.50 seems crazy, and a year ago I would have called you a nut and put you on ignore if you suggested $0.50 was in the cards.
I think they can turn things around, but it might get ugly. This could be partly why we have not seen insider buying. They know how ugly things may get.
I think they must be thinking about streaming the rest of the gold, or issuing some preferred shares with a profit sharing portion. I think they may throw common stock under the bus and run over it a few times to make sure it stops moving.
FCX is a bust too. I got out of that one at $27 with a small loss then they cut the divvy and it dropped to sub $20. Way too much debt and too many poor oil wells.
I am 90 to 95% sure that TC will limp along and be able to figure out some way to navigate the debt dilemma. I think maybe some people have realized this navigation may be painful to common shareholders.
The 2019 bonds were a good fit. I bought them in my IRA and sold my common shares in taxable. Because bonds are considered substantially different than stock, I can take a tax write off for the loss on the shares while pocketing the 13.5% yield I received on the 12.5% bonds in my IRA. I wish I had done this a bit earlier, but better late than never I guess.