#$%$ is a much better ticker symbol than FCX for what that management did to shareholders.
Hah hah. The entire loss of this IRA, while painful, would not drive me to thoughts of suicide.
I really don't have any exposure to mining stocks in our other accounts, which are well diversified in index funds, TIPS, and cash.
I have around $1000 cash in my Etrade IRA. I have $100,000 in TC 2019 bonds, 20,000 shares of CLGRF (Claude, a gold mining company), 3000 shares of a biotech Endocyte which is a long shot but could make up for every TC mistake and then some, and 2000 shares of Seadrill Partners purchased at the bargain price of $5 (it is now $3.50 LOL).
I want to keep Endocyte and Seadrill Partners (pays a 30% dividend even after the cut) but I could be talked into selling Claude. Low volume on that stock but I should be able to get a bit over $10,000 for my 20k shares. I really doubt Claude is going to take off in the next few months as they go through their winter supply.
I would use the $10,000 to buy $50,000 more of TC 2019 bonds, bring me to $150,000 par value.
Claude is a gold play, but if gold goes up, I think TC would also be a reasonable analog.
What would you do here? Do the bond deal or keep the Claude stock?
I could well be missing some important factor, like the ability of TC to rapidly burn through the ~$200m in cash before 2017 rolls around (this would seem to be near impossible, but?).
A mine strike, horrible weather, something. Other than that, I don't see much of anything that would prevent the May 2016 and November 2016 bond payments.
This puts a 2019 bond purchased today for 20% of par at essentially 7.5% of par after Nov 2016 (a little more because of accrued interest in December 2015).
Are we to think that bondholders would accept a deal that offers them less than 7.5% of par if copper is still above $2? It would essentially make TC a company with near zero debt and thus massive profit. It would be a $40 million dollar company making $80 million dollar profit per year and paying $10 million a year interest on a small debt. This is unlikely in my thinking.
More likely is a larger portion of the unsecured is bought for cash or an offer of a lower amount of secured bonds.
Anyway, if you go with just 10% of par as a reclamation, you get to break even before even 2017 rolls around.
I can't see the 2018 and 2019 bondholders accepting a deal that does not at least pay some small amount of the original note in addition to new shares issued. With one bond payment under your belt and a offer of 10% of par plus shares, bondholder who purchased under 25% of par would be at break even with the profit in the new shares. 10% of par would drastically reduce the debt level of TC to such a point that it could be run profitably at $1.50 a pound copper.
Thus I believe buying 2018 and 2019 notes at 15% to 25% of par carries a pretty low risk right now.
What I meant by saying you have no money at risk after 2017 is that you can walk away from the table with a profit after that point, guaranteed.
There is no guarantee of any return with the stock by 2018.
I really hope the common stock does pay off gatr. If the common gets to $4 then the 2019 bonds will get to 100%. I will take a five fold increase with no complaint.
Especially when you consider that by 2018 the 2019 bonds will have paid off $25,000 for the purchase price of $20,000. So you will end up with $125,000 for a purchase price of $20,000. That is a decent return in my book. Not to mention that sometime in 2017 you will have no money at risk since the bonds will have paid you back in full.
But that isn't gaining $250, that is gaining something less than $250 since they were not paying out the entire $340 before.
Bond market is saying bankruptcy will happen in less than 18 months and the chance is 100% with zero recovery for unsecured bondholders.
I don't believe the bond market is correct, but the prices of the bonds are saying that.
2018 for 13% of par, would pay back in about 18 months
2019 for 18% of par, would pay back in about 18 months
I think they might do a chapter 11 thing in November of 2017 if they can't work out a deal with creditors. I am expecting 10% to 50% on bonds and at least the May 2016, Nov 2016, and May 2017 payments.
I am going to get a lot of red thumbs here, but this is what I am expecting....unless copper and/or moly make a good recovery.
Every small bio I have bought worked like this. Two recent ones that come to mind are AVNR and VNDA. Both traded at cash level before eventually being bought out. Neither ever really traded at pipeline value.
I have bought near that low (24) but never sold. I don't know who would sell that low. I can't think anyone would bail out at 18 when all they need to do is wait a few months for the interest payment to be nearly that much.
Too small of a lot to be a fund liquidating...it was only around $20,000 face in bonds. Maybe some poor sap who needed money for dinner at Red Lobster?
I will have to go back and double check but I think there were four FR100% patients each with a different type of cancer.
The odds that one of these four have a complete response (near elimination of tumor) should be really high at current dosing level and this not being reported is probably the main thing holding me back from buying more shares here at $3.95. OTOH, if they did report a couple of complete responses, even in this dosing study, the shares would jump to $10 to $12, removing the opportunity to buy at fire sale prices.
I do understand that for eventual approval, none of the results in the dosing study really matter except for determining MDT, but I would like to see some validation of the mouse responses in humans soon.
We have seen reports of 9/16 response of stable disease, which is a pretty bland response in the grand scheme of things meaning the tumor has not increased or shrunk by a measurable amount. This can happen even if the person is not undergoing treatment.
I am expecting as we approach cohort 10 that there should at least be one or two cases that have a better response than stable disease....either a partial response or full response. Especially since there are at least four patients FR100%.
Would they single this out in one of these update reports or is there a reason they might keep this low key and just lump them into the stable disease response numbers?
Lowest ask I have seen and pretty likely IMO to pay you back in full before the 2017 bonds are due.
Also saw that some traded for 18.xx and some 2018 traded for 13% of par!
Doesn't that refer to the lab mice cures we already knew about?
I didn't follow the recent stuff, but the part on this presentation where they say:
Four FR100% patients with durable stable disease
Meso 66 weeks
Gastro 59 weeks
SCLC 15 weeks
NSCLC 22 weeks
Sounds quite promising for EC1456 (happy for those patients as well obviously). They still have not reached MDT.
Looks like mid to late 2016 we will know if we have a $400 stock or a $0.40 stock.
The exact same thing happened to Pharmacyclics. Even one of the founders and the board left. The guy who remained ended up making over $3 billion.
If you have $200, buy 1000 shares. If you have $2000, buy $10,000 of the 2019 bonds. If you have $20,000 then you certainly have not invested in TC stock before.
All I know is I would have been guaranteed to lose money if I held my Gilead stock, as I would owe thousands more on my 2015 taxes due to a lot of trading I did in 2015. The stock I still was holding had built up big unrealized losses due to wash sale rules. IIRC the shares had a basis of $170!
Now I get to deduct that from other gains and save about $21,000 on my tax bill.
1) A gold drop doesn't kill them as much as a copper drop. $900 gold means about $21 million drop in annual profit. Who is thinking we get $900 gold BTW?
2) I think you have to file bankruptcy when you can't pay the bills and you are in default with your creditors. Maybe you can file before this time if you get a dishonest judge, who knows? TC should not be in default with creditors until late 2017, even with $800 gold.
I had to sell to lock in some losses for tax purposes. Need to buy back in 30 days...maybe buy back after the big drop when Merck gets approval. Gilead will drop to mid $80s on that day. They should be able to hit $120 later in the year though.