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Endeavour Silver Corp. Message Board

warmcamp 44 posts  |  Last Activity: Jul 28, 2014 7:27 PM Member since: Oct 15, 2003
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  • Reply to

    my poor timing

    by bruce_wintersteen Jul 28, 2014 2:20 PM
    warmcamp warmcamp Jul 28, 2014 7:27 PM Flag

    Actually, DCIX was always an "investment" for DSX. It was created (spun off) by DSX few years ago; probably, because management expected to make killing on resurgent containership market. It didn't really work, unless shareholder corpses can be considered as a definite proof of "killing". It is still unknown, especially after initial "killing", whether this dog can ever hunt, even with this new cash infusion.

    Regarding DSX itself, it is still better than many peers, especially in terms of downside protection, so your purchase has good chance to end up successfully, i.e. with gains. Market really expect better rates ahead, though DSX management will likely dissent, as usual, during tomorrow call. Good luck with your DSX shares and don't get greedy when you have, hopefully soon, capital gains on hands.

  • Reply to

    my poor timing

    by bruce_wintersteen Jul 28, 2014 2:20 PM
    warmcamp warmcamp Jul 28, 2014 6:07 PM Flag

    Obviously, management still hopes that cascading ends soon. Anyway, company journey to containerships was a big blunder; hopefully, honest mistake. DCIX got 100% dilution today, it is an almost recapitalization. On the other hand, it indicates that management is more optimistic on containerships. Probably, they don't like high, relative to BDI, vessel prices in dry-bulk, and decided to move cash to greener pastures.

  • Reply to

    my poor timing

    by bruce_wintersteen Jul 28, 2014 2:20 PM
    warmcamp warmcamp Jul 28, 2014 6:06 PM Flag

    I don't think that DCIX announcement will have too big impact on share price. I would rather see today's share price move as related to tomorrow's earning report.
    It is another story that you probably overpaid a bit, i..e paying ~$10/share was a bit high relevant to present shipping rates (BDI). However, BDI can change quickly and when/if it gets to mid-high 800s, present DSX share price would be more in line. Hopefully, low BDI is a short-term phenomenon and your relative over-payment will dissipate soon. After all, no one can guarantee that share price drops to $9 after the earning report.

  • Reply to

    I see new lows coming

    by chrisnoore2525 Jul 25, 2014 11:36 AM
    warmcamp warmcamp Jul 25, 2014 5:52 PM Flag

    P/E is a bit high, but it is Ok taking into account strong balance sheet and low P/B.
    The actual problem, imho, is that market hates small-caps at the moment and this stock is illiquid. The latter makes it vulnerable to ETF/mutual fund selling. I don't know whether GIFI is part of Russell; probably, it is. Every time Russell and all funds linked to it have sell-off (it happens often these days) it means automatic selling and even if it's only few thousand shares, it is enough to kill share price. Illiquid and so it suffers collateral damage. It is fun to own an illiquid stock when small-cap goes up and it is the opposite now.

  • Reply to

    Warmcamp, got a question, r u there?

    by ctixers Jul 15, 2014 7:25 AM
    warmcamp warmcamp Jul 24, 2014 6:51 PM Flag

    Hello! I didn't see your message and apologize for late reply.
    The reason is that I "am not there" and this makes me poorly qualified to answer your specific question. In my opinion, it will be better time to re-visit "small producers" or even "big producers" somewhere in 2016 or even in 2017. Needless to say, any forecast has big chance to be wrong and long-term assumptions are wrong, for sure :)

    Good luck with your investments and, hopefully, we will find each other on some "small producer" message board 2-3 years from now.

  • Probably, it makes sense to remind about specific industry point that can sometimes cause big difference between spot and charter. Sometimes, the reason comes from the fact that in this sector it usually costs more to idle assets (ships) than leasing them out for very little (with loss) money. It creates sometimes situations when ship owners, already losing money, become desperate and agree to lease ships for very low rate just because it is still better than mothballing.

    I believe most people around know why mothballing can cost more (i.e. bring more losses) than low-rate lease. If someone doesn't know then feel free to ask for more detailed explanations.

    Obviously, this situation gives charterers better bargaining position when they deal with money-losing ship owners and, conversely, it puts financially sound ship owners in better bargaining position allowing them to get better rates. Also, the same rationale (better lease for little than keep it idle) can explain why very low numbers go specifically to spot rates. Desperate ship owners can accept losing money on spot, consoling themselves with the point that spot rate varies quickly. Locking in long-term money-losing charter could be for them just unbearable, both emotionally and financially.

  • warmcamp warmcamp Jul 22, 2014 6:54 PM Flag

    Eriktrade, the more correct argument would be not that DSX is a "great company" or that balance sheet is the best. The major point regarding DSX is that this company doesn't lose money even in present challenging environment. It means that it still controls own future. Does it mean that any person must buy shares now? Not at all. DSX always presented good investment opportunity because it is a comparatively transparent company disclosing all numbers to retail investors. Outsiders can see the numbers and make own informed decision.

    Regardiing book value, it should be noted that it has little meaning in this sector. Essentially, it is money that companies paid for ships bought in different times. Shipping prices vary. Do some shipping stocks trade with premium to book, while others go with discount? It is the most natural situation, because they all trade with no correlation to book values.

    Present sector situation still carries good deal of investor optimism. Firstly, many people still expect near-term surge in rates. Secondly, overall market is very strong (better say, it looks very strong). This sentiment can distort share prices. Please note that DSX was always a laggard when it came to following positive near-term sentiment. In other words, DSX always (comparing to other sector plays) presented more protection on downside than reward to upside. It is changing actually, but long-term reputation is something that changes very slow.

  • warmcamp by warmcamp Jul 10, 2014 6:55 PM Flag

    The most recent purchase and chartering of new capsize may reveal company philosophy behind “perpetual preferred shares" issue few months ago. Both deals are about the same in size. Share sale proceeds were around $60M, while new ship was bought for $58M.

    New shares carry sizable dividend rate, 8.875%, but they don’t bring any other obligations to the company except "liquidation $25/par value", i.e. company basically got $60M with only obligation to pay around $5M in annual dividends. It differs from bond sale when principal must be re-paid.

    On the other hand, by signing new cape for about $25K/day, company makes about 13K-14K/day in free cash flow ($$ after all cash expenses). It makes for about the same $5M/year.

    It can be assumed that DSX planned new capesize purchase for some time, before the announcement, and possibly they arranged the preferred sale for specific purpose: buy new ship that could cover all dividend payments. If rates go up from now then company can make more than just justify the sale. Also, ships have “residual value”. When they're done (after 20-25 or more years of service) they are sold to scrap and cape can bring in good money; maybe $15-20M (I didn’t check scrap prices recently, and so I apologize for approximate numbers here).

    Needless to say that in case rates go down this share sale will be less attractive. Please note that dividend is not counted against earnings; it affects cash flow only. Also, dilution was small because company sold shares for $25/share, i.e. much higher than market price.

  • Reply to

    Trading Volume, July 3

    by rnomava Jul 6, 2014 3:59 PM
    warmcamp warmcamp Jul 7, 2014 5:30 PM Flag

    Copper demand is robust and warehouse storage numbers are very low. Also, rumors about Chinese break-down were slightly exaggerated, as it always happens with the rumors propagated around time of Chinese New year. Hint: China has vested interest to keep major commodity prices low.

    SCCO runs on positive momentum now and it can be sufficient to get in mid-to-high 30s around time of next earning release.

  • New capesize ship has been chartered for very profitable rate. It adds about $11K/day to company earnings ($4M or 5 cents/share annually). DSX has another cape ship waiting for renewal this year. It is currently employed with rate about twice lower than presently announced. It can provide another positive support to earnings.

  • Reply to

    Good Deal IMO

    by pioneerrubi Jul 4, 2014 1:39 PM
    warmcamp warmcamp Jul 5, 2014 11:02 AM Flag

    It is too funny, but I have to make addition to the preceding post. It is necessary knowing history of this board :).
    I used an expression "U S-based person" (no spaces). It seemed to be innocent, but by some reason Yahoo filter decided it as a profanity. It is too funny.

  • Reply to

    Good Deal IMO

    by pioneerrubi Jul 4, 2014 1:39 PM
    warmcamp warmcamp Jul 5, 2014 10:58 AM Flag

    All flow-through shares get sold to Canadian investors. It would be hard to find #$%$-based person willing to pay formal premium to share price and get no tax benefits in exchange.

  • Reply to

    Good Deal IMO

    by pioneerrubi Jul 4, 2014 1:39 PM
    warmcamp warmcamp Jul 4, 2014 7:17 PM Flag

    I feel it's necessary to explain how "flow-through" mining shares work in Canada. It means, in short, that company passes future exploration expenses (coming from stock sale proceeds) to new shareholders. For example, if (for simplicity sake) all flow-thorough shares are bought by single person (Mr.X) and then company spends all proceeds on mining exploration in Canada then, according to Canadian tax laws, it means that all this expense was incurred personally by Mr.X, not by the company; and Mr.X is entitled to deduct this expense from taxable income. If Mr.X has federal marginal tax rate in 25-30% range (I don't know exact number, but guessing Canadian taxes are even higher) then he gets substantial gain to show against this stock trade.

    More specifically, if Mr.X buys flow-through shares for 1.70 and keeps them long enough to get all exploration done for this money, then he can sell for the same1.70 (if it's possible) and still pocket substantial gain (completely tax-free!). God bless Canada.

    PS: I apologize in advance for possible inaccuracies in explanations above. Please note that I am not a professional tax specialist and I don't live in Canada.

  • Reply to

    Mining tax stability in Peru

    by warmcamp Jun 21, 2014 10:34 AM
    warmcamp warmcamp Jul 4, 2014 6:44 PM Flag

    New law proposes, besides other mining incentives, to limit EIS (environmental impact statement) approval time to 30 days. It takes now about a year to get such approval in Canada, and it can take longer than human life in U.S.

  • Reply to

    Good Deal IMO

    by pioneerrubi Jul 4, 2014 1:39 PM
    warmcamp warmcamp Jul 4, 2014 6:38 PM Flag

    Canadian flow-through shares carry big tax-credit discount to buyers, 25-30% in average. It means that shares are sold for about $1.20, after tax discount.

  • Peruvian congress considers new law promising 15 year stable tax jurisdiction for new mining projects in Peru. No tax increases for many years to come. Search Google news for "peru mining tax". The official goal is to promote mining investment in the country.

    This new law is proposed by President and has broad bi-partisan support, it will be adopted soon. It is a good confirmation of favorable mining regime. Peru has become one of the best mining jurisdictions in Latin America, surpassing Chile and Mexico.

    SCCO expansion in Peru is on relatively good geopolitical track. Current government is surprisingly pro-business. There were grave concerns about Ollanta when he came to power and he proved them wrong. Serious political opposition is even more pro-business. It promises many years of stable mining development in the country.

  • warmcamp by warmcamp Jun 13, 2014 6:49 PM Flag

    BDI is close to make 52-week low and long-term rates seem to start giving way to pressure from low spot numbers. As of now, i.e. taking into account today's financials (earnings, cash flow and revenues), share price is hardly sustainable. In other words, it carries good deal of optimism about future rates. Future is hardly predictable and so this stock situation requires some caution, imho. If any profits appear then they should be taken off table and entry points should be selected in careful way.

    New charter (Oceanis) is made both below preceding charter rate and below important psychological 10K/day level. DSX still has strong balance sheet, but it is not that strong as it was couple years ago. Company financials are more dependent now on future improvements in rates and the word "future" means now shorter term.

    If BDI stays under 1000 for couple months then vessel values go down and DSX will likely buy more ships. It will inevitably increase leverage and market risks. It may indicate bumpy road for this stock this year. In my opinion, low 10s are very possible in near term and buying even on that level is not a slum dunk. Personally, I would be inclined to buy, but risks are obvious.

    It must be noted, especially because of specific situation on this message board, that DSX doesn't lose money, technically speaking (in operating cash flow terms). However, this positive moment cannot support share price indefinitely. At some point market wants to see earnings. For some time (last few quarters) market sentiment was positive about this sector, i.e. market ignored lack of earnings hoping on near turnaround. This sentiment cannot last forever.

    In total, DSX is a strong company with experienced management. However, they cannot control shipping rates. They can only ensure that company survives bad times. It lends support to share price, but this support cannot go unlimited.

  • Reply to

    Reinstate the dividend

    by edsmoe Jun 10, 2014 11:40 AM
    warmcamp warmcamp Jun 10, 2014 5:20 PM Flag

    This "dog" is almost 25% up during last 12 months. It is a bit better than S&P500. It is not the most impressive performance (market is very strong), but still it is not something to be labeled as "dog", imho.
    Dividend will be restored here only when shipping rates go up about twice higher than they are now.

  • Reply to

    Diversion

    by rogluther Jun 6, 2014 1:25 PM
    warmcamp warmcamp Jun 8, 2014 10:29 AM Flag

    I guess this divergence is caused by wide, across-the-board buying of U.S. equities. It goes mainly through index buying, lot of cash moved to equities last week. FCX is supposed to get better benefits being represented in numerous U.S. index funds, i.e. FCX stock is perceived by mainstream investing public as much better connected with U.S. market and economy.

    On the contrary SCCO is more specialized copper play, essentially a foreign company for U.S. fund investors. Copper was under pressure last week, again caused by foreign events, and SCCO paid price. TCK was weak too, by the way; also a "foreign copper stock". Needless to say, "foreign" is not always a bad word for investment, it just happened that it worked against SCCO last week.

    In other words, it is not a manipulation; it is an orderly market (ordered by investor sentiment) and SCCO drop last week has created new opportunity, imho. "Chinese investigation" worked last week to drop copper price, but looking in details of this event it's difficult to see it holding water for longer than few days. In my opinion, it's more like last attempt by well-connected Chinese bureaucracy to press copper down just a bit before it flies. Could this be called "manipulation", by the way? Maybe, but really it doesn't matter how you call it. It is more important how to use it.

  • Reply to

    Charter renewals this month

    by warmcamp Jun 7, 2014 11:00 AM
    warmcamp warmcamp Jun 7, 2014 11:01 AM Flag

    ...continued from preceding message

    The only ship in question is Leto. Its present rate 12.9K is probably a bit higher than market and it could give the charterer justification to re-deliver at earliest point. If it's the case then we will here from DSX about new Leto charter very soon (in upcoming week?).

    In total when all 6 ships are re-chartered (it will happen this year) then chances are very high that combining revenue for this ships increases.

EXK
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