There has to be some significance here. That is 6% of the float in a single transaction...notice the cancelled trade ahead of the actual trade for fractions of a cent more. I wonder if this is also tied to the sizable price drop in the last 15 minutes of trade Friday. Perhaps the pre-arranged deal was based upon SVM's closing price.
Looking at the 5 year correlation between PAAS and SLV there is a 100%+ divergence (In SLV's favor). Yes, Pan American management has made some mistakes, but I have to believe they are smart enough to "buy low" and ratchet up a share buyback program! Look at the silver prices the last time PAAS was around the $10 level:
September 2003 $ 6.30
November 2008 $10.80
October 2013 $22.40
There is enough cash to bring that float down a little from above the 150 million share level. Issue a little debt or temporarily suspend the dividend to do it if you must. Unless there is a bombshell about to hit this stock that insiders know about then why wouldn't we buy back shares at decade lows?
Sentiment: Strong Buy
Yes, PAAS is a great buy at these levels if you are patient and have the stomach for volatility. When PAAS increased its quarterly dividend by 150% in February, they also announced increased probable and proven silver mineral reserves totaling 317 million ounces. With a today’s market cap of $2B, a simple calculation yields a value of $6.31 per ounce of proven/probable reserves.
Historically, PAAS has been able to significantly exceed that net profit margin. On one had there is increased chance of resource nationalization and rising production costs. On the other hand, central banks around the world are printing money at unprecedented rates and spot silver prices are close to many companies’ costs of production; which inevitably leads to reduced supply and rising prices.
We could balance potential further write downs with potential increases in proven/probable reserves and favorable mergers/industry consolidation. Physical silver has a floor in the low 20’s, regardless of what the paper market does.
As the equity market becomes even more saturated with FED liquidity and people search for yield and value plays, PAAS is going to stand out.
Sentiment: Strong Buy
As mentioned by another poster here, this Blackrock ownership is interesting and likely not a bad thing. They're not exactly in the business of losing money.
(9) Aggregate amount beneficially owned by each reporting person
(10) Check if the aggregate amount in Row (9) excludes certain shares
(11) Percent of class represented by amount in Row 9
Dated: February 4, 2013
Wow, if you don't have time to read a few paragraphs of text as part of gauging market sentiment and your investment "decisions", then I guess that says something about the value of your process. Add in some baseless attempt at a personal attack to a reasonable post and I've got your value on this board summed up pretty quickly!
Simply a great question - need? No. However, some mega-FaceBook users I know seem to have self-esteem or other personal issues, coupled with an inordinate amount of free time to waste.
I would think that might make them very good consumers and thus beneficial to FB, except, generally they don't have much disposable income due to spending all day playing free games on Facebook.
What is interesting is that, in order for FB to succeed financially, they essentially have to become something they were/are not. For example, they have to out-Google Google or out-Amazon Amazon. The mid-term question becomes whether or not those efforts are successful and whether or not they alienate users in the process.
One of my main FB concerns is that a number of people I talk to have become very guarded about their FB postings. I hear things like, "I haven't been on there in months" or "I need to go delete my profile". Others are now posting mostly "sanitized" versions of their life just to save time keeping up with distant relatives or aquaintences that they otherwise don't have time/inclination to call. I think there is a purpose/value to FaceBook, but I think people are aware/becoming aware of the privacy trade-offs as well.
It kind of makes me thing the next move is lower here after a 50%+ run up. But, perhaps there's a few more shorts to roast...could go either way short-term.
Unless FB can get back over $28 today, it makes me think that a lot of this "news" on its inclusion in the N-100 index was already baked in the run-up from $19.50 to $28. Now you have the speculators that anticipated the index news cashing out their profits before the next lockup expiration (next week).
I suspect that many employees sitting on paper profits will want to realize those gains now (bird in the hand), especially knowing that capital gains rates are going up next year. It will be interesting to see if additional index fund purchases can counter those sales.
I suspect there's also a lot of momentup players that will pause purchases once FB isn't going up $2 per week due to the speculator front-run of the index news. I guess this thing can go either way, which makes me uncertain in the near-term. Given how quickly technology and competition moves, it's hard to be certain in the long term, too. That's especially true given market saturation of the developed countries. By the time China let's FB play there, they'll have to enter via a partnership/acquisition with one of the existing Chinese companies.
WIth all this uncertainty, what the heck am I doing investing in this stock right now????
csp, I don't disagree with the second part of your thoughts, but I'm not following you on why it costs FB more in taxes if the price is lower. Can you please explain a bit why a lower PPS results in additional costs to FB?
Thanks for the cogent thoughts...here are a couple of counter points to play devil's advocate. As a data point, Yahoo Finance shows 80M shares short out of a 1.31B float when the stock is trading pretty close to previous lows.
top executives leaving, lets assume they all hold more than 1M shares each.
I agree, this is generally a bad thing in the short run. However, it seems kind of like the thing to do for these social-network companies. Also, if someone was just hanging onto their job for the IPO payout then it is probably best that they leave to open the position to someone with new energy that is still "hungry".
FB hasn't had one major inside buy yet.
The reality is that many of the holders make maybe 100K a year, but all of a sudden they had $1M in shares when this went public...Any smart person is going to sell at least 1/2 their shares and diversify their investment. Even 1/4 of total shares is still 350M shares, or 7 days worth of volume in a single clip.
Good point, but let's be honest. Even if future prospects are good, no smart employee with the majority of their wealth already in the company is going to buy more shares before they have a chance to sell what they already have.
The reality is, perhaps, that a portion of the 80M shares that are already shorted come from these employees you are talking about. If I were an engineer watching the price drop from $38 to $30 you can bet I would be leveraged to the hilt shorting as many shares as I had in options just to protect that position prior to their "unlocking". To the best of my knowledge, there is nothing preventing employees with "locked" options from shorting their own company and using their shares that are about to unlock to cover those shorts. That scenario is quite possible as these are not dumb people working there.
Also, we have to keep in mind that Zuckerberg promised not to sell any shares for at least one year. I believe he will keep to that word and I believe he is one of the major shareholders. :)
In the end, it's just really hard to value FB, but I'm pretty confident they are not a "fad". Besides teenagers gossiping, families legitimately use Facebook to stay in touch, high schools to organize reunions, companies and social causes to promote awareness, debate politics, etc. Like it or not, I believe Facebook is here to stay. I do like the idea of an e-commerce enabled Facebook where I can choose some items from a friend's wish list for their birthday. Niche companies looking to compete with Amazon may like that as well.
Maybe Facebook isn't like a chair, but more like a realtor. Homeowner's don't really want to pay the 6% commission to sell a house, but realtors pretty much control a key marketing platform (MLS).
It seems clear that keeping the stock market near current levels is in the interest of some pretty strong powers/players out there. Historically, retail investors are known as the "dumb money," buying high and selling low. However, for the most part, retail has steered clear of the market. Facebook's decline following its IPO is one significant symbol/reason why the retail investor does not trust the casino right now.
So, if you are one of the major powers/players and you want the retail tide of money to flow out of fixed income and into equities, what must happen? If you guessed, "Prevent FB shares from falling further and/or make them rise", you win! If the retail investors see Facebook shares climb back up in value then it won't look quite so bad for the Wall Street banks that took the FB IPO participants for such a ride.
"See, it wasn't theft, merely a temporary overreaction to the downside for what is truly a one-of-a-kind company with over a billion regular users." I know shorts will disagree, but the current $42 billion market cap on Facebook seems reasonable to me.
By comparison, Amazon, while a more mature company, has a $110B market cap (2.6 times FB), a trailing P/E of 297, and only $377M Net Income Avl to Common (ttm according to Yahoo statistics). Facebook is just getting rolling at monetizing their assets and is already producing billions in operating cash flow.
All I'm saying, shorts, is be careful if/when market sentiment changes towards Facebook. To me, the chances that the next gap is up seem to outweigh the chances for a gap down; even with the shorts incessant repetition of shares unlocking soon. You may wake up one morning to find the market has already priced in those shares unlocking and then some.
Wow, thanks so much for that valuable insight! I'll be sure to dump everything right away!
Whatever, that Barron's article was complete garbage. All it did was allow us to accumulate shares at lower prices. I believe we move higher from yesterday's prices.
Great question...very interested in seeing the action at today's close as well as tomorrow's open. I have a gut feeling (totally could be wrong), that this quick drop from $23 was something of a "shakeout" and we might see a gap up at the open one of these days.
Personally, I bought to complete a core position this morning and have to say that I'd be pretty comfortable holding a while unless there is some major geopolitical event that throws the entire market into chaos. I have a feeling that the next lockup expiration may not be as "eventful" as some fear.
Reading between the lines, I think those that are believers/buyers of the stock undertand that there is a huge base of users and there is now a motivation to monetize that value. Make no mistake, FaceBook will find more and more revenue stream opportunities going forward. I believe Zuckerberg is simply smart enough to know that he could alienate a potentially fickle user base if he makes it all about the money and doesn't concern himself as much with the user experience.
Maybe Q3 or Q4 of this year isn't blockbuster from a profit perspective, but I have a strong feeling that next year and the year after certainly will be.... If you wait until then to buy the stock, it very well may be too late, unless the overall market deteriorates as well in that time frame.
I agree...that would not surprise me in the least. It's really just a matter of timing/when.
I'm not an expert on chart patterns, but it almost looks like we have a cup and handle forming between the end of July and September 19th (the cup) and from there until now creating the handle. If true, that would definitely be a bullish sign.
Personally, it would not surprise me to see FB trade back up to the $28, or even $32, level that it was at only two months ago. The Barron's article was crap and, if this market holds up, I believe FB will see much higher levels from the $19.80 price we experienced today.
There are a lot of money managers that would love to be part of a 30%+ move to catch up on their lagging performance against the S&P benchmark. FB moving from $20 to $28 gives them what they are looking for and helps out a lot of related, underwater, funds that were left holding the bag in the meantime.
Do all the "fundamental" analysis that you want, but I believe the recent "shakeout" coupled with Barron's garbage analysis have given money managers the opportunity they needed to load the boat with FB shares at relatively low prices. Now we have the fuel and the motivation to move up, IMO. In the absence of deep knowledge on FB's ultimate strategy and ability to execute, no one can be proven right or wrong on a valuation. However, given other factors and motivations at play in this stock, I think this thing is headed higher.
Unless we have a major geopolitical event, I'm on record as calling a bottom in FB today. I put some money where my mouth is as well. If I'm wrong, then you can throw it in my face later, but we'll see about that.
Between Goldman's $37 target and this news that FB is moving full-speed ahead with monetizing mobile, I'm kind of surprised to see a 9% selloff today! That Barrons hatchet-job seems to be swaying more opinion today. I ask myself, really, FB is worth 10% less today than its last trading day because of some "new" revalations from Barrons??? Doesn't pass the smell test, IMO.
Facebook goes live with Bango for mobile payments through carriers
The social network will now accept payments from users through carrier services in the U.S., U.K., and Germany.
By going with Bango, Facebook might increase its chances of getting mobile customers to buy products. According to Bango, 77 percent of those who click "buy" on a digital good and use the Bango platform will actually complete the purchase. In traditional carrier billing models, that conversion rate is closer to 40 percent, Bango claims.
Quite a difference between Barrons and Goldman opinions/estimates!!!
Facebook (NASDAQ: FB) had its price target lowered by Goldman Sachs from $42.00 to $37.00 in a research report released on Monday morning.
“Due to movements in the comp group share prices over the past few months, we are adjusting our P/FCF multiple to 65X from 80X and our EV/EBITDA multiple to 20X from 25X. As a result, we are lowering our 12 month price target on Facebook from $42 to $37 (equal weights of DCF, P/FCF, EV/EBITDA). Our earnings and revenue estimates remain unchanged. At $23, Facebook is trading at 13x our CY13 EV/EBITDA forecast, which compares to our comp group mean of 25X.