Articles

The Velocity of Money Our Little Island World GDP = (P) x (T) P=MV A Slowdown in Velocity Dallas and Thoughts on the Economy This week we do some review on a very important topic, the velocity of money. If we don't understand the basics, it is hard to make sense of the hash that our world economy is in, much less understand where we are headed. But before we jump into that, I want to let my...

 

Remember when $25, 000 was a success? Now it is a garbage collector. Frank Dane At one point on Monday the Dollar was trading in the red and Gold which should have shot up was actually trading roughly 10 dollars lower. As the Day progressed both the Dollar and the Euro were trending upwards together while Gold continued to slide.  The story below attempts to provide a reason for this phenomenon. March 8 (Bloomberg) -- Gold prices in New York fell the most in a month on speculation that Greece’s fiscal crisis will be resolved, reducing demand for the metal as a...

Some of the difficulties involved in valuing oil companies are because the company is always developing along the trajectory from 'we think there's oil there' to 'we know there's oil there and we can prove it'. As an investor, you're looking for the extra value - which might not be what the reserves are worth now, but what you think they'll be worth if three out of the next five wells hit oil. Remember that reserve values can grow in two ways. First, the reserve can be increased if the company actually finds oil. But secondly, it can be increased if...

Markets continue to be described as volatile, the translation being ‘investors are finding it almost impossible to identify a directional trend'. There are reasons for this; some from far flung locations such as China and Greece, others are closer to home, and therefore more relevant to the smaller company index in the UK. The first concern occupying the minds of investors is the general election, and the unquantifiable implications of the numerous outcomes. The second is the much muted double dip. Were it to happen, there is unlikely to be much evidence...

The past few weeks have seen economic data and news flow playing out across the markets each week. If 2009 was all about banks, then 2010 is panning out to be all about countries, or more specifically the amount of sovereign debt and the associated fears of potential default. Taking centre stage at present is Greece, but waiting in the wings are Spain, Portugal, Ireland and Italy. The current issues in Greece and the implications across the wider European Union are making an understandably uncertain market even more nervous. Monetary policy decisions...

The US Mint’s popular American Eagle gold and silver coins remain in high demand by US investors.  Working to overcome production bottlenecks, the Mint radically stepped up operations last year to the highest levels by far of this entire secular gold bull.  The Mint’s Eagle sales data offers interesting insights into physical precious-metals demand. Back in the early 1980s, foreign gold coins like the famous South African Krugerrand were soaring in popularity.  The US Congress didn’t want the United States to be left out of the prestigious national gold-coin realm, so it crafted the Gold Bullion Coin Act of 1985 which...

The UK market doesn't seem to care about our debt or the trouble we are in - the only thing that counts is following the US. Wow. Great results from Nestor Healthcare Group (LON:NSR). I can see why they've been rising. I'm up more than £5,000 now including the spreadbets. On those figures I'm not at all tempted to cash in yet. Indeed.. can you guess what's coming? Yes, right! I bought some more! This time another 8,000 at 51.9. New target for these is 70p. I think there is another 25% upside here. The...

Edison Investment Research today published a report on Faroe Petroleum entitled "On The ‘Explorer’ Success Track". In summary, the report says:

"Faroe has built a unique portfolio of exploration licenses in the Atlantic margin and Norway, which are combined with producing assets. Recent drilling success at Tornado and Glenlivet is supported by an appealing exploration programme with seven committed wells to be drilled in the next 24 months. Its strong balance sheet was boosted last year by the £25.5m disposal of the Breagh interest and is backed by credit facilities, enabling Faroe to fully fund its exploration and capitalise on new opportunities. These factors point to further unlocking of its significant risked value. "

Edison Investment Research today published a report on Oxford Biomedica (OXB.L, LSE:OXB) entitled "No Surprises In Results". In summary, the report says:

"Oxford BioMedica remains an attractive recovery play: its current market cap implies little value is attributed to TroVax and the upside potential in the stock. With a solid cash position of £25.3m, the company has a good chance of partnering ProSavin on attractive economic terms (and re-partnering TroVax) in 2010. The year should also bring clinical catalysts, including further ProSavin Phase I/II data and the initiation of new trials –Phase IIb for TroVax in prostate cancer, Phase I/IIa for two ocular assets."

Valuing oil exploration companies is quite tricky. You're valuing possibilities and probabilities, rather than actual resources; and there's no one way of doing it, but rather quite a few different approaches. Even where a Competent Person's Report (CPR) gives you most of the data on resources, you need to be able to take your own view on what the resources are actually worth. I'm going to run two articles on this topic. This first one is about how oil exploration companies develop and what resources and reserves are all about. Then in the second one I'll go into more detail about...

Geopark Hldgs (LON:GPK, 424p, ▼ (0.82%)) has formed a new strategic partnership with LG International Corporation ("LGI"), the Korean conglomerate to jointly acquire and develop upstream oil and gas projects in Latin America. LGI is the energy, natural resource and trading affiliate of LG Corporation, the large international Korean company with 147 subsidiaries operating in over 50 countries and with annual sales exceeding US$100 billion. LGI has successfully invested and operated in the oil and gas exploration and production business for over twenty years including current upstream oil and gas projects in Oman, Vietnam and Kazakhstan. LGI has adopted a long...

Edison Investment Research today published a report on Inchcape (INCH.L, LSE:INCH) entitled "Strong Second Half". In summary, the report says:

"While trading results fulfilled the promise of the December 2009 trading update, the market seems to be concentrating on the uneven rate of recovery across the group’s various markets, rather than Inchcape’s medium-term potential and the strong balance sheet. The share price appears to have stabilised over the past six months, but refuses to acknowledge the underlying quality of the overall business which enables management to grow earnings in flat markets."

Edison Investment Research today published a report on SNC-Lavalin entitled "Balanced Exposure". In summary, the report says:

"SNC-Lavalin is a truly global play with broad-based end markets that allow investors to take a secondary exposure to the upturn across mining, transport infrastructure, oil & gas and power. The performance of the group over the past five years has shown its resilience even in these turbulent economic times with a 30% CAGR in net income and a 28% CAGR in dividends. Likewise, with improved risk management practices following the impact of the poor performing thermal power project in 2007, return on equity has averaged 28% over the past two years. Given the group’s ability to transport knowledge from..."

Edison Investment Research today published a report on Ym Biosciences entitled "Cytopia Adds Diversity". In summary, the report says:

"YM BioSciences has extended its cash runway into 2012 by raising US$17.5m after its February all-stock acquisition of Australian biotech, Cytopia. Cytopia adds two oncology projects (including an oral VDA) to YM’s portfolio, and diversifies risk. Nevertheless, potential best-in-class EGFr inhibitor, nimotuzumab, remains central to the investment thesis: read-out of key clinical trials and possible further partnering activity on the back of this suggests that 2010 will be an important year for YM."

Edison Investment Research today published a report on Merrion Pharmaceuticals entitled "Imminent Deals". In summary, the report says:

"Merrion transforms injected drugs into oral pharmaceuticals, offering relatively low development risk with minimal marketing uncertainty. Final FY09 results on 8 March show strong revenue growth due to payments from Novo on oral insulin and GLP-1 for diabetes. We anticipate a major Orazol deal in Q2-Q3 based on last year’s clearly indicative Phase II data. The formal grant of the US patent removes a potential uncertainty. Merrion may also sign other deals during 2010. "

Cove Energy announced this morning a placing of 64,300,000 shares of 1 pence each at 40 pence per ordinary share. They have raised £25.7 million to be allocated towards explorational commitments and working capital. Cove expect the new ordinary shares to trade on AIM on the 15th March, 2010.The upstream oil and gas company say they will use the new capital  for ongoing commitments in Rovuma Basin, offshore Mozambique as well as for general working capital requirements. Following the success of the Windjammer project thirty miles off the Mozambique coastline in February 2010, the company are said to be...

Edison Investment Research today published a report on Molins (MLIN.L, LSE:MLIN) entitled "Pension Fears Eased". In summary, the report says:

"Molins shares have rallied significantly from their low point in spring 2009, but they remain materially undervalued relative to larger, UK-based multinational engineering groups. Fears about the pension scheme liabilities should have eased substantially following agreement with the trustees and sentiment ought to improve as the Packaging Machinery division recovers over the next two years."

Global Energy Development (LON:GED) reported today a pre-tax profit slump in 2009, attributable to volatile and consistently low oil prices. In a separate announcement today, the company announced their three year plan to increase production volumes.  Global Energy Development is a petroleum exploration and production company focused on Latin America, where they pursue a long-term strategy of finding and developing reserves. The company holds 100% of all contracts and rights to explore for and/or produce oil and gas from a geographically diversified portfolio of prospective acreage in Colombia, Peru and Panama.  According to the report, profit before tax for the year plunged...

Edison Investment Research today published a report on China Real Estate Opportunities entitled "Tender Offer Underway". In summary, the report says:

"Results for the year to 31 December 2009 were broadly in line with forecasts and February’s trading update. EPRA NAV/share in GBP was 14% down for the year overall, at £11.37, but recovered by 7% in H209. Income was stable in local currency, despite a fall in the average occupancy rate, due to increases of up to 5% in rents/sq metre. We covered operational progress including asset sales and refinancing in our recent update. As previously announced, CREO is currently engaged in initiatives to improve its equity rating, ie a tender offer to address a stock overhang, and a proposed..."