Monday, February 28, 2011

Don't Be Fooled By The Motely Fool...

The Motley Fool website posted a critical analysis of Hecla Mining (HL) today that is being credited for knocking 5% off the price of the stock.  Here's the piece:  GARBAGE  I felt compelled to post a response on the Yahoo/finance HL chatboard, even though trolling these types of venues is typically beneath me.  I did feel the need to clarify and post the golden truth.  Here's is what I wrote:
A very poor, amateur hack job.  To begin with, this information was released when HL released it's earnings last Thursday. The MF write-up has no new informational content.  Second, the guy makes it sound like they'll end up spending all of their cash to settle this. Wrong. The terms of what looks like will likely be close to the final settlement are clearly delineated in HL's earnings release. They'll have to use a little over $100mm up front and then use cash plus the exercise of warrants plus stock in amortizing payments out to 2014. For a company generating a run-rate of over $50mm cash flow/quarter with silver at $30, I'm not too worried about HL's ability to fund everything out of operations plus cash on hand.

Quite frankly I'm getting quite irritated by the all the amatuer, hack analysis on the precious metals and mining stock market that gets widely published.  Before I saw this MF train wreck analysis, I had mentioned to a long time colleague that I was getting really irritated by all the ignorance about this sector proliferating in the media and interenet.  The Motley Fool has proven time and again that they know as much about this sector as Ellen DeGeneres knows about the NFL.

This hit is a gift from the market. Enjoy it.
It took me all of about 5 minutes to pour thru HL's earnings release and figure out what was going on.  I'm sure I could justify a stock price of $22 for Hecla if I wanted to take the time to do a very thorough analysis of the latest 10K/Q plus spent 30 minutes on the phone with management.  I don't have time for that and I know HL is going to more than double from here eventually.  I took advantage of this market inefficiency (i.e. crap analysis) and doubled my position in the stock, as I was looking to put more stock on anyway!


  1. FWIW, It's spelled DeGeneres. And she may know more about the NFL than one might think, though it's doubtful.

  2. thanks E. I actually corrected it shortly after i posted it. ya she probably knows the names of of some teams and players just like the MF can probably spell "g-o-l-d" correctly and knows the names of some of the companies LOL

  3. So ok, HL was the targeted Bear raid today...good I can buy more.

    Great post Dave


  4. personally, i think it has more to do with CDE than it does some article in MF.

    i.e. my guess is hedge funds are pouring onto

    long CDE
    short HL

    and given CDE's production outlook for 2011 and valuation relative to HL, i can't say i blame them. CDE is undervalued.

    still like HL though...low double digits still good value and you're correct about the aspects of the settlement. shouldn't be a big deal as the payments are so spread out.

    (assuming something close to that gets approved)

  5. Yeah, thanks Dave for the alert.

  6. Motley Fool are mainstream media bullshit artists. They jump on and off whatever bandwagon is hot at the moment. Hacks are too kind a label for that outfit.

  7. LOL I agree Anonymous, but I have clients who read my blog and don't appreciate my foul mouth to the extent that I like to flaunt it LOL

  8. Dave,

    As a HUGE HL holder, I saw that hatchet job as well. It's laughable, but it seems immaterial relative to the stop running bear raid that precipitated shortly after the open. One of the above posters mentioned a spread trade with HL and CDE... it's certainly possible, although I wouldn't put a dime on such a trade in the long run. HL has been MUCH better to shareholders than CDE over the last 5 years, and the proof is in the price.

    That said, isn't it amazing that supposed litigation concerns in the 1/4 billion area seem to overshadow resources and reserves increasing by several billion $'s each? Especially when the net impact of these litigation concerns is less than $50mm greater than that which was already disclosed to shareholders in years past!

    As I've said before, I love the site. It's heartening to know that other professionals are noticing these poor attempts at price suppression and speaking truth to power.


  9. I would trust your analysis before the Motley Fools.

  10. Ben Davies, “A few notable commentators such as James Turk have talked extensively about the commercial signal failure in silver. As King World News readers know, we have been a proponent of this thought process as well. Positive silver lease rates at this point are more a function of credit risks, i.e. counter-party concerns, than they are about egregious metals shortages although metals shortages clearly exist.

    That gives ÿou a great deal comfort doesn't it? Don't worry about the silver shortage it's just the margin on JPM which is now over a 100 basis points. Normally that would be time to stop time taking the valium and start mixing mogadon with qualudes.

    Where do they find these people?

  11. HL balance sheet is still cleaner than CDE.

  12. Why no mention of the $133 million "tax benefit" associated with the settlement? It's not mentioned by either you or Motley Fool? It would seem to seriously reduce the effect of the $262 million estimated settlement amount.

  13. I figured MF's article was a hack job when HL started falling in the afternoon. Those clowns wouldn't know a good stock if they fell over it.