The Golden Truth: Don't Be Fooled By The Motely Fool...

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!

14 comments:

EdwardoMonday, 28 February, 2011
FWIW, It's spelled DeGeneres. And she may know more about the NFL than one might think, though it's doubtful.
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Dave in DenverMonday, 28 February, 2011
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
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BillMonday, 28 February, 2011
So ok, HL was the targeted Bear raid today...good I can buy more.

Great post Dave

Bill
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Dave in DenverMonday, 28 February, 2011
Thx Bill. HL is a steal today
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AnonymousMonday, 28 February, 2011
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)
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U6Monday, 28 February, 2011
Yeah, thanks Dave for the alert.
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AnonymousMonday, 28 February, 2011
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.
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Dave in DenverMonday, 28 February, 2011
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
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AnonymousMonday, 28 February, 2011
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.

-RTS
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EconomicDisconnectMonday, 28 February, 2011
I would trust your analysis before the Motley Fools.
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AnonymousMonday, 28 February, 2011
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?
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AnonymousMonday, 28 February, 2011
HL balance sheet is still cleaner than CDE.
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AnonymousMonday, 28 February, 2011
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.
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ConwayMonday, 28 February, 2011
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.
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.