Trading/Investment Thread

[coincrazy]

Something I found posted on another forum from casey research.

With much respect to Casey Research.

9-13-2011
Silvercorp
(US$6.30, 175.06M SO, $1.10B MCap, www.silvercorp.ca)

Re: http://alfredlittle.com/2011/09/13/silve...
Comments: Silvercorp was hit by another accusation of wrongdoing today (which you can view in the link above), and the stock plummeted 19.6%. Our first impression of this report is much the same as the other one – biased, long on innuendo, short on proof, and in some cases, flat out wrong. Let’s go through the accusations one-by-one so you can see why we are not panicking about our position…

The report states that their “investigator” picked up a couple rocks that fell off an ore truck and the assays showed much lower grade material than SVM reports. The report notes this sample is not scientific, and promises better data in the future, but that doesn’t stop them from publishing nonsense numbers now. They also counted the trucks entering the mill and say there are not enough to add up to the tonnage of ore SVM says it’s processing – but how many days did they count? How many days did they count when there was a power issue at the mine, or one of the mill circuits was down for maintenance? What does it really prove to have a guy skulking about the bushes taking pictures and picking up rocks?

One very important fact that seems to have escaped the authors of the report is that SVM direct-ships high-grade ore to a smelter. This is a very significant part of production that does not go to the mill, and that would affect the number of trucks entering the mill, as well as the grade of the ore going to the mill (or falling off a truck along the way).

The report also falsely claims that Silvercorp’s narrow veins cannot be mined without dilution, reducing the average grade. This is simply not true. There’s a technique called “resuing” by which you tunnel next to the ore, and then take only the ore to the mill. The ore needs to be just right, but SVM’s massive sulfide veins are just right for this. Plus, there are areas where the veins are meters wide, and still grading kilos per tonne, so they can be mined directly. Louis James has been there and seen this, and saw it in multiple places in multiple levels of the mine.

The report also makes a big fuss about how large SVM’s MCap is compared to its resources and reserves. They say SVM “should” have more resources. This is more nonsense. It’s very common for vein deposits to have only a year or two in reserves drilled off in advance. Yes, that’s a risk factor, but its normal – drilling off the whole deposit in advance is just too expensive. Nobody does it. Furthermore, SVM trades at lower multiples and metrics than many other silver producers, probably because of the “China discount.” It is simply not overvalued, compared to its peers. This accusation smacks of dishonesty.

Another fuss relates to SVM buying a project from a relative of Rui Feng’s – but that, too, was disclosed at the time. Whether or not the relative made a profit is not relevant; what matters is how much the property is worth to SVM. The report states, “SVM’s independent directors need to explain how this could possibly be a fair price.” But the appropriate place for such a challenge is directly to management, or at a shareholder’s meeting. Since these avenues were apparently not tried, one must question the motives of the company’s attackers.

The report makes another big fuss about SVM selling concentrate to a smelter in which it owns at 15% stake. This ignores the fact that this was fully disclosed when SVM made the investment, and that SVM made the investment to ensure better terms for its sales and security for its contracts. This is not a bad thing, but a very good thing. The authors say they were “shocked” to see this well known and fully disclosed fact, but that's a crock.

[coincrazy]

WTF is Muddy Waters?
http://www.economist.com/node/18929130

Make sure to check the comments:
http://www.economist.com/node/18929130/ ... s#comments

An interview with Carson Block:
http://www.cnbc.com/id/42556530

Their $1000 wordpress website domain registered through godaddy with most recent update being June 28:
http://www.muddywatersresearch.com/

What is this guy doing?
http://www.canadianbusiness.com/blog/bu ... ort-seller

[beauanderos]

http://finance.yahoo.com/q?s=svm&ql=1 David Morgan has scheduled a Friday interview with James Puplava of Financial Sense (a very credible source and interviewer). It should be interesting to listen to. The stock is starting to rebound strongly right now off of earlier lows. CC, thanks for posting those links, read one of them so far and it seems like this guy is off-base with his allegations. Which doesn't change the fact that he probably still made a nice profit off of panicked longs when he filled (or starts to fill) his shorts.

[68Camaro]

I jumped on it this morning for 5000; just off the low, not quite as low as I would have liked, but ok. We'll see what happens.

[beauanderos]

I jumped on it this morning for 5000; just off the low, not quite as low as I would have liked, but ok. We'll see what happens.

You dog! We scratch the fleas, and you swipe the bone!

[68Camaro]

That's me, just an ole cur.

[NHsorter]

I doubled down again at $6.07 and averaged down my buy in quite nicely. Hopefully we have seen the bottom. Can't wait to turn the profits on this one into some real hard money.

[fasteddy]

Well I had a buy at 5.75 but didn't make it....I am hoping this CRUD is over....thanks for all the links fellas.

[beauanderos]

Too soon to start slapping each other on the back, but a smile might be in order. Stock is up 15% right now.

[NHsorter]

Oh yeah, I know it is not over until you complete that sell order. I'm not dancing yet, but it is still fun to watch that chart spiking for now.

[68Camaro]

A couple of blood-suckers (one below) have gotten wind of this. When you read it, you'll see that some anonyomous source (emphasis mine below) with an admitted short position "leaked" the information. Looks like a mess.

NEW YORK--(BUSINESS WIRE)-- Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of the securities of Silvercorp Metals, Inc. (“Silvercorp” or the “Company”) (NYSE:SVM - News), concerning whether the company and certain of its officers and directors have violated federal securities laws.

On September 1, 2011, the Company was forwarded a copy of an anonymous letter dated August 29, 2011, addressed to the Ontario Securities Commission, the Company’s auditors, and various media outlets alleging a “Potential $1.3 Billion Accounting Fraud at Silvercorp. The letter also alleges that Silvercorp reported a profit in 2010 in a Securities and Exchange Commission Filing, while also reporting a loss to Chinese regulators. The anonymous author also acknowledged he had taken a short position in the Company. On Friday, September 9, 2011, The British Columbia Securities Commission confirmed it was investigating this anonymous allegation against Silvercorp. On this news, shares of Silvercorp plummeted $1.54 or about 20% to close at $6.30 on Tuesday, September 13, 2011.

If you are aware of any facts relating to this investigation, or purchased shares of Silvercorp, you can assist this investigation by contacting either Peretz Bronstein or Eitan Kimelman of Bronstein, Gewirtz & Grossman, LLC at 212-697-6484 or via email eitan@bgandg.com. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.

Bronstein, Gewirtz & Grossman, LLC is a corporate litigation boutique. Our primary expertise is the aggressive pursuit of litigation claims on behalf of our clients. In addition to representing institutions and other investor plaintiffs in class action security litigation, the firm’s expertise includes general corporate work, private securities offerings, and securities arbitration.

[NHsorter]

I BELIEVE THAT THIS IS GOOD NEWS??

Silvercorp Repurchases Over $31 Million of Shares Under NCIB
43 minutes ago - Marketwire via Comtex
Marketwire

Silvercorp Metals Inc. ("Silvercorp" or the "Company") (TSX: SVM)(NYSE: SVM) announced it has acquired a total of 3,918,012 of its common shares at a total cost of $31,290,657 (average price of CDN$7.97 pursuant to its normal course issuer bid ("NCIB") announced on June 17, 2011.

Under the existing NCIB the Company intends to acquire up to 10 million common shares. All common shares purchased under the NCIB will be cancelled.

The Company is purchasing its owns shares because it believes that prevailing market conditions have resulted in Silvercorp's shares being undervalued relative to the immediate and long term value of Silvercorp's portfolio of producing and development properties in China and Canada.

About Silvercorp Metals Inc.

Silvercorp Metals Inc. is engaged in the acquisition, exploration, development and mining of high-grade silver-related mineral properties in China and Canada. Silvercorp is the largest primary silver producer in China through the operation of the four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of China. The Company is developing its GC silver-lead-zinc mine in the Guangdong Province and recently acquired the BYP gold-lead-zinc mine in Hunan province. In Canada, Silvercorp is preparing to apply for a Small Mine Permit for the Silvertip high grade silver-lead-zinc mine project in northern British Columbia to provide a further platform for growth and geographic diversification. The Company's shares are traded on the New York Stock Exchange and Toronto Stock Exchange and are included as a component of the S&P/TSX Composite and the S&P/TSX Global Mining Indexes.

[SoFa]

I don't get what all the fuss is about. It looks like an $8 stock to me.

[NHsorter]

I just grabbed a good chunk of SIVR this morning at the open and now I am watching it trickle up. I think we have seen the bottom. I scoured CL for some physical first, but of course there was nothing. I prefer physical and don't trust paper, but I'm just hoping to play the bounce here real quick.

[68Camaro]

Interestingly, after doing an overall paper reassessement this morning of where my paper PM was, after licking my wounds from the week after following the market down cost-averaging until I literally ran out of money, and looking at where I stand, I am (AMAZINGLY) still in positive territory (considerably) relative to my start in this in April, still have some cushion to that, and I'm still way up relative to where I was after the May bloodbath. So, if we run down into the mid-20s, I can still control my normal feelings of panic.

[beauanderos]

Buying SVM has been veddy veddy guud to me. I sold 158 shares of AGQ at avg cost of $219 to buy and would have lost $17000 had I sat on it. Instead, bought 4980 shares of SVM which initially showed a loss of $2500 at the bottom, but is now ahead of what I DCA'ed in for.

[NHsorter]

SVM has had a nice week and I was considering cashing out some or all of it. Are you taking anything off the table yet? Just curious what you guys are thinking. If paper silver takes another dip, it should hurt SVM too I would think. If $12 was the SVM goal with $43 silver, how high can we expect SVM to reach with $30 or $25 silver?

Just cracked $8 as I was typing. Go, go, go.

[beauanderos]

It may be early in the game, but I'm going to express cautious optimism that we've weathered the most recent attack on silver and are ready for a rebound. I'm not selling SVM. It far outperformed the other majors in the last two weeks (it "held its ground" while others lost as much as 25 - 30%, witness favorites AG, SLW, EXK) and is again in an upward trend. Whether this is due to support of management buying back shares or not, the recent allegations that led to the shorting of the stock seem to have fallen by the wayside. By the time silver returns to $50, this stock will go back to its former highs in the $16's, especially if, as others are experiencing, sourcing physical silver becomes difficult and people are left only with paper plays. If anyone is nervous holding SVM, they should sell after a profit... but not the entire position. Consider selling enough to break even... and let your profits ride. DYODD

[beauanderos]

Well, with all the market manipulation crap going on, and positions moving against me, I was getting close to a margin call. According to a news source, a forensics accounting study cleared SVM of wrongdoing and the stock popped over 11% this morning. I'm still holding onto it long term in my 401K accounts, but I did sell 200 shares last week in my outside brokerage acct at $8.60 before it dropped back under $8, and sold the other 800 today at $9.00. Since I bought the 1000 at $7.80 I was able to make a small profit on it.

[beauanderos]

Boy do I feel like a goof!! Wish I'd known this forensics report was coming out. The stock is now up over 20% on the day, likely due to a good amount of short-covering. Have to take the good with the bad, I guess. Sold early on the 1000 shares, but at least I still have another 6000 in the 401k

[NHsorter]

Took the profit at 9.50 on SVM. "Portfolio" was way too heavy into silver anyway so I'll play around on a different ball field for a little while. This is my best trade of the year so far. Thanks for the heads-up beau! I hope this one gets up to 16 for you!

[fasteddy]

This stock is a yo-yo....profitted @ 9.57 share....nice. May jump back in when it drops.

[beauanderos]

This stock is a yo-yo....profitted @ 9.57 share....nice. May jump back in when it drops.

I may do the same. From past performance of stocks that take a huge leap forward, they usually pullback for a few days before making a more moderate steady upward ascent. If this stock sees $8 again I'm back in.

[NHsorter]

This stock is a yo-yo....profitted @ 9.57 share....nice. May jump back in when it drops.

I may do the same. From past performance of stocks that take a huge leap forward, they usually pullback for a few days before making a more moderate steady upward ascent. If this stock sees $8 again I'm back in.

Yup, that is the same thing that I was thinking. $8.00 within the next few days (as long as silver is still over 30) and I will be right back in. I know that I just said that I did not want to be way too heavy into silver related assets, but if this does get to $8 pretty quick I would grab it and hold out for a $9-10 level. After the positive report that just got released, this has a lot less risk than it had over the last few weeks.

[fasteddy]

Good move yesterday for SVM profit taking...Netlix....what a corporate blunder...reminds me of the introduction of "new" coke.