Category Archives: resources / supply side economics

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Will Big Oil have to cut their dividends if oil prices stay low?

Over the last years many energy companies made gigantic windfall profits which allowed them to ramp up their shareholder distributions. Dividends and buybacks are often the reasons for investments in big energy companies. Since the high in 2022, oil prices have almost halved, though. With the main driver oil now trading around 60–65 USD, the question arises whether these generous payouts are sustainable. Short answer: no, if we see a longer period of low energy prices. What does this mean for the Supermajors and their investors? And how do I handle this unfavorable environment? Is it maybe even advantageous for my setup?

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Talos Energy – a strong buy trading 40% below NAV? + new stock idea

I like simplicity – in life in general, but especially in the context of stock investing. When analyzing commodity, respectively energy stocks, a good first approach to assess the valuation is to compare the current price with the net asset value (NAV). Talos Energy, an American offshore operator in the Gulf, looks like a promising deal. The company is a low-cost operator and trades (at least) 40% below its NAV. Supported by an active acquisition history as well as Mexico’s richest man, the company’s enterprise value has risen while oil is flat. Is this the window of opportunity to buy into this company while it’s still cheap?

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The Donlin Gold Project – America’s biggest gold mine in the making

Located in Alaska, the Donlin Gold Project is an impressive mine-in-development. When shovel-ready, it would be one of the biggest, if not the single biggest, gold mine in the entire Americas and even among the top mines globally. On top of a yearly output of more than 1 mn. ounces, an incredible mine life of almost 30 years is envisioned. Donlin is owned half-half by Barrick Gold and the much smaller NovaGold Resources. The latter has a market cap of 1.1 bn. USD while at current gold prices the mine could have a net present value of an incredible 40 bn. USD! Is this an overlooked multi-bagger?

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Is South Africa’s Sasol a steel at 0.4x book value?

Once a 40 bn. USD heavyweight, South Africa’s energy and chemicals company Sasol has imploded to a market cap of less than 3 bn. USD. South Africa primarily makes negative news, as the country is coping with political instability, a weak economy, high unemployment, the world’s highest inequality, a fragile energy and electricity supply and even recently announced legally allowed expropriations of white people. In this environment, the currency depreciated strongly. Is now the time to look for bargains in this crisis-ridden environment? A look at South Africa’s (former) giant.

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Drill Baby, drill + new research report “Trump Trade 2.0”

One of the expectations for the second term of president-elect Donald Trump is that “dirty” energy will see a huge revival due to pushing back the strict ESG policies of the current administration. Less wind and solar and back to more oil, gas and coal, maybe with nuclear mixed in. However, despite the perception being that Trump is good for oil and gas producers, the above would be exactly the opposite as more supply means lower energy prices. Will we see aggressive drilling and lower energy prices or shall we prepare for something entirely different? All my members receive my latest stock idea, my second “Trump Trade” which should be a big beneficiary either way.

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Why I continue to avoid uranium miners

With the publication of my stock idea to play the uranium bull market in late-2022, I purposefully went against the groupthink. Instead of picking a uranium miner for my members – whether actively in production or just restarting / developing a mine, my choice was a very defensive one. Instead of just looking at the potential for multi-bagger returns in a one-sided, biased way, I saw many more risks in this sector. Today, I am taking a look back, discussing some performance numbers and what happened at a retail investors’ darling from Australia.

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Silvercrest buyout – is Discovery Silver the next in line?

Last Friday it was announced that my former silver mining stock idea for my members, Silvercrest Metals, will be acquired. Great on one side, as it confirms through my research work to have found a great company. I had laid out that Silvercrest might be an acquisition target one day due to its high-quality mine in Mexico. Bad on the other, as I obviously closed my case too early at “only” +85.1%, leaving some performance on the table. There’s another interesting silver miner in Mexico, sitting not less than on the world’s biggest undeveloped deposit. Is this an even better Silvercrest in the making?

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Investing in oligopolies isn’t always a winning strategy

Everyone knows that market concentration leads to less competition and in turn to more powerful entities within this group. Such oligopolies by definition should allow the respective companies to achieving strong results and high margins due to pricing power, but also where applicable economies of scale. In reality, however, not every sector or company offers automatically a good stock investment, even when factually operating in an oligopoly.

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What most investors get wrong about gold stocks + new research report

There are three things the majority of investors fail to understand with regards to gold stocks. The first is gold is NOT THE hedge against inflation and thus gold stocks not even better hedges. The second is with higher gold prices, NOT ALL gold stocks go up exponentially. The third is the evergreen that all gold stocks are heavily undervalued by the stupid market and great buying opportunities. I am going to take these beliefs apart. My Premium PLUS members receive on top my best gold stock idea after I have already had a golden hand with my silver pick (for all my members). If you read until the end, I have a small gift for you.

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Namibia – the new and better Guyana? + new research report

Although ever since the predictions and paroles have been that the world is running out of oil soon, from time to time big new discoveries have been made. Brazil has vast known reserves that could last for 50 years. Offshore the coast of neighboring Guyana, a reservoir of an estimated double digit billion barrels of oil equivalent is being already extracted. There’s a good chance, Namibia, a country in Southwest-Africa, could become the “next Guyana” – maybe even a better one!

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