Banks’ Glencore Exposure Is a $100 Billion `Gorilla,’ : BofA

Glencore has $35 billion in bonds, $9 billion in bank borrowings, $8 billion in available drawings and $1 billion in secured borrowings, in addition to $50 billion in committed credit lines, against which it draws letters of credit to finance trading, according to BofA.

  • Analysts say extra $50 billion credit lines must be considered
  • Regulators to scrutinize commodity exposure in stress tests

Global financial firms’ estimated $100 billion or more exposure to Glencore Plc may draw more scrutiny as regulatory stress tests approach after the commodity giant’s stock plunge this year, according to Bank of America Corp.

Bank shareholders and regulators may be concerned that Glencore’s debt and trade finance deals, of which a “significant majority” are unsecured, will reveal higher-than-expected risk and require more capital once the lenders are put through U.S. and U.K. stress tests, BofA analysts said Wednesday. Adding an estimated $50 billion of committed lines to the company’s own reported gross debt, the analysts say financial firms’ exposure may be three times larger than Glencore’s reported adjusted net debt of less than $30 billion.

“The banking industry may have significantly more exposure to Glencore than is generally appreciated in the market,” analysts including Alastair Ryan and Michael Helsby said in a note titled “The $100 Billion Gorilla In the Room.” The commodity-price bust and “stress in Glencore’s share price and debt spreads may spur a review by investors, supervisors and bank management,” while “bank shareholders may pressure managements to reduce exposures,” they said.

Loans to the industry have come under scrutiny as the price of oil, copper and other commodities fell to the lowest in 16 years amid weakening demand from China. Glencore, the Swiss producer and trader of commodities led by billionaire Ivan Glasenberg, has pledged to cut debt by $10 billion and revealed more detail about its financing to mollify investors. On Dec. 1, the Bank of England releases its second round of stress tests, in which it has pledged to examine U.K. banks’ commodities exposure.

Glencore spokesman Charles Watenphul declined to comment on the BofA report. Glasenberg told staff last week the company had $13.5 billion of available liquidity and the company “will emerge even stronger.”

Stress Tests

The shares climbed 6 percent to 124.8 pence at 1 p.m. in London and have almost doubled from their low on Sept. 28, when Investec Plc analysts wrote there may be little equity value in Glencore if low commodity prices persist. Trading was briefly halted due to volatility twice on Tuesday and the stock posted its biggest gain ever on Monday, though the stock is still down by more than 50 percent in 2015.

“Gross exposures will be considered by regulators in upcoming stress tests” as opposed to banks’ net exposure, which can be offset by hedging, BofA said. “Many banks may now be more carefully reviewing their exposure to the commodities complex.”

The analysts criticized the lack of disclosure from banks about their commodity lending, but predict a change in policy to calm fears. “We believe the numbers are big enough that banks will need to use third-quarter disclosure to alleviate what we believe will be building investor concerns,” Ryan and Helsby said.

Balance Sheet

On Tuesday, Glencore released a document explaining its financing, reiterating much information that was already public knowledge, in response to recent criticism of a trading business that some have labeled a “black box.” Glencore has argued that its secured trade-financing from banks is of a high quality and has a low rate of default.

“Losses on trade finance portfolios historically have been low,” the Paris-based International Chamber of Commerce said last year, citing a report from the Bank for International Settlements. “Moreover, given their short-term nature, banks have been able to quickly reduce their exposures in times of stress.”

Glencore has $35 billion in bonds, $9 billion in bank borrowings, $8 billion in available drawings and $1 billion in secured borrowings, in addition to $50 billion in committed credit lines, against which it draws letters of credit to finance trading, according to BofA. That compares with more than $90 billion in property, plant, equipment and inventories.

Jack A. Bass Managed Accounts

More than 60 banks participated in Glencore’s $15.25 billion revolving credit facility raised in May, and the broad syndication of the debt means that credit issues “would not likely be existential for any individual bank,” Jack A. Bass said. His managed accounts held no Glencore shares or debt.

Standard Chartered Plc, which has also been battered by the commodity rout, has the greatest exposure to commodity traders among European banks with $1.9 billion of syndicated loans, including more than $1 billion of loans and credit lines to Trafigura Pte Ltd., Sanford C. Bernstein said Oct. 5. Credit Agricole AG has the largest exposure of any bank to Glencore at $841 million, followed by HSBC Holdings Plc with $658 million, analyst Chirantan Barua said.

Guaranteed Investment Performance Or You Don’t Pay
In the same way that I urge investors to use an adviser I too have a business coach. This week I complained that my performance of a 31% gain in 2013 and 18 % in 2014  was not gaining me the respect or new clients to which I thought I was entitled.

He challenged me :
a) I was not ” entitled ” to anything more than I earned by performance
b) My performance allowed me to guarantee an annual 6% return or I will forfeit the 1 % annual fee and the 20 % performance fee.

The Challenge – a guarantee for your annual investment return despite all risks to our performance and our costs .

Investors and pensions need efficient methods to screen, research, perform due diligence and monitor managers in their quest to deliver returns. They need to know the data they are using is accurate and fresh — and represents the best options available worldwide across every asset class. They must take into account their own assets and liabilities and the impact to portfolio risk while screening strategies and tracking exposures. They also need polished reports and presentations to provide evidence of a sound, inclusive selection processes for regulators and committees.

Placing these decisions in Jack A. Bass Managed Accounts removes the work from your hands to ours .

Meeting the Challenge
Jack A. Bass Managed Accounts offers a comprehensive suite of solutions for screening and monitoring, as well as risk assessment leveraging the data of the most important databases. In fact, 89% of surveyed clients agree that Jack A. Bass Managed Accounts helps them save their time during the due diligence process, while 75% of pension clients agreed .

The answer to When? – is always NOW ! – not tomorrow.
Contact Information

Information must proceed action and that is why we offer a no cost / no obligation inquiry service if you are not already a client.


or Call Jack direct at 604-858-3202 – Pacific Time 10:00 – 4:00 Monday to Friday

Commodity Collapse Has More to Go – ” long winter’ for prices lasting years

  • Morgan Stanley sees `long winter’ for prices lasting years

  • Open interest posts fourth straight monthly drop in September

Even with commodities mired in the worst slump in a generation, Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. are warning bulls that prices may stay lower for years.

Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it “hard to argue” that most prices have already bottomed.

The Bloomberg Commodity Index on Sept. 30 capped its worst quarterly loss since the depths of the recession in 2008. The economy in China, the biggest consumer of grains, energy and metals, is expanding at the slowest pace in two decades just as producers struggle to ease surpluses. Alcoa Inc., once a symbol of American industrial might, plans to split itself in two, while Chesapeake Energy Corp. cut its workforce by 15 percent. Caterpillar Inc. may shed 10,000 jobs as demand slows for mining and energy equipment.


“It would take a brave soul to wade in with both feet into commodities,” Brian Barish, who helps oversee about $12.5 billion at Denver-based Cambiar Investors LLC. “There is far more capacity coming on than there is demand physically. And the only way that you fix the problem is to basically shut capacity in, and you do that by starving commodity producers for capital.”

Investors are already bailing.

Open interest in raw materials, which measures holdings of futures and options, fell for a fourth month in September, the longest streak since 2008, government data show. U.S. exchange-traded products tracking metals, energy and agriculture saw net withdrawals of $467.8 million for the month, according to data compiled by Bloomberg.

The Bloomberg Commodity Index, a measure of returns for 22 components, is poised for a fifth straight annual loss, the longest slide since the data begins in 1991. It’s a reversal from the previous decade, when booming growth across Asia fueled a synchronized surge in prices, dubbed the commodity super cycle. Farmers, miners and oil drillers expanded supplies, encouraged by prices that were at record highs in 2008. Now, that output is coming to the market just as global growth is slowing.

Over-investment in new supplies in the past decade and favorable growing conditions for crops caused gluts, Citigroup analysts led by Ed Morse, the global head of commodities research, said in a report Sept. 11. The bank is bearish on crude oil, aluminum, platinum, iron ore, cocoa and wheat in the next three to six months.

Investors need to brace for a “long winter,” with the commodities bear market predicted to last for many years and oil dropping to as low as $35 a barrel, said Ruchir Sharma, who helps manage $25 billion as the head of emerging markets at Morgan Stanley Investment Management in New York. Crude futures traded Tuesday at $46.19, down from about $90 a year earlier.

Goldman Sachs has an even dimmer outlook.

The odds are increasing that oil will slump near $20 because the market is more oversupplied than initially forecast, analysts led by Jeffrey Currie, the head of commodities research, said in a Sept. 11 report. Currie, in an interview days later, said prices could stay low for the next 15 years. The bank also forecasts that copper will remain in surplus through at least 2019 and fall 13 percent to $4,500 a metric ton by the end of next year.

Still, future production isn’t assured. Miners are already scaling back on spending, and extreme weather can cause surprise reductions in farm output.

Rice, one of only a handful of commodities to rise this year, gained 14 percent as a record-wet May in Texas and above-average temperatures in July in other growing states eroded U.S. yield prospects. Companies from Glencore Plc to Freeport-McMoran Inc. are cutting metal output, and Royal Dutch Shell Plc announced it would abandon its drilling campaign in U.S. Arctic waters after spending $7 billion.

“Once you get to a certain price, you’re going to lose a lot of the players,” said Karyn Cavanaugh, a senior market strategist at Windsor, Connecticut-based Voya Investment Management, which oversees $205 billion. “And at that point then, prices will go up.”

Even if demand rebounds, there are still a lot of excess inventories to work through.

U.S. crude-oil stockpiles remain almost 100 million barrels above the five-year average. Copper inventories tracked by the London Metal Exchange have more than doubled in the past 12 months, and the International Grains Council sees wheat reserves climbing to a record next year.

Investors are punishing producers. Glencore has lost about 60 percent in market value this year, and credit markets already view its debt as junk. Seven of the 10 worst performers in the Standard & Poor’s 500 Index this year are commodities-related businesses.

In the case of Caterpillar, the world’s most valuable machinery producer, share prices slumped 23 percent last quarter, as the company struggled to cope with the ripple effects of the slump in oil. The Peoria, Illinois-based company is cutting as much as 9 percent of its workforce through 2018 to lower costs.

“The global infrastructure and supply of commodities still needs to be re-balanced, and it will probably take a couple more years to resolve itself,” said Jack Bass, chief strategist for Jack A. Bass and Associates, Vancouver, Canada.

Read more abour protecting your assets at

Glencore in Freefall

  • Shares of FTSE 100’s worst peformer plunged more than 30%
  • More substantial restructuring needed, Investec warns

Glencore Plc plunged as much as 31 percent, extending a rout that’s wiped more than $14 billion off its value this month and highlighting investor concerns that it’s not cutting its debt load quick enough.

Chief Executive Officer Ivan Glasenberg’s debt-reduction plan announced three weeks ago and the move to sell a stake in its agricultural business reported by Bloomberg on Friday has failed to stanch the bleeding. Investec Plc warned Monday that there was little value for shareholders should low raw-material prices persist.

“In the current climate, debt is fast becoming the most important consideration,”Hunter Hillcoat and Marc Elliott, analysts at Investec, wrote in a note to investors. “Glencore may have to undertake further restructuring.”

The slump on Monday was the most since the company’s initial public offering in 2011. The company has been forced to sell new stock and scrap its dividend as part of the $10 billion debt-reduction program as China’s economic slowdown hurt demand for commodities and sent prices slumping. Goldman Sachs Group Inc. said last week that Glencore’s recent steps to reduce debt and bolster its balance sheet are inadequate.

Glencore fell to a record low and was down 28 percent at 70.48 pence by 1:54 p.m. in London. The stock slumped more than 16 percent for the second time in a week and has declined 76 percent this year, the worst performance in the U.K.’s benchmark FTSE 100 Index.

Glencore’s 1.25 billion euros ($1.4 billion) of 1.25 percent bonds maturing March 2021 fell 7 cents on the euro to 74 cents, the lowest since the securities were issued in March, according to data compiled by Bloomberg. The cost of insuring Glencore’s debt against default rose 29 percent to 711 basis points on Monday, according to data provider CMA.

The company counts Qatar Holding LLC, CEO Glasenberg, Harris Associates LP and BlackRock Inc. among its biggest shareholders, according to data compiled by Bloomberg from filings.

The shares have been battered after investors retreated from commodities as China’s economy expands at the slowest pace since 1990. The Bloomberg Commodity Index last month reached the lowest in 16 years and the Bloomberg World Mining Index on Mondaylost as much as 2.5 percent to touch the lowest since 2008.

Glencore has hired Citigroup Inc. and Credit Suisse Group AG to sell a minority stake in its agricultural business, a person familiar with the situation said Friday. The sale is part of the debt-cutting program announced earlier this month that included selling $2.5 billion of new stock in an attempt to reduce the company’s debt to $20 billion from $30 billion.

That might not be enough, according to Investec.

Investec Warning

“The challenging environment for mining companies leads us to the question of how much value will be left for equity holders if commodity prices do not improve,” Investec said in a note. The bank warned that if major commodity prices remain at current levels, almost all of Glencore and Anglo American Plc’s equity value would evaporate in the absence of substantial restructuring.

Anglo American, owner of the world’s biggest platinum and diamond producers, dropped as much as 8.8 percent to a 15-year low in London.

Goldman Sachs said that should commodity prices fall another 5 percent, the metrics needed to maintain Glencore’s credit rating would be out of the required range.

Chinese Market

Billionaire Glasenberg has said no one can read the Chinese commodity market. The nation’s industrial profits dropped 8.8 percent last month, the most in at least four years, signaling weakening demand. The biggest consumer of commodities is struggling with excess capacity, sluggish investment and weaker manufacturing.

Moody’s Investors Service earlier this month cut its outlook to negative on Glencore and affirmed the company’s Baa2 debt rating. Standard & Poor’s has reduced its outlook on Glencore’s BBB level to negative, saying China’s slowing economy will continue to weigh on copper and aluminum prices, which are near six-year lows.

Mining Shares Lead Stock Losses

  • Cartoon of the Day: Falling Stocks - falling bull cartoon 10.13.2014
  • Copper, zinc, coal all tumble on deepening China concern
  • Credit Suisse lowers target prices for diversified miners

Mining shares including Glencore Plc led a slump in European equities as metals prices tumbled on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.

Glencore fell as much as 10 percent to a record 107 pence in London trading. Anglo American Plc, Antofagasta Plc and ArcelorMittal dropped more than 6 percent, dragging the regional benchmark Stoxx Europe 600 Index lower. KAZ Minerals Plc plunged almost 18 percent, the most since January, to a record low.

“Until China demand and emerging-market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices,” Credit Suisse Group AG analysts led by Liam Fitzpatrick wrote in a note Tuesday.

The bank cut its price estimates for large diversified miners including Glencore and BHP Billiton Ltd., which said on Tuesday it’s planning to sell hybrid securities to help refinance near-term liabilities. Stainless steel producer Outokumpu Oyj sank as much as 16 percent after saying third-quarter delivery volumes may be 10 percent lower than the previous quarter.

Growth Cut

The Asian Development Bank reduced its growth forecasts for China and said the country’s declining appetite for energy, metals and other raw materials would hurt commodity-focused export economies like Mongolia and Indonesia. China is set to grow at its slowest pace in a quarter century this year even after five central bank interest-rate cuts and fiscal stimulus.

Copper declined 2.5 percent to $5,139 a metric ton. Zinc sank as much as 1.8 percent to $1,628 a ton, the lowest in five years. European coal for 2016 dropped below $50 a ton for the first time.

Glencore, which sells all three commodities, was down 8.7 percent at 108.60 pence by 11:02 a.m. in London trading, after earlier touching the lowest since it began trading in May 2011.

“Glencore is a bet on copper, and weakness in metal prices is sending tremors through Glencore’s shareholders,” said Richard Knights, a mining analyst at Liberum Capital in London.

Glencore to Sell as Much as $2.5 Billion Shares


  • Company will seek to cut debt by as much as $10.2 billion
  • Commodities producer and trader to suspend dividend payments

Glencore Plc, the commodity producer and trader, plans to sell assets and shares to cut its $30 billion net debt by about a third following the rout in global markets.

Baar, Switzerland-based Glencore, which last week posted its biggest weekly decline in London since going public in 2011, plans to sell about $2.5 billion in new shares and assets worth as much as $2 billion. It also will suspend dividend payments until further notice as it aims to reduce its net debt by about $10.2 billion, the company said Monday in a statement.

Glencore has lost more than half its market value this year, and along with BHP Billiton Ltd. and Rio Tinto Group has seen profits slump as commodity prices plunged to touch a 16-year low last month. Standard & Poor’s cut Glencore’s outlook to negative from stable last week, saying weaker growth in China will weigh on copper and aluminum prices.

The proposals are “designed to sensibly accelerate the deleveraging of our balance sheet, maximize future cash flow generation in the current weak commodity price environment and substantially improve our financial and credit metrics,” Chief Executive Officer Ivan Glasenberg and Chief Financial Officer Steve Kalmin said in the statement.

Morgan Stanley and Citigroup Inc. will underwrite 78 percent of the proposed share sale. Glasenberg and Kalmin and several board members will take up the remaining 22 percent. The company said it will save $1.6 billion from suspending its 2015 final dividend and a further $800 million from suspending its 2016 interim dividend.

Glencore’s net debt was $29.6 billion as of June 30, according to an Aug. 19 filing. It’s rated at BBB, the second-lowest investment grade, by S&P.

Miners Sector 2015 Forecast :Dumping Assets At Fire-sale Prices

Senior mining companies are still holding many unnecessary and troubled assets on their books. So it would not be a surprise to see a few more dirt-cheap deals in 2015.

Scott Douglas/Riversdale Mining Ltd.Senior mining companies are still holding many unnecessary and troubled assets .

The junior mining sector is in such brutal shape right now that most companies are unwilling to even pay for booths at conferences that are geared to them.


Mr. Dethlefsen’s firm, Corsa Coal Corp., was approached this year about buying coal assets in Pennsylvania from Russian steel giant OAO Severstal, which was bailing out of the United States.

Severstal had bought these operations for $900 million in 2008, when steelmaking coal prices were hitting all-time highs. Mr. Dethlefsen would not pay anything close to that in today’s awful coal market, but he didn’t have to. Corsa bought the operations for a grand total of US$60 million, or less than 8% of what Severstal paid.

“It’s a tough market. We have our work cut out for us with this business and it’s not going to be easy,” said Mr. Dethlefsen, Corsa’s chief executive.

“But we’d rather start by paying US$60 million than US$500 million.”

Indeed. It used to be that when mining companies put assets up for auction, they wouldn’t actually sell them unless they got a very full price. That could be because their commodity price assumptions were too optimistic, or they were just too attached to them and convinced they could extract more value. Dozens of interesting projects were put up for auction in recent years and never changed hands because sellers demanded too much money.

We have our work cut out for us with this business and it’s not going to be easy

That changed in 2014, especially at the low end. This will go down as the year when miners were happy to dump their troubled assets. They just wanted to get them off the books and make them someone else’s problem.

The Corsa-Severstal deal was one such example. Rio Tinto Ltd., another, sold coal assets in Mozambique for US$50 million, just three years after paying US$3.7 billion for them. Kinross Gold Corp. dumped Fruta del Norte, possibly the world’s richest undeveloped gold project, for US$240 million, or less than a quarter of what it paid six years ago.

A Billion Dollar Loss – and more of these stories to be written in 2015

And then there was the unfortunate tale of Alberta coal miner Grande Cache Coal Corp. A pair of Asian commodity traders (Marubeni Corp. and Winsway Enterprises Holdings) paid $1 billion for the company in 2011. But coal prices turned dramatically against them. So in October, they agreed to sell their Grand Cache stakes for a buck. Each.

These fire-sale prices generated some laughs across the industry. Yet the deals have an undeniable logic in the current volatile market conditions.

Handout/Grande Cache Coal

Handout/Grande Cache CoalA pair of Asian commodity traders (Marubeni Corp. and Winsway Enterprises Holdings) paid $1 billion for Grande Cache Coal in 2011. But coal prices turned dramatically against them. So in October, they agreed to sell their Grand Cache stakes for a buck. Each.

During the mining bull market (roughly 2002 to 2011), the industry was undergoing massive consolidation as miners rode the wave of rising metal prices. Senior mining companies like Rio Tinto and Vale SA snapped up almost everything in sight, piling up a lot of debt and unnecessary assets in the process. As long as commodity prices were high, who cared? They were just happy to get bigger.

It took a steep drop in prices — and an embarrassing wave of writedowns — to force them to reconsider their strategy. They realized too much management time was being wasted on non-core assets that deliver minimal or no return. They also recognized that low commodity prices may last for a while and that they needed to shed these assets to get as lean as possible.

It has helped that almost every major mining company replaced its CEO over the last couple of years. These guys have no emotional attachment to the assets their predecessors overpaid for, and are happy to do whatever it takes to get value out of them.

“Everyone is looking at rationalizing their portfolios to their best core assets,” said Melanie Shishler, a partner and mining specialist at Davies Ward Phillips & Vineberg LLP. “In furtherance of that, I think people are being quite unrelenting in what they’re prepared to do to reach that goal.”

And there was nothing CEOs wanted to divest more than their problem assets. These assets were unloaded for bargain-basement prices after they backfired in spectacular ways.

For Severstal, it was a combination of a deteriorating coal market and Vladimir Putin. When Severstal bought the U.S. assets in 2008, coking coal prices were soaring above US$300 a tonne. Supply was so tight that steelmakers were terrified they would not be able to source product, so they started snapping up coal mining operations.

Today, that strategy seems absurd. Benchmark prices have plunged to US$117 a tonne, due to soaring supply and uncertain Chinese demand. Steelmakers no longer see any need to be vertically integrated.


Kinross – Poster Child For Mining Sector Errors

For Toronto-based Kinross, the central issue was also politics. The problem with the Fruta del Norte (FDN) project is that it is in Ecuador, a country with no history of large-scale gold mining. Kinross paid $1.2 billion for FDN in 2008 even though Ecuador did not have a firm mining law at the time. It was a reckless gamble, and it backfired after the government demanded outrageous windfall profits taxes. (Kinross owns equity in FDN’s new owner, so it could still benefit if the mine is built.)

Rio Tinto fell victim to a lack of good due diligence. It paid billions for the Mozambique coal assets without having a firm transportation plan in place. The transportation constraints were far bigger than anticipated, making the coal assets almost worthless in Rio’s eyes.


Handout/KinrossKinross paid $1.2 billion for the Fruta del Norte mine in 2008 even though Ecuador did not have a firm mining law at the time. It was a reckless gamble, and it backfired after the government demanded outrageous windfall profits taxes.


In the two-dollar Grande Cache deal, the Asian sellers decided the assets definitely worthless to them at these prices. Experts said the sellers were facing potential cash outflows in the short term, something they clearly wanted to avoid.

Senior mining companies are still holding many unnecessary and troubled assets on their books. So it would not be a surprise to see a few more dirt-cheap deals in 2015.

One notable thing about these transactions is they usually involved a large company selling to a very small one. Sometimes it takes a small company to give a problem asset the attention it needs to create value. If they can’t get the assets turned around, then these deals are not such a great bargain.

“I’ve always said one company’s non-core asset is the cornerstone asset of another one,” said Jack A. Bass, managing partner at Jack A. Bass and Associates.

That is certainly the case with Corsa, which transformed into a serious player overnight with the Severstal deal. But now that the excitement has worn off, the company has to prove it can generate actual value out of these operations in a miserable coal market. If Corsa pulls that off and prices rebound, it could turn out to be one of the best mining deals in decades.

“We took the opportunity to come in and buy at what we think is the trough,” Mr. Dethlefsen said.

“To do that, you’ve got to have a pretty strong stomach. Over the next 12 months, it’s going to be a knife fight.”

You Have Options:

What To Do ?

Here is our recent letter:

Managed Accounts Year End Review and Forecast

November 2014 – 40 % cash position
Gold and Precious MetalsThe largest gains for our clients came from the exit from the gold producers at $18oo an ounce and continuing until we hold no gold and no gold miners . This from the author of The Gold Investors Handbook.2015 – We continue to be on the sidelines for this sector – regardless of the gnomes of Switzerland . As a safe haven gold simply wasnot there for investors despite turmoil in the Middle East, Africa and Ukraine.How much more frightening can the prospect for peace be than to have wars in multiple locations? Secondly the spectre of inflation – on which I have given numerous talks – simply failed to materialize. In fact economists and portfolio managers such as myself are now more concerned about deflation – and the spectre is a Japanese style decades long slide in the world economy.
Shipping Sector / Bulk ShippersYou can review our stock market letter at to follow our profits in the shipping sector before our retreat as overcapacity has yet to effect continued overbuiding. In 2008-9 rates-  illustrated by the Baltic Dry Index – were at their peak. The BDI hit over 10,000. Today it is roughly 10 % of that benchmark and the sector slide continues. We have an impressive watchlist of former ” darlings” – but we are content to watch and wait.
Oil/ Energy I am very happy for the call in natural gas prices – out at $12 and into oil. When oil was above $100 we lessened positions and that is our saving grace in the past two weeks. We are not bottom feeders and will wait for a turn in the market before reentering drillers or producers.On Friday November 27th, crude oil prices dropped to below $72 and the slide has continued into the weekend, with Brent crude oil at $70.15 as I write this post. Shares of major oil companies traded down on Friday. Our former energy sector holdings are down another between 4% and 11%, including SDRL, which dropped another 8% following Wednesday’s 23% plunge…

Have you avoided these sectors – you would have been better off to follow our advice in 2014 and now you have to decide for 2015.
No one – and I am not being humble here – can project the future with great accuracy but our clients continue to do very well and we offer that experience to you.

Fees : 1 % annual set up and a performance bonus of 20 % – only if we perform.

You can withdraw your funds monthly if you require an income stream.

Alternate Guaranteed Income Payments

Private client funds Minimum $10,000 Maximum Loan $500,000

Our client is seeking funds to expand their tanker fleet .

Interest 12 % compounded – paid 1% per month

Floating charge of the full $500,000 against the fleet – valued at  more than $ 1 M


Contact information:

To learn more about portfolio management ,asset protection, trusts ,offshore company formation and structure for your business interests (at no cost or obligation)

Email OR  OR

Call Jack direct at 604-858-3202

10:00 – 4:00 Monday to Friday Pacific Time ( same time zone as Los Angeles).

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

Tax website  Http://

HudBay Minerals Update

HBM : TSX : C$8.81
Target: C$12.00

HudBay Minerals is an integrated Canadian zinc and copper producer with operating assets in Manitoba, and development or exploration properties elsewhere in Canada, in the U.S., and in Peru.
All amounts in C$ unless otherwise noted.

Metals and Mining — Base Metals and Minerals
HBM on January 8 released 2013 production and 2014 guidance. 2013 copper production’s miss against guidance is the aberration. 2014 production guidance is consistent with our forecasts. HBM confirmed Constancia’s budget and schedule, and provided surprisingly high 2014 production guidance (pre-commercial production) of 5,000-10,000 tonnes.
Our revised 2013-15E EBITDA forecasts are C$23 million, C$129 million, and C$485 million, which compare to our previous forecasts of C$32 million, C$129 million, and C$485 million. Our revised 2013-15E adj. dil. EPS forecasts are C$0.03, C$0.16, and C$1.08, from previous forecasts of C$0.07, C$0.15, and C$1.08.
Action and valuation
We are maintaining our BUY recommendation and our 12-month target of C$12.00, which is based on the average of: i) 5x our 2015E EV/EBITDA, which would imply a share price of C$11.97; and ii) our NPV10 estimate of C$11.62, (which includes C$7.79 for Constancia).
Next potential catalyst and investment risks
We are forecasting Q4/13 adjusted diluted EPS of negative (C$0.02) based on: i) payable zinc and copper sales of 24,400 tonnes and 7,800 tonnes, ii) realized zinc and copper prices of US$0.93/lb and US$3.31/lb (before treatment and refining charges, but after provisional pricing adjustments), and iii) after by-product credit costs of +US$1.41/lb of copper.


Get every new post delivered to your Inbox.

Join 2,337 other followers