The stock market recovered some lost ground today — the Dow was up 146 points to 12735, the S&P 500 was up 19 points to 1409 and NASDAQ ahead 33 points to 2475. Though recovering a tad from the beating the markets have taken since Day 2 of 2008. The major stock indexes are still off 4% YTD. These are times when gold comes to mind, and indeed, the price of gold reached a record $894 per ounce today on the New York Mercantile Exchange before settling at $881.
In the process of checking in at the New York Stock Exchange web site for the daily movers (www.nyse.com), we came upon something much more interesting — a video of Yamana Gold (AUY: $15.68; Mkt Value: $5.6 B)at the bottom of that site. We checked it out further at www.yahoo.com/finance.
Yamana is a gold producer. Trailing 12 month revenues are $588 million and Earnings are $0.32 per share. Looks like a real company. The back story to bringing it to your attention, is that is appears overlooked, and possibly under-loved. Yamana appears similar to Kinross Gold (KCG: $21.64; MV: $13 B) in an industry comparable screen, yet Kinross is valued by the market at 13 times revenues versus 9 times for Yamana.
Also, we learned from the Yahoo! Site that there are now 9 analysts covering Yamana, compared to 1 a year ago…when Yamana’s stock price was near today’s. Kinross’ stock price, meanwhile, has shot up 100% over the same time. Worth looking into…! http://finance.yahoo.com/q/ae?s=KGC
In the days ahead it might be worthwhile to look at is the Bond Insurers. Ordinarily, this is a pretty sleepy business. Actuaries who cannot stand the excitement go into municipal bonds…the genesis of this industry. In fact, MBIA (MBI: $13.40; MV: $1.7 B) was founded as Municipal Bond Insurance Company. It’s basic business used to be municipal risk. This is the type of insurance that enables states and cities to undertake public works projects for the common good, like bridges and sewage.
The industry is now caught up in the sub-prime mortgage loan mess as much as the Investment Banks, except their reach is a lot further into the community-fabric of America. In today’s issue of the www.nytimes.com , we learn that a New York State insurance regulator, Eric Dinallo, contacted the famous Oracle of Omaha investor, Warren Buffet, to get into the Bond Insurance business…which his company, Berkshire Hathaway, did (BRK: $103,400; MV $202 B).
Include Ambac Financial (ABK: $19.25; MV: $2 B) in your search with MBAI. Each of these companies once had market values of almost $10 Billion, and within the past 6 months. It is structurally and culturally a lot easier for Mr. Buffet to purchase an operating company that is already in the business than to staff from scratch. Even if you cut the difference between these companies’ current market value and the $10 Billion they once were, $ 6 Billion is well within the Oracle’s financial reach. Remember, Berkshire Hathaway disposed of its financial interest in Western Union (WU: $22.35; MV: $17 B). In any event, these are our opinions…we could be wrong…
Let us hear your thoughts below:
