Member Info for LunaNera

Hi GTX1

Such manipulations, at best, have only short term effects. Long term, this position chuggers away nicely towards market beating returns.

I’m not worried in the slightest.

Now that you mention it….

:D

Hi Velo

I looked into purchasing an ekectric car and found them unsuitable hor long distance travel. Quoted ranges are for 45mph. At 70mph, the range almost halves.

As city runarounds for private use, EVs are rather good. for everything else the next best option is a hybrid, and thus in need of a catlytic converter.

Global chip shortage had a negative impact on car production. some had to considerately scale back. A rather unprecedented event.

One woukd expect the chip draught to finish in a couple of years max. It would not be unreasonable treating this as a temporary setback.

Andvlets not have any false hooes on hydrogen either. The engineering challenges are considerable. H2 has a tendency of corroding pipework for eg. These challenges are amongst the reason why tge US has failed to buil a hydrogen economy, as it set out to do in earnest in 2003. Ask Robert Zubrin at NASA, has has ample experience working with H2 engines.

I would expect demand to pick up considerably as new chip manufacturing facilities come online.

It's a good call. But good luck finding some on the LSE. NASDAQ or HK more likely.

Oops, indeed, i discounted from the wrong end.

Chatmandu is right.

Showing the previous step: 100 /(1.0-0.6) = x
Where 0.6 is the percentage expressed as ddecimal, in our case the 60%

Either way, whatever valuation method one uses, one still attempts to calculate the incalculable, namely the future.

They remain whatever they are. Estimates. For SLP these are so large, that the expected upside handsomely outweighs the downside.

One just doesn't know when this will happen. The guesswork always makes for interesting games...

100 / 0.6

Given the recent discounts and the favourable outlook, I continue building this position.

I suggest you read the Chairman's and CEO's statements in the latest AR. It's rather indicative on their future plans.

Re share buyback programme.... from the horse's mouth:

"Through the buybacks over the last six years we have been able not only to prevent the dilution from options vesting, but we have been able to grant around 12 million shares to senior employees and we have cancelled approximately 11 million shares. The Treasury holding now covers all historical awards and enables the Company to create the newly-launched Employee Dividend Entitlement Scheme for all junior and mid-level employees. "

Not much has changed apart from price.

Is the business intact? yes
Is the board competent? yes
Is Rh supply in deficit? yes
Is the valuation favourable? yes
Have the earnings improved over last year? yes
Will the price hit xxx in xxx time? I have no idea, but the likelyhood is that the returns will be market beating over time.

Also, bear in mind that there is quite a bit of nervousness around many of government schemes stopping or scaling back their support for COVID impact. This can have negative impact on consumer confidence in the short term.

A global chip shortage is also a consideration. Again, a short-term impact but it led manufacturers to scale back production significantly. It won't have much of a long term impact though because

1 - chip production will catch up
2 - EV's are not a universal solution yet. The quoted ranges are for average speeds of 45 mph -- which makes it impractical for long distance travel or transport. Many will have to opt for hybrid at best.

When prices drop, fear often sets in when one has no thesis or done valuations of their own. It's worth to remember Ben Grahams words: "...in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company."

Patience is a virtue of every successful investor.

Hi Quiggers52

Yes. We should cheer if the market is irrational enough and offer us 100p for the price of 1p. I doubt we will be so lucky though.

However, this is only possible when the business is intact, has good future prospects and not an exhorbitanty high valuation.

SLP ticks all these boxes. In fact, it's difficult to see it going lower, but we've all been there over the years.

You can really only do this with top quality companies. And SLP is in that bag.

So yes, 1p for the share? Anyone care to sell it to me pls?

I'd be delighted.

Chatmandu

I am not sure the market knows something we didn't. Be we now know that there is quite a bit of something that you don't know.

Almost makes me sound like the infamous Donald Rumsfeld in one of his hilarious speeches....

Compare it to Q4 2020 and see

2020 2021
SDO $13.2 m $48.4 m
Net profit $2.2 m $14.7 m
Cash $55.9 m $101.1 m
EBITDA $4.2 m $28.7 m

Truly 'horrible' results. Sell you shares to me now :P

As always, an excellent, clear and candid report.

Interesting to note that they already achieved their annual target of 70,000 oz PGM , or do I remember incorrectly?

Our bonuses are due soon. Rather happy about the drop.

Hi Stoodio,

Are you referring to this one?

===
Unsteady through emotions
I can be so up and down
I'm tryna find my focus
When my mind is spinning 'round
etc...

@Chatmandu

I don't have these kind of restrictions. Good situations don't come up often. So the answer is: As much as possible.

I hold for as long as the initial thesis is intact. I do like the powers of compounding work for my money.

Hope this helps

Hi Chatmandu

Agreed with regards to new purchases but, for somebody already underwater, some of the risk has already been realised and that isn't much of a comfort blanket.
===

That’s were an (or several) estimate of intrinsic value is important. Prices always change in both directions. But am I really bothered when my lowest estimate puts the stock comfortably at 165p?

Of course not. Instead I laugh and increase my position further if at all possible.

And that’s precisely what I did. The purchase orders once the price dropped below 100p we’re almost the same size as six months worth.

One should not look a gifted horse in the mouth.

Hi toptiger,

I am not sure where you read that I follow 12 PGM stocks. You might confuse me with someone else.

I don't diversify and I am usually not interested in commodities (no pricing power).

SLP is a huge exception because they are so well run.

Whoops, meant PEG of 0.2

I am always interested in the bear as well as the bull views.

For a rounded understanding this is very important to me. Nothing is ever clear cut and there is always risk when making a bet (taking a position) of the future.

However, valuations are important. Ratios are important. They tell me where the balance from upside to downside lies and how the probabilities fall. And probabilites, are the only truth in our world.

Let's say we have a position that is priced rather high. Lets say a rather high P/E, a PEG of 1.5+ etc etc etc. On these, sharp downward movements can be rather disconcerting.

In our case, there is a whole bunch of ratios and metrics that just scream upside.

So it's not unreasonable to take the positon that this is a welcome opportunity instead of a broke business (which SLP is definitively not). In fact, the cheaper the price falls, the lower the downside risk. So further increasing the position is not unreasonable. Not doing anything is also sensible. Just ride it out (C. Munger).

Whatever method one employs, doing a reasonable enough estimate of intrinsic value does help because it provides good reference points.

But TBH, with a fwd P/E of 3-4 and a PEG of 2.0 with equity and capital returns of 30%+ and op margins in the 50s, is hard to see this fail.

I am definitively not thinking about an exit here. Maybe some do, but I severely hope it won't be at a loss because that turns a potential loss into a realised loss.

"The stock market is the only market where participants complain when prices go down" - WB

You need to be into any security for the right reasons. Namely value, not price. The two do have a relations, but they are not necessarily conjunct at all times.

Price is what you pay. Value is what you get.