LONDON – Some 15 of the 100 top British public companies have shares selling for half book value, or less. That’s what I am seeing here in the UK, along with some marvelous birds and sunsets.
More than several are resource companies, primarily miners of copper/gold/platinum/nickel/zinc/lead. BHP Billiton, with $4 billion of cash and $8 billion of net debt, is probably the world’s largest mining conglomerate … and its shares have fallen ALMOST TWO-THIRDS since May.
When you hang your trunks in London, or West Sussex as the case may be, people greet you at the local health spa, the fishmonger and the smartish public ale houses and QUOTE you these numbers, then shrug. No sh … sh … Shakespeare intended.
The other day, I said tumultuous currencies, freefalling stocks and a shrinking economy have yet to grip Britain by the bollocks. Life goes on, especially the traditional planning for office and friends’ Christmas lunches and dinners. The new James Bond film “Quantum of Solace” opened here Friday, and we saw it. Theatres were busy, and the film’s acting, editing, action sequences and pacing were remarkable. I loved it, but then I love most films. (The kids saw some exploding plot points that were a bit cheesy.)
Yet aside from film and food, sure as sh … sh … Shakespeare, the British know full well the bombardment they are suffering in this blitz.
This is not a clarion call to seek great honking slabs of elements buried beneath our planet. S’not. Commodities suppliers are sinking like lead pellets in a pond of scummy coots and mucked-up mallards. Sorry about that but it is true.
Instead, this is a call to keep current on raw materials, just in case STUFF, as in metals and coal, coins and plain STUFF, are close to what the money folks call a bottom. My friend and an original subscriber of The Calandra Report and Thom Calandra’s StockWatch during the MarketWatch days, Al S. in New Mexico, sent me this UGLY CHART of the UYM (AMEX: UYM, Stock Forum), an exchange traded fund for raw materials.
Al currently is knocking around Nevada, looking at old mining towns and gold mines in the Sierras. Mr. Sanchez ran into snow in the higher passes, just as we here in U.K. land, headed back to North America, are getting drizzled on.
Al visited the Empire Mine, which once was owned by Newmont Mining and now is a museum. Al thinks basic materials, as represented by the UYM security below, will not become museum relics but instead might be poised to rip higher.
Al is a former Marine and one of 18 or so keen observers on my networked planet. He says, “I was thinking more about what the chart meant, and it came to me that perhaps it is not so much demand that is driving the upturn (although China is still looking at a 9% growth rate), or that ultra basic materials are as oversold as the war in Iraq, but rather a realization that when you create $3 trillion of new currency in 90 days (in the U.S. alone), all that new money is going to be looking for a home.”
Al, who one hopes will manage his way through the Sierras and into California before some nasty storms, like a blitz, white-coat the Interstate, continues, “Somehow I doubt that the ‘smart money,’ if there is such a thing, is thinking Treasury notes that return well below the rate of inflation. No, I think it is going to be all about things, real things.”
At London’s National History Museum with my wife and one of our children, in the astonishing room devoted to elements in all of their glorious forms, I saw this next to one of the world’s largest examples of crystallized gold, “Gold is the child of Zeus. Neither rust nor moth devoureth it, but the mind of man is devoured.” Fifth century B.C.’s Pindar, a philosopher of sorts, almost surely was thinking of the craze gold descends upon the psyches of kings, soldiers and aristocrats. These days, he might well be talking about the way falling materials prices are devouring the CUSIP’d paper of the world’s largest and smallest miners.
On Tuesday, I will tell you what my friend Van Simmons of DAVID HALL RARE COINS, another of my keen observers and operator of a successful and longtime rare coin dealer, has to say about gold, silver and platinum coins and the premiums they are commanding these days, even as mining stocks and futures contracts for precious metals loiter in les toilettes.
London’s fiery pharma
That’s it for now. Here at Stockhouse.com, we are working furiously on the new subscription report that will be published later this month; call it a ThomWatch Deluxe for those willing to part with a few hundred quid or loonies or euros or dollars a year. (OK, we’ll take Swiss francs as well. Yen, too.)
As stated here in the free ThomWatch, I believe we will experience a return to sensible asset values soon in risky investments … and indeed, some small companies in life sciences already are showing some life. The new chief executive of GSK (GlaxoSmithKline (NYSE: GSK, Stock Forum)), for instance, says he expects pricing to be an important marketing factor for new and existing drugs.
No wonder. The British drug pricing control board, called NICE, recently rejected GSK’s Tyverb for the nation’s cancer patients who use public health care. Too expensive is the guess of some, even as Andrew Witty’s GSK gave the breast cancer compound to National Health Service patients in Britain for free for the first three months.
Witty, whom I think is a winner in the area of strategic planning, also intends to make his mark on mergers and purchases of other companies, possibly generic drug makers, or possibly developers of new molecular compounds that treat cancer, cardiovascular and other human ailments.
The SUBSCRIPTION REPORT that begins later this month will explore our planet in a search for the very few stakes that could offer excellent, in some cases cosmic, returns. It is only for those who are comfortable with ultra-intense levels of risk. On Tuesday, I will unveil – for free – some energy companies that might benefit from the planetary blitz of security valuations.
Note: Thom’s cosmos of holdings is listed for free Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. We do not own Ivanhoe Mines (IVN in Canada and U.S.) but are considering adding it to our holdings if it continues to freefall along with other mining shares. We own some gold coins minted after 2000. We no longer own the ETF for silver (SLV is the U.S. ticker) in the wake of the dollar and yen-surge this week. We do not own GSK. We do not own the UYM. We have inflation-indexed bonds in a retirement fund at T. Rowe Price. For more ThomWatch, please see Stockhouse and ThomCalandra.blogspot.com.
TURBO THOMWATCH: For investors who profited from a meteoric rise of commodities, mining and life sciences companies, Thom Calandra acted as a beacon. Thom helped his audience find value in a quagmire of investment choices. He is not a titled investment adviser. Thom co-founded and was the driving editorial force and spirit of CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and scores of thin-crust pie joints across the planet in a search for profit, fashion and pizze de trippa gorgonzola. Thom's latest project, the novel PABLO BY NUMBERS, was completed in summer 2008. He and Stockhouse this autumn will offer a DELUXE VERSION of ThomWatch as a subscription report for a select audience.
