MCP - Molycorp, Inc. - Page 3
I've seen speculation that this might enable MCP to make a legit buyout offer for another rare earth producer. Specifically, Great Western, the guys in the GWG Canadian forum thread said MCP made an unrealistic offer to Great Western that was patently rejected, and this might enable them to make a legit one. GW has a formerly producing mine property in South Africa that may be able to be brought online quickly... thus the "capacity expansion" argument is supported by this spec.
I guess nobody is interested in playing MCP right now. It's a mover but pretty unpredictable.
This one has been hanging back in regards to REE and SHZ really taking off today. I'm LT bearish, but I think i'm going to stay away from trading this one....
I wasn't impressed by the breakout of the bearish channel. It broke out on fairly high volume and then really didn't do much of anything. Didn't really see any continuation. Based upon how this one trades on Friday I may look to get in short on Monday. I still think this has a significant pullback potential
Molycorp vs LynasHello, been long MCP for a couple months now. Initially invested because of their reported first mover advantage, but then did more some more research and found Lynas Corporation is due to go into production Q3 2011 initially at 11000t then 22000t a year later. They're an Australian company but also trade on the pink sheets (LYSCF.PK). Thinking of either shifting capital to Lynas or having a bet both ways. Do you think there's room for both?
The entire rare earths market for 2011 is estimated to be about 2 billion $$ worth of sales , the bulk of that produced and refined in China.
The market saying that MCP is worth over 4 billion $$ is akin to an up and coming silver producer being worth double the $$ amount of the worlds entire sales of silver next year.
SORRY but i dont get it. The fact of the matter is that rare earths mining , refining and creating products for the enduser is a very long , expensive and difficult process. Margins really will not be as good as for silver producers for instance , but the market wont realize this until a couple quarters of production are done for MCP , sometime in 2013.
The price of refined rare earths products has gone up several hundred % in many cases , but there is no guarantee that they will stay there. MCP plans to get to 40,000 tonnes per year , Lynas also will be up to over 20,000 tonnes within a few years , and there is nothing written in stone saying china will not increase their production, given that they have about 36% of the worlds rare earth reserves, enuff to supply the entire market for a few hundred years.
The real shortage is in the heavy rare earths, and there are precious few companies planning on any production of those, but that market is very small.
MCP is primarily going to produce light rees.
Looks like you could just set your entry at $40 for a double bottom entry. That will be a slight violation of the 50dma which it has been finding support on. Put your stop five points below the 50dma and let the trend be your friend. Mouser is right about the evaluations but we all know how ridiculous those can get when you are a darling of wall street.
Agreed, I've been watching this run up again and will look to potentially play some quick downside in this stock. On each of these run-ups it seems to suck alot of people in who are weak hands during quick drops which you can make $$$ with OTM front month naked puts. Will be keeping an eye on it.
Wouldn't look to go long on this stock as I still think that real upside in these stocks are limited at the whimsy of China and with current evaluation of MCP's market cap being 2x the total REE industry currently. I understand the upside potential of the marketplace but MCP's lack of true REE production currently leaves me bewildered at the price action. But all things must come to an end and I will be patiently waiting.
I won't claim to have the best grasp on the rare earths, I've seen sites and threads elsewhere and some people have been posting on the sector for well over a year and some for closer to two years. There are a few REs in the Canadian forum and a couple of really sharp minds there, and a few articles by the head of Medallion with some really keen minds posting about rare earths below the article, great resources out there to learn more. But from what I know, I don't want to sink much money into the rare earth space for the long haul - if I had a million bucks I'd probably earmark 20 maybe 30-40K for a few long-term speculative plays on companies like UURAF, STZYF, GWMGF, and particularly MLLOF (maybe even Lynas too). But for now I'm just tracking those. REE seems fairly promising but I don't want to be dabbling in these for longer-term in any of the names because it seems way too bubbly, as in we're far enough into the bubble. I'll stick to quick hit and runs which can easily be 3-6% daytrades, or 10-25% holds for a few days. I also never want to hold them overnight if I am not extremely confident they are in a multi-day uptrend. At this momeny, AVL seems to be at or near the front of the pack, but that isn't an endorsement of it as the one you should buy if you want and can only have one, it may be a bit extended even after shedding almost 10% from yesterday's high. AVL and REE are both in the $500MM cap neighborhood. SHZ is my favorite trader right now as it seems most volatile and with a $225MM cap it should be a bit easier to catch good moves in it. If you look at the daily chart, it looks to me as if it has the best potential for the next lightning move up.
Alright, dug a bit into the MCP SEC Filing from Monday. It sounds like the author of this article is full of crap. He claims the float is about to double, but from what limited info I could find on MCP's float, finviz said it is like this:
OS: 82.29 MM
Float: 65.91 MM
These 13.5 MM shares in this offering are just being sold by existing shareholders, so if we assume that already happened, the float went from 52-ish to almost 66 or up about 25%. The company also will sell 1.5 MM preferred shares, which from the article's figures sounds equivalent to ~3 MM common shares (172MM/$50+ per share). No matter what the math, the authors claims sound suspect at best and more likely laughable. But the thing is, there are 13.5MM shares about to be sold on the open market which is extremely likely to put some downward pressure on price especially when you factor in the likely cost basis of those shareholders. If I were short MCP, I'd probably add to my position if i could afford it and look to avoid covering for at least a few weeks given that my odds would probably be very good to profit from doing so, not to mention that MCP has already sagged a bit in the last few days, suggesting that any marginal increase in volume may be a reflection that these sales are already underway (although I doubt that to be much of a factor yet).
Anyway, if someone digs into the SEC fiiing and thinks I'm full of crap, please help me out, if the author spelled out how he did his math more fully, it would have been easier, it may be that he is just bashing to send it down as far as possible. Here is their filing: http://www.sec.gov/Archives/edgar/data/1489137/000095012311009435/d78447a1sv1za.htm#D78447114