• Kashyap Sriram

Monthly rollup | September 2021

Stocks Mentioned: ZIM Integrated Shipping Services (ZIM), Knight-Swift Transportation Holdings Inc (KNX), Valero Energy (VLO), Costamare (CMRE), Pretivm (PVG), International Seaways (INSW), Credit Acceptance Corporation (CACC)


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September 02 2021


Five Technical Trade Ideas


ZIM – Leader in the containership space. The company just went ex-dividend. They’re paying out $2 a share, and because it is an Israeli company I didn’t want to deal with the hassle of the withholding tax until it went ex-dividend. I have had this issue with Euronav (EURN) before, which is subject to Belgian withholding tax. I’m not an expert on container shipping so I’m simply buying the leader which is showing major strength.


The company upgraded its 2021 guidance. The adjusted EBITDA for this year is nearly equal to the market cap.


Q2 earnings presentation


KNX - Knight-Swift Transportation Holdings Inc. is one of North America's largest and most diversified freight transportation companies, providing multiple truckload transportation and logistics services, as well as LTL (less than truckload) services through ACT (beginning in July 2021). Knight-Swift uses a nationwide network of business units and terminals in the United States and Mexico to serve customers throughout North America. In addition to operating the country's largest tractor fleet, Knight-Swift also contracts with third-party equipment providers to provide a broad range of truckload services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors.


The stock is making 52-week highs. The company increased its expected adjusted EPS for the full year 2021 to $3.90 - $4.05 from $3.45 - $3.60 previously. Business is booming across all segments.


Q2 earnings presentation


VLO – Valero Energy is a Texas-based refiner. I’m buying this because the stock is showing a 2B reversal pattern. Historically oil and energy do best in the winter because of the demand for heating.


CMRE – Costamare has a fleet of 81 containerships, with a total capacity of approximately 581,000 TEU and 37 dry bulk vessels with a total capacity of approximately 1,910,000 DWT. The stock is making 52-week highs as demand in both segments is running hot. A cool twist to dry bulk shippers is that these vessels can also be used to transport containers. TTM PE of 8.9x, not too expensive considering how hot the shipping sector is right now.


PVG – Pretivm operates the Brucejack underground gold mine in British Columbia, expected to produce 325-365,000 gold ounces at an All-in Sustaining Cost (AISC) of $1060-$1190/oz in 2021.


Flag pattern in response to Q2 results release. Showing strength amidst weakness in the broader sector. Also, I like this stock for fundamental reasons. PVG has a troubled history. The company, during its founder’s reign, fired a technical consulting firm for not estimating as high a grade and

size of the deposit as management wanted them to, got a more pliant firm to prepare their technical reports, and lo and behold – the ore grades were much lower than expected. The founder retired with a C$6 million golden parachute before the shit hit the fan, leaving his trusted assistant holding the bag. The Board finally performed its fiduciary duty and brought in an outside CEO last April. The new CEO promptly fired the old guard and set to work repairing the company’s reputation with investors.


The company has guided free cash flow of $120-$170 million in 2021 assuming an average gold price of $1700. My 2021 estimated net income is $140 million. With an estimated mine life of over 18 years, the stock is cheap at current prices.


The flag pattern is technical confirmation.


International Seaways (INSW) hit my buy stop and is my favourite among the oil tanker/wet bulk shipping stocks. The company is well diversified with both crude and product tankers post their merger with Diamond S Shipping.


September 04 2021


Twitter is abuzz with news on the Sprott Physical Uranium Trust (SPUT) hoovering up uranium and sending the metal to 5-6 year highs. Amir Adnani (promoter extraordinaire) who runs UEC and URC is talking about $40 uranium. Hedge fund guys are talking their book and telling people why SPUT is the new GBTC, encouraging the masses to pile on. URNM had an extraordinary week. All good, and the long term trend is up for uranium, but this is the time to be cautious. Typically, when hedge fund guys start marketing a trade, they are creating liquidity to absorb their selling volume. Something to be wary of. And promoters are going to use this opportunity to raise capital via ATM financings or private placements. Chances are, this rally is done.


The way SPUT performed their trades to create this buzz is highly questionable. The fund announced a $300 million ATM program intended to buy any uranium it could find on the spot market. They did this over 2 weeks with a deliberate intent to paint the tape. If you understand normal contracting activity, you know this isn't how deals are usually done. Even "spot" trades are actually negotiated trades for delivery sometime in the near future. SPUT has a mandate to not hold more than $10 million or so in cash, which means they are forced to buy uranium with whatever capital they raise. Naturally, the sellers took advantage of this indiscriminate buying to generate the 6-year highs you see being bandied about. Now, unless SPUT can keep the momentum going forever, uranium is going to have a sharp correction once this indiscriminate buying ends. It is just not sustainable and attempts to corner the market have been met with regulatory action before, like with the Hunt brothers in the 1980s. You can bet that the purchasing agents for utilities, who actually consume the product, are not going to sit idly by while a fund brazenly manipulates prices like this. I expect some form of crackdown to start very soon. Easiest line of attack is to claim that the fund is deliberately raising prices on itself, ignoring its fiduciary duty to the unit holders. Or that it's engaging in brazen market manipulation. The actual lawsuits don't matter - if there's enough uproar, IIROC can request a trading halt while the matter is investigated.


Personally, I'm going to start exiting my URG position next week and be out before these nasty surprises. If I had SPUT, I'd hit the bid and get out before the stock gets halted. This is not the time to pile on to the uranium trade.


The last time the uranium market was this hyped was during Trump's term when URG and UUUU filed a Section 232 petition with the Commerce department. I covered that on my website. Check out how that bull market ended in July 2019.


September 05 2021


You know things are getting crazy when ZH is on the uranium bandwagon. This week is going to be spectacular.

A Bitcoin-Like Opportunity In Uranium?


September 06 2021


As of Tuesday, 8% of all U.S. refining capacity had been shut-in, and Colonial Pipeline had closed two lines. U.S. Energy Secretary Granholm authorized on Thursday a release of the emergency oil reserves to loan ExxonMobil’s Baton Rouge refinery 1.5 million barrels of crude to ensure adequate gasoline supplies while it becomes logistically challenging to get crude oil to its final destinations.


But possibly one of the most deleterious effects of the storm was seen near Port Fourchon, the only deepwater terminal in the U.S. capable of offloading supertankers, where LOOP (Louisiana Offshore Oil Port) deliveries were paused ahead of the storm. By Wednesday, more than 24 oil tankers had jammed Louisiana ports since only a handful of ports had reopened.


Some suggested that it could take LOOP weeks to reopen.


September 09 2021


Stopped out of the KNX trade today. I'm surprised, but that's also why I used a stop since I don't really know the fundamentals too well.


September 14 2021


Sidestepping the uranium bubble



September 16 2021


I'm short CACC for reasons outlined in this report. There have been more insider selling since then. Average analyst target is $395 ($470-$295 high-low).


September 20 2021


Exited this trade [Mongolia Growth Group, YAK.V] completely at the open today. The stock was pumping last week in response to the uranium hype and bull run in coal. The stock is way above the valuation I was looking for when I first entered the trade, so I'm booking it and moving on.


September 24 2021


Shipping looking fantastic, even the oil tankers are starting to catch a bid.


This content was originally published as part of Against All Odds Research.

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