Month: March 2013

NCLH, Norwegian Cruise Line Holdings

Hamilton

“I am so excited about this new magical experience that will come to life aboard Norwegian Getaway,” said Kevin Sheehan, Norwegian Cruise Line’s chief executive officer. “The Illusionarium will be an experience unlike anything at sea today and take adults and children alike on a journey into the mystical world of magic. This is so perfect for the ship that will embody the vibe of the Magic City.”

Norwegian_Breakaway_10

Recently launched in Germany, the Norwegian Getaway and the Norwegian Breakaway, a sister ship, are on their way to start operations from Miami and New York. They do not come any bigger and have room for about 4000 passengers. The company has nine other vessels.

The company has been around for a while but only went public in January of this year issuing about 1/2 bln. of stock at $19.

nclh

The chart tells you very little other than that the stock immediately gained 60%, going from the $19 issue price to about $32. We would sell; the illusionarium may be an experience unlike anything else but at a cost of $1 bln. we suspect that this could, one day, prove to be one of the most grotesque misallocation of capital. Between Carnival, Royal Caribbean and a few others there are now at least  50 or more of these oversized ships. Some are so big that you cannot even tell when they leave the dockside. It is like living in a financial bubble, with Bernanke at the helm. We prefer our cruises on real ships like these;

samsunJadran

The one on the left is the Samsun, passing by the Leander tower at the Black sea entrance to the Bosphorus, the other the Jadran (=Adriatic), you can have your illusion right at the waterfront in Toronto. At 3,000 tons the Jadran is 1/50th the size of the 145,000 ton sisters.

BAA, Banro Corporation.

Hamilton

Last December we opined that this stock could go quite a bit lower as per this chart;

baa dec 2012baa march 27s

The ultimate target was at the red line at the bottom of the chart, about $1.75 less a bit. As it happens we are there! Almost. We have gone back to the base of the wedge tracing out a nice A-b-C in which C is about 1.6X A, a very common ratio. The MACD and RSI have been non confirming for about 4 months now. Also from a fundamental perspective, the announced financing of about $100 mln. and it’s dilutive effect has probably run its course.

Viewed over a longer term , the stock may already be in a new bull market starting in the early 2000-ends.

baa march 28

In that scenario a wave 3 up is about to start. This is, however a very low confidence call as the combination of digging for gold and doing it in the Congo is not the happiest combination.

S&P, the Mnt. Everest syndrome

Hamilton

S&P 500 Chartmnt everest

Mount Everest syndrome, in my vocabulary, stands for this phenomenon that you climb it for no other sensible reason than that it is there. I suspect that Bernanke and his co-conspirators at a whole slew of other central banks in the world, most prominently those of China, the ECB, Switzerland, the UK and now again  Japan, all want to get to the top just to be able to say that nothing really happened as a result of the great recession.

The mountain was first successfully climbed by the New Zealander Edmund Hillary and Tenzing Norgay, a Sherpa climber from Nepal, back in 1953. Locally the mountain was known as “Holy Mother” but was named after an English bureaucrat surveyor George Everest for fear of offending any one of the many ethnic groups that might claim parenthood to the mountain, preferring to, in good English tradition, offend them all. Since 1953 some odd 8,000 people have attempted to climb the mountain, resulting in 250 or so deaths, mainly due to altitude sickness or the tragic events immediately following.

What is not well known by the financial community of the World is that the mountain has had an almost 100% perfect correlation with the S&P. This is an impeccable record not matched anywhere else. Using an optical illusion it is perfectly clear that a high of 1565, give or take a point, will do the trick and then there is a precipitous drop right ahead. There is no need to do anything now, we are almost guaranteed to get there. But once we do, don’t let it get to your head as it is definitely time to get out. To gain a “feel” for the coming drop, here is that picture again;

mnt everest 2

 

P.S. For those who are wondering, Mnt. Everest is the one in the middle. The photos, without the white lines, are by David Breashears. Tomorrow we show the Matterhorn against the Swiss SMI index.

STD, Suntech Power Holdings Co Ltd. and how to create a 10+% GIC in Canada.

Hamilton

STP 2013

These guys are flirting with bankruptcy, unique for a Chinese company. We are not sure how to count this but we are sure that it does not matter, not after you drop from $90 to 60 cents on the ADRs. FSLR has had equally dramatic move, see elsewhere in this blog. What happened? Did the sun stop shining?? No. Governments around the World wanted to be “green” so they decided to rig the market such that something that was not at all economical, becomes very economical (for some, as the laws of physics cannot be changed). Then they threw “local content” into the equation and voilà a big expansion of manufacturing was stimulated into existence. Then they, the governments, rather abruptly recognized their follies and cut their subsidies, that is the price at which they are willing to buy your electricity, the so called feed-in rate. That is why, or at least one reason why some of these companies are in trouble.

In Canada we have the Micro-fit programme. Micro because it is for the little guy with about $50,000 max to invest, and fit for feed-in-tariff. Google micro-fit and you will get tons of information. You need a rooftop that is of a certain size and facing the sun for a good part of the day. The tariff is now 54.9 cents per kilowatt-hour down from about 84 cents in the beginning, but the costs have come down equally fast. A 5KW system can now be bought for $25,000 including HST and fees for connecting and permits. This would generate about $3,400. per year but that degrades by about 1/2 to 1 % per year, which should work out to a yield of about 10% per annum or better, good for 20 years, government (Ontario Power Authority) guaranteed.  Here is one of the better companies in this business;

esolar website

They are happy because what they lose on a bank deposit they make up on their Micro-fit installation. Unfortunately you can only go to about $50,000 now.