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MVIS OMIB and earnings follow-ups -2

13:06 14-Nov-19


To add some telecom news to the follow-ups:

Vodafone Ideas operational results were poor, but no worse than expected.  As already discussed, it's the regulation that is the problem, and thus this is the only sentence from the report that counts is:

It is to be noted that our ability to continue as going concern is dependent on obtaining the reliefs from the Government as discussed above and positive outcome of the proposed legal remedy.
Aditya Birla has already joined Vodafone in saying that it will not commit any further capital to the JV with government relief.  In response, the government has proposed cutting the Adjusted Gross Revenue fees from 8 to 5% and suspending the deadline for their payment for two years. 

As a reminder, this has no longer has any direct financial impact to Vodafone, since it had already written off its India investment.  Only upside should be possible from here.  However, the situation also highlights why the market is taking a wait and see approach with Ebix, which seems to be mostly on the right side of regulators these days.  In addition, there is A LOT of wrong information out there.  Those who understand and can live with the realization that doing business in India always has and will continue to be a mess should consider adding EBIX now, and VOD on any further dip, especially ahead of the dividend.

On 11/14/19 9:38 AM, Esekla wrote:

MicroVision's CEO purchased 33K shares on the open market Monday at a price just below 75 cents each.  The transaction increased his stake in the company by about 4.5%.  While open market insider buys are usually a sign of confidence from management, and therefore a positive, I see this one as mostly negative due to the limited operating capital.  Management wouldn't be able to buy shares if it had private information on an imminent deal.  Consequently, I take this as a sign that more dilution is in store this quarter and see it as an attempt to revive the stock price in advance of that.  I prefer to take chances on AMSC and WPRT instead, in light of their unwarranted post-earnings slumps.

Mostly, though, as mentioned yesterday, I am over-weighting CVA and BGCP.  This work by NASA should be interesting to Covanta as it shows landfills to be the main source of methane emissions in California and that they exhibit "persistent anomalous activity".  The company also responded to my question regarding metal price hedging, saying that

metals are not a homogenous product and given locations and quality do not easily correlate to a specific index.
Consequently, the company is looking at individual streams and locations to find hedging opportunities, but it is "early days".  It did, however, confirm my read that ferrous pricing has seen some modest recovery since the report.  Furthermore, I note that natural gas has risen sharply to top out above $2.75 since then and is now at $2.66, both well above the October average of $2.33.  Though it's always possible that I'm wrong about the dividend, all of this points to tremendous upside as move into toward next year.

Brent pricing around $63 is also modestly good for Shell, but the stock has just gone ex-dividend and is right at my $60 mark.  I have to wonder if Murban will eventually be of some importance as well, as I note the first signs of fading dollar importance in the industry.  Although most forecasts for crude demand and production have continued to be gloomy, the long-term energy outlook that is increasingly pertinent to natural gas still shows global annualized growth of 1 to 1.3% through 2040.  All of this comes as European economic data shows a little relief, and Powell's testimony confirms my thoughts about the market rally fading though they reduce the chance of a dramatic reversal somewhat.  The long-term outlook still seems ripe for Golar, but trading will be very tricky in advance of a shipping update, hopefully with the report on the 26th.  Invest carefully!