No one is short this stock Hi All,
I'm just as anxious for this PEA as everyone else is. Personally, I'm not expecting it until the end of March - for no reason other than I don't want to get my hopes up that it will come sooner and then be disappointed. I've waited years and gradually accumulated my position (and more recently, my losses), so another 2+ weeks is fine by me.
Here's the deal: no one is short this stock. There is no material short interest reported and never has been. The only shorting that would occur would be for market making purposes - as in: a couple hundred shares here, an odd lot there. I can assure you that RBC is not out there shorting the stock. What is happening is that someone is selling their long position. This is just conjecture, but I am very confident in that. I have no problem believing that someone is selling their long position. They could be doing it for a multitude of reasons not specific to FPX. For instance, has anyone seen a chart of the Venture index recently? Yes, it's pretty ugly. And how many small resource funds do you think are out there that are facing ongoing redemptions or closing up shop? The answer is many. Consider a $100mm resource fund with a 1% weight in FPX - that's 2.5mm shares. If that fund were closing up and needed to return capital to shareholders, it sells it's holdings. The TOTAL numbers of shares RBC has sold YTD as a broker is 3.27mm shares. Take out the noise and you could easily see a small resource fund selling their position.
I will also acknowledge that it could very well be a fundamental call relating to the prospects of FPX. For instance: this will be a large capex project in an environment where capital and operating costs are a major issue in mining. In 2007, a robust PEA would shoot this stock to $5 pretty quickly. The same PEA might cause investors to sell on news in this market. I can assure you that stocks reacted better to PEA's when the Venture was over 3000 vs. today's value of 1116. There could be a few holders that are trimming their positions ahead of the PEA to protect against a potential negative market reaction to a "positive" PEA. Don't scoff, this is the market environment that it might happen in.
All that being said, I assure you I am not in that camp. You can see all my previous posts and I stick by my opinion. I've done conservative cash flow analysis (of course making a lot of assumptions on costs and revenue... assumptions that the current market is not willing to give FPX credit for); and the value is there at Decar. Extrapolate that value to the 100% owned properties, and the upside is massive. And no small signficance is the mosaic theory surrounding Cliffs actions. Cliffs has repeatedly conducted themselves in ways that quietly tell the market that they are extremely interested in Decar and FPX and would like nothing more than to keep it under the radar. I'm happy that the FPX management had enough foresight and bargaining ability to institute a 9 month lag between the Decar PEA and the expiration of the stand still agreement. I'm invested in this story and still believe in it, so quite frankly, at this point all there is to do is wait for the PEA.
Good luck to all longs - see you on the flip side!