RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: flip this Vildegrul,
Fair enough and I admit if you'd never read my Sandstorm pieces on my blog it could come off as unwisely dismissive but I've publicly written about these failures to a fairly detailed degree on many different occasions. I totally agree that they were disasters, but again, when a stock is priced at a level where these failures are priced in and then some it's really irrelevant as far as the risk/reward equation.
As far as these disasters reflecting upon managements judgement, I couldn't agree more and trust me I haven't forgotten, but again to not think about them in context of both the idiosyncratic circumstances that contributed to their failure (think natural gas at 50 year lows and the secondary effect that has on the coal industry or the resource capital markets completely shutting down to juniors etc.) as well as Watsons ENTIRE career is both naive and shoddy analysis. Feel free to bring up any of them and we can discuss.
So one needs to keep in mind his long-term batting average and the various adjustments Watson has made to the model since these deals were struck (i.e. the hiring of specialists, a focus on byproduct deals where they partner with SAND, no more deals with juniors who are highly sensitive to the health of the capital markets, etc. etc.) along with a few other salient factors when thinking about how to accrurately handicap the liklihood of a similar disaster occuring in the future.
For example, in order to form my own opinion on Watsons judgement I analyzed nearly every deal Watson has ever done in detail and so I think I'm in a pretty good spot in terms of Watson's judgement. I recommend you do the same, specifically the byproduct deals.
Anyhow, the failure of these deals is an immaterial consideration 1) at this price 2) in context of Watsons extraordinary paper trail over the course of his entire career, and 3) in light of the multitude of changes in terms of both people and process made at the organizaton since. I could go on, but my point is that sometimes wisdom is about knowing what to overlook (to paraphrase William James).