RE:Contrarian: Where are you?Hi JJ – sorry, I don’t drop in here as often as I once did as I find the quality of the discussion to be pretty lame present company excluded. Noteholders, shareholders and even those with no skin in the game who post on this Board because they bare a grudge were too busy complaining about the situation to see the opportunity it presented. I don’t usually disclose my position but I see some of the usual idiots questioning that and so I disclose it partially here on a one time only basis. I worked very hard to get my average cost down to about 16 cents on the shares (100k at $1.00 + 2m at 12 cents = 16 cents) and I did something similar with my bond position. In addition I traded an incremental equity position from about 13 cents, selling it yesterday at 21 cents, buying it back this morning before the meetings and selling it again around noon today. I trade actively and hope to find more opportunities to do so with this name. Other than that I’ve had some success with the junior golds this year, and short selling Air Canada and Cineplex. Short selling of the Canadian banks hasn’t produced much of anything to date. As we get closer to the fall, I’ll be looking to build up my short/hedge book.
With respect to SCN, as I said in a previous post with a solution now in hand, the compression should come off of the whole capital structure. There is an implied transfer of 80-85 cents of enterprise value from noteholders to shareholders – which is a pretty unbelievable thing. Even at market value for the bonds (as opposed to the former par value) there is still a notable transfer of enterprise value.
I can’t imagine that SCN’s immediate results (2nd Q) will be anything great as the cobalt price has been weak and the nickel price has only recently firmed somewhat. I guess the question is whether pressure being released from the resolution of balance sheet issues will create more interest than likely mediocre financial results.
Good luck!