manualofideas

Since we have many Canadian investors here, I was hoping someone would know the ownership reporting threshold for Canadian public companies. In the U.S., one has to file a Schedule 13G or 13D when ownership exceeds 5% of a company. From what I can tell, the threshold might be 10% in Canada, but if someone knows for sure, that would be much appreciated. Thanks!

Very bullish earnings release, including increase in monthly distribution from $0.12 to $0.20. Also mentioned in the press release are pulp prices of $1,000 for May. Bodes well for SFK...

There is a great write-up on SFK posted on SumZero: http://www.sumzero.com/quick_ideas/view/2563 (If you don't have access, see the attached PDF file.) Disclosure: Long SFK.

You should listen to what Buffett has to say on estate taxes and the perpetuation of family dynasties.

It's amazing that no one has been held to account yet. Judd should really sue for libel.

We would have guessed a boost in the mid single digit millions, so we were not too far off. By the way, here is perhaps the clearest article yet stating that the black liquor subsidy expired on December 31, 2009: http://memphis.bizjournals.com/memphis/stories/2010/01/25/story2.html?b=1264395600^2767641 It's incredible that this has not yet been picked up by investors and reflected in SFK's stock price. Just another example of how inefficient markets can be sometimes. Disclosure: Long SFK.

We did a report on magic formula investing a while back that some members may find useful. We discussed the pros of the magic formula approach on pages 4-6 and included some suggestions for narrowing down the list of magic formula screen results. http://manualofideas.com/files/moi200811.pdf

We looked at some Japanese stocks last year. This may help you get up to speed quickly on a few companies. http://manualofideas.com/files/content/pmr200902_japan.pdf

Our understanding is that the black liquor subsidy that badly hurt SFK's U.S. recycled pulp mills last year expired on December 31, 2009. This seems like a major positive for the company, as the St Felicien mill should already be printing money at current pulp prices. With the U.S. mills likely to recover this year as well, SFK could have a big year. This seems hardly priced in at a price to tangible book ratio of less than 0.2x. Perhaps we deserve 0.5x or better? Cheers! Disclosure: Long SFK.

We have a different read on the continuation of the "black liquor" subsidy that has hurt SFK in the U.S. Here is some encouraging news: http://www.bignews.biz/?id=828089&keys=Congresswoman-Ann-Kirkpatrick-Liquor Disclosure: Long SFK.

http://www.tudou.com/programs/view/XH5W4vffBbY/

How is it that the U.S. spends so much more on health care as a percentage of GDP than other industrialized countries, yet so many Americans are uninsured? There is no reason why every person in a rich country should not have health insurance, and there is no reason for it to cost as much as it does in the U.S. Maybe the Congress should ask Canada or the U.K. to help figure this out?

Seems like those targets may have to be raised again! Cheers!

Do you know which banks upgraded it? Thanks.

We recently interviewed Tim McElvaine who had a rough 2008 but is undoubtedly one of Canada's top value investors. Here is a link to the interview: http://www.manualofideas.com/files/content/dpr200910_tim_mcelvaine_interview.pdf

Looks like SFK will get $20 million: http://www.opinion250.com/blog/view/14252/1/canfor+nets+$122m+in+green+transformation++dollars

Looks like the subsidies will be detailed today: http://www.vancouversun.com/Ottawa+announce+billion+subsidies+pulp+mills/2083459/story.html

Thanks!

Tariq, can you ask what would happen to banks in a hyper-inflationary scenario in which the 30-year Treasury Bond yield goes to 15-20% or higher, as Julian Robertson has suggested?

Here is a government website that has more information on the subsidy: http://cfs.nrcan.gc.ca/subsite/pulp-paper-green-transformation Note the statement in the timeline: "Early October - Credits awarded to companies" Disclosure: Long SFK.

It looks like the Canadian government may finally be moving ahead on a $1 billion "black liquor" subsidy to pulp companies in Canada. See the following two news articles we dug up: The first article is about the Celgar mill (not owned by SFK) in Castlegar, Western Canada. Two quotes from the article: "Hitzroth said the mill is expecting a grant of roughly $60 million to be forthcoming from the federal government any day now." Also: "If we're able to get the money, say, by mid-October..." http://castlegarsource.com/node/3393 The second article is about two mills in Fredericton, New Brunswick. Here is a quote: "The AV Nackawic and AV Cell dissolving pulp mills will invest in energy efficiency projects once they receive nearly $50 million from the federal government's green transformation program." And this: "The turnaround in the economy - with pulp prices inching back up and demand increasing - is certainly a positive sign..." http://nbbusinessjournal.canadaeast.com/journal/article/809666 Since the subsidy in question is a federal subsidy, with mills in both Western and Eastern Canada expecting tens of millions each from the federal government, there is no reason to believe SFK is in a different situation. If SFK receives a similar subsidy in the coming weeks -- and it should, based on the Saint Felicien mill's production -- the huge leverage on the SFK equity stub could pay off pretty quickly. Note that SFK is widely regarded as having one of the strongest balance sheets in the pulp industry, yet the shares still trade for less than 20% of tangible book value. Given recent developments, 50% or more of tangible book would be absolutely appropriate, in our view. Disclosure: Long SFK.

Some Board members have mentioned Henry Singleton in the past so we wanted to share an audio program on Singleton that is now available online: http://www.manualofideas.com/blog/2009/10/the_manual_of_ideas_on_busines.html

More insider buying at SFK: http://www.canadianinsider.com/coReport/allTransactions.php?ticker=sfk.un Given recent developments at Domtar (UFS) and Mercer International (MERC), it is difficult to see how SFK is not sitting on the cusp of a major positive fundamental inflection point. A Google news search for pulp prices yields several stories on pulp producers implementing price increases around the world. By the way, comparing the balance sheets of SFK and MERC is an interesting exercise. Let's just say SFK is a fortress compared to MERC. Disclosure: Long SFK, no positions in MERC and UFS.

We recently profiled Contango Oil & Gas (MCF) and Exterran Holdings (EXH), another natural gas-related company, in Portfolio Manager's Review. Contango profile: http://www.manualofideas.com/files/content/pmr200908_mcf.pdf Exterran profile: http://www.manualofideas.com/files/content/pmr200908_exh.pdf Disclosure: Long MCF and EXH.

Looks like insiders bought some SFK units in the open market last week: http://www.manualofideas.com/files/content/20090811sfk.htm Disclosure: Long SFK.