New FBK

[lessthaniv]

Last month (Jan 10) I posted a link to the CME - NBSK Future pricing. Below is a copy of the data as at Jan 10th. Then, I've followed that cut/paste with the current data for comparison.  :o

 

As posted on Jan 10;

 

Chicago Mercantile Exchange (CME) › Food and Fiber › NORTHERN BLEACHED SOFTWOOD KRAFT PULP (WP)

Market  Contract  Open  High  Low  Last  Change  Pct  Time

WP.F11.E  Jan 2011 (E)  905  905  905  940  0  0.00%  set 14:07

WP.G11.E  Feb 2011 (E)  892  892  892  934  0  0.00%  set 14:07

WP.H11.E  Mar 2011 (E)  878  878  878  930  0  0.00%  set 14:07

WP.J11.E  Apr 2011 (E)  868  868  868  900  +1  +0.11%  set 14:07

WP.K11.E  May 2011 (E)  861  861  861  882  0  0.00%  set 14:07

WP.M11.E  Jun 2011 (E)  856  856  856  871  0  0.00%  set 14:07

WP.N11.E  Jul 2011 (E)  850  850  850  863  0  0.00%  set 14:07

WP.Q11.E  Aug 2011 (E)  845  845  845  857  0  0.00%  set 14:07

WP.U11.E  Sep 2011 (E)  856  856  856  851  0  0.00%  set 14:07

WP.V11.E  Oct 2011 (E)  851  851  851  846  0  0.00%  set 14:07

WP.X11.E  Nov 2011 (E)  849  849  849  844  0  0.00%  set 14:07

WP.Z11.E  Dec 2011 (E)  847  847  847  843  0  0.00%  set 14:07

WP.F12.E  Jan 2012 (E)  848  848  848  842  0  0.00%  set 14:07

WP.G12.E  Feb 2012 (E)  847  847  847  841  0  0.00%  set 14:07

WP.H12.E  Mar 2012 (E)  846  846  846  840  0  0.00%  set 14:07

WP.J12.E  Apr 2012 (E)  845  845  845  839  0  0.00%  set 14:07

WP.K12.E  May 2012 (E)  844  844  844  838  0  0.00%  set 14:07

WP.M12.E  Jun 2012 (E)  843  843  843  837  0  0.00%  set 14:07

WP.N12.E  Jul 2012 (E)  843  843  843  836  0  0.00%  set 14:07

WP.Q12.E  Aug 2012 (E)  843  843  843  836  0  0.00%  set 14:07

WP.U12.E  Sep 2012 (E)  843  843  843  836  0  0.00%  set 14:07

WP.V12.E  Oct 2012 (E)  847  847  847  836  0  0.00%  set 14:07

WP.X12.E  Nov 2012 (E)  846  846  846  835  0  0.00%  set 14:07

WP.Z12.E  Dec 2012 (E)  845  845  845  834  0  0.00%  set 14:07

 

As of today;

The long dated futures on NBSK have continued to rise. Here is an example of the 1 year:

 

http://quotes.ino.com/chart/?s=CME_WP.G12.E

 

 

Chicago Mercantile Exchange (CME) › Food and Fiber › NORTHERN BLEACHED SOFTWOOD KRAFT PULP (WP)

Market Contract Open High Low Last Change Pct Time

WP.G11.E Feb 2011 (E) 892 892 892 950 0 0.00% set 14:08

WP.H11.E Mar 2011 (E) 878 878 878 955 +5 +0.52% set 14:08

WP.J11.E Apr 2011 (E) 868 868 868 955 +5 +0.52% set 14:08

WP.K11.E May 2011 (E) 861 861 861 955 +5 +0.52% set 14:08

WP.M11.E Jun 2011 (E) 856 856 856 949 +6 +0.63% set 14:08

WP.N11.E Jul 2011 (E) 850 850 850 943 +6 +0.64% set 14:08

WP.Q11.E Aug 2011 (E) 845 845 845 939 +6 +0.64% set 14:08

WP.U11.E Sep 2011 (E) 856 856 856 936 +6 +0.64% set 14:08

WP.V11.E Oct 2011 (E) 851 851 851 932 +6 +0.64% set 14:08

WP.X11.E Nov 2011 (E) 849 849 849 929 +6 +0.65% set 14:08

WP.Z11.E Dec 2011 (E) 847 847 847 926 +6 +0.65% set 14:08

WP.F12.E Jan 2012 (E) 848 848 848 924 +6 +0.65% set 14:08

WP.G12.E Feb 2012 (E) 847 847 847 921 +6 +0.65% set 14:08

WP.H12.E Mar 2012 (E) 846 846 846 919 +6 +0.65% set 14:08

WP.J12.E Apr 2012 (E) 845 845 845 917 +6 +0.65% set 14:08

WP.K12.E May 2012 (E) 844 844 844 915 +6 +0.66% set 14:08

WP.M12.E Jun 2012 (E) 843 843 843 913 +6 +0.66% set 14:08

WP.N12.E Jul 2012 (E) 843 843 843 912 +6 +0.66% set 14:08

WP.Q12.E Aug 2012 (E) 843 843 843 911 +6 +0.66% set 14:08

WP.U12.E Sep 2012 (E) 843 843 843 910 +6 +0.66% set 14:08

WP.V12.E Oct 2012 (E) 847 847 847 909 +6 +0.66% set 14:08

WP.X12.E Nov 2012 (E) 846 846 846 908 +6 +0.66% set 14:08

WP.Z12.E Dec 2012 (E) 845 845 845 907 +6 +0.66% set 14:08

WP.F13.E Jan 2013 (E) 906 906 906 906 +6 +0.66% set 14:08

All quotes are exchange delayed. For charts, options, and latest headline news, click on the market name.

 

 

[lessthaniv]

Finally,

 

One last comment to highlight from Mercer's report:

Mr. Lee continued: "In the short term, pulp prices have increased by approximately $20 per ADMT in China in February 2011 and producers have announced an increase of $30 per ADMT in selected markets to take effect in March 2011. Additionally, based on the most recently published data, NBSK producer inventories are around 25 days which generally signals strong demand."

 

Inventories remain tight  at 25 days. That should further support the NBSK pricing in the coming quarters.

 

<IV

[triedtestedand]

IV:

 

Wow ... significant movement.  1YR out+ futures have all risen by almost 10% ... in one month ... Sharper -> you spotted this early.

 

Here's today's weekly summary of pricing ... no changes:

      http://www.paperage.com/foex/pulp.html

      http://www.foex.fi/

[Guest Dazel]

 

 

Tembec' s Market cap is $527m!!!!!!

 

The Pulp boat is rolling down the river...is Fibrek going to catch a ride

or are our hibernating management content to keep collecting their half million dollar salaries? asleep on the shore!

 

At this point I would like to know whether they are entertaining offers or avoiding them because of their lack of personal invested capital...

Fairfax where are you?

Fairfax bought this thing at $4 to $5!!!! averaged down of course but wow...$1.57...in this environment! pathetic.

 

Dazel.

 

 

 

[finetrader]

How much of your portfolio is dedicated to FBK?

For my part, FBK is 32% and I am considering reducing this to 15-20%.

[FFHWatcher]

How much of your portfolio is dedicated to FBK?

For my part, FBK is 32% and I am considering reducing this to 15-20%.

 

Too funny or coincidental?  When FBk had retreated back to $1 there was a fraction of embarrassment that I owned so much of a losing stock.  Averaging down (and averaging up) took this from a 5% position to about 5-6 times that amt.  Now, with the recent firming in nbsk pricing and the subsequent bounce in pulp co shares, it makes the research time and the finger crossing that I put into this profitable (so far).  Putting in dozens and dozens of hours (maybe over 50 hours?) and having a $100k loss is not much fun...trust me on this one.  Feels good now. 

 

Not sure what Harry longs risk policy would say about averaging down that much?

 

As far as selling now?  I will be honest, I am a bit manic on this.  I tell myself that I should reduce my position a bit, I then execute that and shortly thereafter usually buy back the position when I re-analyze how cheap the stock is and how cheap I thought it was when it hit $2 last year.  Yes, I know that is dumb, lacks a certain plan and is tax inefficient. 

 

 

[Alekbaylee]

I tell myself that I should reduce my position a bit, I then execute that and shortly thereafter usually buy back the position when I re-analyze how cheap the stock is and how cheap I thought it was when it hit $2 last year.  Yes, I know that is dumb, lacks a certain plan and is tax inefficient.

 

It's not dumb, it's human. I think we're all struggling with the same dilemma, specially because it makes a big chunk of our respective portfolios. It's hard to keep faith when you saw it go from $2 early last year to less than $1 a few months later, albeit a better financial situation. I'm sure everybody thought "Dam, should have sold at 2 and bought back at 1" or "Sh... should have bought Canfor or Mercer instead of this dog".

 

Well, our patience should be rewarded in a few weeks/months.

I can't see what will keep the stock at this ridiculous price.

[Uccmal]

FFHWatcher, you are by no means alone in the 'manic' behaviour.  I originally bought this stock in summer 2009 this time around.  That should leave my ACB in the range of < 0.50.  Well, I have bought and sold pieces of this position so many times that my ACB is now just shy of a dollar.  Not very tax efficient but the alternative may have been losing all my gains.  Each time I saw a show of strength in the pulp price, or the company, with no stock reaction, I would buy back in and then start to sell again when I decided I had overdone it.  I agree it is only human with a large position.  Smaller positions I can usually leave alone for years. 

[alertmeipp]

you guys make me want to buy all the shares I sold. :-\

[EdWatchesBoxing]

 

Well, our patience should be rewarded in a few weeks/months.

I can't see what will keep the stock at this ridiculous price.

 

If this happens, I'll definitely sellout and be done with this shitty pulp business. I just can't keep myself from thinking that FBK is a way better situation than being paid 2 or 3 to 1 on a coin flip. I feel that we're playing with loaded dice and have high max odds at the craps table.

 

I remember hearing a story about a guy who put all his money in USG when buffett was in it in the early 2000s. I recall the ACB was way under $10. I wonder if he sold over $100, before the shit hit the fan and the cycle turned downward.

[tyska]

FFHWatcher, you are by no means alone in the 'manic' behaviour.  I originally bought this stock in summer 2009 this time around.  That should leave my ACB in the range of < 0.50.  Well, I have bought and sold pieces of this position so many times that my ACB is now just shy of a dollar.  Not very tax efficient but the alternative may have been losing all my gains.  Each time I saw a show of strength in the pulp price, or the company, with no stock reaction, I would buy back in and then start to sell again when I decided I had overdone it.  I agree it is only human with a large position.  Smaller positions I can usually leave alone for years.  

 

I was happy when it finally passed $1.42, which is my ACB across all my accounts, bought some way too early at too high a price, which made averaging down hard. I obviously don't have as much on this horse as some of you, makes up a little more than 15% of my port. Has any one ever figured and posted what FFHs' ACB is on this.

 

Now Total Energy Services, that makes up close to 30% of my port.

[Uccmal]

I was happy when it finally passed $1.42, which is my ACB across all my accounts, bought some way too early at too high a price, which made averaging down hard. I obviously don't have as much on this horse as some of you, makes up a little more than 15% of my port. Has any one ever figured and posted what FFHs' ACB is on this.

 

I originally held this in late 2005/early 2006.  I think FFh was in before me... I didn't know until later that they had been buying.  My guess is that the original block of shares cost about 5.50.  So, add 5.50 +1 (rights) /2 = 3.25 for their ACB.  I dont see them letting it go for less than $5.00.

[Pick52]

A second upwardly revised price target for MERC from TD Waterhouse within a week. Now at US $16.00. Some interesting valuation metrics from a table in the report:

 

Price/Book

MERC 2.5x

FBK 0.4x

Global Peer Group average 1.3x

 

Debt/Cap

MERC 54%

FBK 19%

Global Peer Group average 22%

 

[Alekbaylee]

Tx Pick52,

So FBK has the lowest Debt/Cap ratio and the cheapest Price/Book in his group?

Lots of catch up to get to the 1.3 average; should sell at x3 from where it is now.

 

[Pick52]

Cheapest price/book, yes. The next cheapest North American company in TDW's global peer group is at 1.2 p/b. There are a couple of Brazilian companies under 1x.

 

There are 3 lower debt/cap companies; two of them are North American (Domtar (9%) and West Fraser (6%)).

[doc75]

 

I assume that Fibrek is being held back for the following reasons, all of them pretty rational (in my estimation):

 

1)  More than half their production is RBK -- and this is marginally profitable.

2)  A few quarters in a row of underperformance (apparent if not real) compared to peers while prices are sky high.

3)  A majority of shares are held by value investors who want the stock to trade at $5 but apparently won't pay $1.65 for it.

 

I'm not bashing.  I have about 15% in FBK.  I just hope some people NOT on this board (and with names not starting with P-R-E) get excited about it before pulp prices make their inevitable turn.

 

 

[Myth465]

 

3)  A majority of shares are held by value investors who want the stock to trade at $5 but apparently won't pay $1.65 for it.

 

 

LOL. So funny because its true. I paid 1.56 a few days ago.....

[lessthaniv]

 

3)  A majority of shares are held by value investors who want the stock to trade at $5 but apparently won't pay $1.65 for it.

 

I'm not bashing.  I have about 15% in FBK.  I just hope some people NOT on this board (and with names not starting with P-R-E) get excited about it before pulp prices make their inevitable turn.

 

This is one of those "for the record" comments. But Fairfax now owns more than 20% of FBK. They cannot add shares to their position without making a formal offer to all shareholders for the entire company under securities regulation. There are some rules that do allow a company to go above 20% without making the formal offer - one of those being shares acquired through a rights issue. Fairfax responded by backstopping the entire issue! I would suggest they've done everything their entittled to other than bidding for the entire business which isn't their M.O. to this point.

 

<IV

[FFHWatcher]

Is it wrong or greedy to think that I could sell some of my Mercer that has gone up 40%-50% and buy some more FBK? 

[Alekbaylee]

Lucky man! Didn't have the chance to get my hands on Mercer or Canfor.

Though question. I guess it'll all depend on the outcomes (afterwards)...  ;D

[Myth465]

Is it wrong or greedy to think that I could sell some of my Mercer that has gone up 40%-50% and buy some more FBK? 

 

Neither. Its smart inmo. FBK has a marketing issue though, and the US plants are dead weight at the moment. Its cheaper, but a broken horse right now. You would be correct to trade value and get the cheaper play, but you may end up riding the wrong horse and miss the rest of the race  :).

 

You have to ask yourself - Do you feel lucky? Is FBK a broken stock due to ownership, management, size, and US subs?

 

With all that gibberish. I would split the difference and sell a decent amount (maybe half) in a non taxable account and use that to buy FBK. No taxes and you smell like a rose either way (unless it all collapses in some violent pullback).

 

Kuppy was right to split the difference on the 2, I wish I had followed his lead and used options.

[Uccmal]

Is it wrong or greedy to think that I could sell some of my Mercer that has gone up 40%-50% and buy some more FBK? 

 

I am not in the business of giving advice but fbk is not FFH or BRK or something else I want alot of my net worth in, no matter what the price.  I keep companies like fbk out of my Registered Accounts where a non-tax deductible loss is catastrophic.  My holding in FBK is about 10% right now.  If it goes up to 4.50 my whole portfolio will make a 20% gain.  If it goes to zero my whole portfolio is down 10% - not really that much because I have about 9 years of continuous capital gains tax to retreive. 

 

Trying to keep a position in a stock like fbk right sized is tricky.  Hence why my churn is so high.

 

I still hold a position in CFX - I dont really expect it to go up much from here but it still pays a hefty dividend and has no debt.

[cwericb]

I hope these aren't dumb questions, but since no one else has mentioned this perhaps someone could enlighten me.

 

NBSK prices are updated weekly on FOREX and Paper Age, and every move in price has an effect on the value of FBK as does the price of wood chips.

 

But if something like 50% of FBK's output is involved with RBK it certainly would be nice to be able to access RBK prices.

 

1) Doesn't RBK price fluctuate as well?

 

2) If so, is there anywhere we can go to follow RBK pricing - and perhaps the prices of waste paper as well?

 

3) Even if prices aren't set weekly, how often does the price change? Has it changed recently?

 

One would assume that there must be some correlation between RBK prices and other pulp products since it is a substitute. Is there some sort of ration uses between RBK price and say NBSK?

 

Anytime I Google RBK, FBK's name comes up. Is that because they are the only ones producing RBK in any quantity?

 

Thanks

[cwericb]

Well, well, well. I am now starting to believe that FBK management are perhaps following this board.

 

Seems their new website has been revamped and I received a news item today titled "Why invest in Fibrek?" Haven't had a chance to look at this yet but it seems that they may be doing something to promote the company at last. This is certainly a step in the right direction. Suppose the upcoming AGM precipitated this but at least they are doing something in the PR area.

 

http://www.sfkpulp.com/en/investors/why-invest/

[Uccmal]

cwericb, As far as I know fbk is the only significant producer of RBK hence why there is no index quoted price. 

 

I was looking at the additional power output they will be adding.  It looks to me to be about 3-4 Million per year at present power rates (6c/kwH).  If rates start to rise it will equate to a higher dollar value whether they grid it, or use it themselves.  Considering the cost to build the plant to FBK is nothing it is not a bad deal. 

 

Nice website!