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09.14.11
Global Financial Crisis, Act II

The world economy has bifurcated, which creates powerful crosscurrents as each segment deals with different challenges. The debt-ridden, legacy economies of the West need to deleverage, while the capital-rich emerging economies need to manage growth, capital inflows and inflationary forces.

Meanwhile, Act II of the Global Financial Crisis appears to be playing out, albeit in slow motion, with an epicenter in Europe. Fears of a Lehman-like collapse in that region abound, but global economic conditions are much different than in 2008. For example, bellwether commodities like corn, copper and crude oil do not reflect the crisis mentality.

08.29.11
The Running of the Bulls?

August has been a difficult month for the stock market with the major indices down double digits. Investors are pricing in a double dip recession in the U.S. and a commensurate stall in global growth. Despite rather benign economic conditions in China and elsewhere, the concept of decoupling between emerging economies and the developed nations is not yet in play. Because resource stocks are both cyclical and commodity-related, they will have the most volatility during such challenging times.

08.21.11
Crisis+Contrarian = Opportunity

Resource plays in general and the energy sector in particular, are at the epicenter of the dislocation. We have witnessed 20-30% declines in many names over the past week. In some cases, the selling has erased most of our profits, while more recent purchases are underwater. Despite the unusually aggressive selling, we nevertheless take a contrary view and outline a number of reasons not to shrink back from the market in horror, but rather to stay the course and even consider additional buying of resource-related names at bargain prices.

06.21.10
Homeland In-Security

In SSIA we invest in areas related to the theme of Homeland Security. Of course, security is defined in different ways at different times. After 9/11 there was a surge in spending on airport screening devices, vehicle and cargo scanning, Internet security, infrastructure security and data security. If the company had a security angle, it was hot. That theme lasted 2-3 years.

04.15.10
Afghanistan to Uranium

Summary: There are now almost 100,000 U.S. troops in Afghanistan. The Taliban are on the verge of establishing the world’s first militant Islamic drug cartel, which is why the U.S. is planning to attack Kandahar, the spiritual home of the Taliban. The political and economic realities in the country, however, have compromised government support of this critical mission. The more the U.S. speaks out against corruption and drugs, the worse the situation gets.
 

04.15.10
Risk Reward

Uranium is a unique molecule, which holds more than 1000 times the energy of a molecule of hydrocarbon fuel. One reason is that it weighs a lot more. A gallon of milk weighs 8 lbs, but a milk carton filled with uranium weights 150 lbs. Moreover, it releases no carbon dioxide during its exothermic reaction, so it does not contribute to global warming and other ecological consequences of using fossil fuel. According to one model discussed below supported by Bill Gates, electricity can be produced by these new modular reactors at half its current costs.
 

04.15.10
Terrapower

Bill Gates, however, has looked at the nuclear energy and nuclear waster problem and has decided to back a modular reactor design developed by a company called Terrapower that runs on the depleted uranium in those 57,000 cylinders. The “traveling wave reactor” (TWR) doesn’t have to be refueled or have its waste removed until the end of its life cycle, which is theoretically a century or more. This technology is still on the drawing board inside a super computer and is therefore a decade away from being commercialized. That said, we think Gate’s interest in Terrapower will further energize the new modular movement.