Wave speed, v

(15.1) v = .la * .f

v is constant, depends only on properties of medium

Sprott School of Business (Photo credit: Wikipedia)

Oct 30

Sprott Inc.

COMPANY DESCRIPTION:

Sprott Inc. manages approx. $8.5 billion in client AUM. The company currently operates through three distinct business units: Sprott Asset Management LP (mutual funds and hedge funds), Sprott Private Wealth LP (wealth management services to HNW individuals), and Sprott Consulting LP (management, administrative and consulting services to other companies). Sprott Inc. is headquartered in Toronto, ON.

SII : TSX : C$4.60  HOLD Target: C$5.00

SII is scheduled to report Q3/12 results on Wednesday, November 14, 2012.

Investment highlights

Expect significan Q3 growtth – we forecast AUM  ( Assets Under Management) growth of ~22% to ~$10.4 billion (from $8.5 billion) as the firm: (1) closed Toscana and Flatiron (>$400 million); and (2) closed follow-on offerings for PHY and PHYS (~$600 million). On an organic basis, we estimate AUM growth of 11.5% driven by strong fund performance (13%) and net redemptions of $140 million (-1.5%) compared to -$158 million last quarter.

However, performance fee visibility remains low for 2012E as Sprott’s largest funds continue to have significant clawbacks

Incresed Q3 Earnings  - assumption to $4 million (from $1 million) to account for the increases in Gold bullion (+6%) and positive resource investments (public equities, mutual funds, etc.). We now forecast Q3/12 EPS of $0.05 (from $0.03) and compares to consensus at $0.04.

 Expect  revenue of $38.1 million (down 14% YoY; up 39% QoQ) versus consensus of $34.1 million. Our Base EBITDA estimate of $12.1 million (34% YoY decline; up 16% QoQ) represents a 240 bps QoQ increase in margins to 35.6%.

Valuation

Our 12-month target price is based on a sum-of-the-parts approach, derived by a: (1) 8.5x NTM base EBITDA multiple, and (2) DCF model to value its performance fee business (we value at $1.69/share).

Gold is THE Safe Haven Click here  for  investment profits and much more detail on the ins and outs of investing in gold

Related articles

• Eric Sprott: Do Western Central Banks Have Any Gold Left? (sgtreport.com)
• Eric Sprott Cautions Investors To Fear The Financial System (GLD, SLV, PHYS, IAU, PSLV) (etfdailynews.com)

Magnetars are a type of neutron star that revolve very, very fast, creating a really strong magnetic field. The really cool things is “really strong magnetic field” is severe understatement. They can reach about 10 gigateslas, for comparison Earth has maybe 50 microteslas depending on where you are. This is almost strong enough to rip apart atoms, but what they can do is deform hydrogen (and probably other) atoms into long spindles that are maybe 150-200 times as thin as regular atoms.

Hilarious, actually.  Not that I find Romney at all convincing, and Ryan is just a pup.  Personally, I wouldn’t want my political fortune tied to Karl Rove, a man who could benefit immensely by checking out Chuck Colson’s biography.  (And by the way, Is it possible that the video that so enflamed the Arab world last week was a Republican dirty trick?).

More to the point:  the portfolio has suddenly “earned” enough for me to put away some of its gains. (Let’s hear it for the wizards of money management!)  The only problem is to find a way of storing designated savings so that they don’t wither away while the state continues to debase its currency.  Savings may very well equal investment in a classroom, but in a household, I have come to believe, they had better be kept separate.

So I am partitioning out of the portfolio a savings account.  I have made an initial allocation to the Sprott Physical Silver Trust (PSLV) @ 14.21 and the Sprott Physical Gold Trust (PHYS) @ 15.16.   These are closed end funds that trade at a premium or discount to the bullion held by the trust.  (Here is a link to the Sprott site:  http://sprottphysicalbullion.com/why-sprott-physical-bullion-trusts/)  Going forward, I intend to track savings allocations separate from portfolio holdings.  The distinction I am making between savings and investment is fundamental;  investments are actively managed to generate returns, while savings are reserved as a store of value.

In conjunction with the establishment of a savings plan, I have closed the portfolio’s position in the iShares Silver Trust (SLV) @ 33.60.  This trust (unlike the Sprott funds) is heavily shorted, which can have a negative effect on the commodity price of silver.  I would be working against myself were I to hold SLV at the same time I held PSLV.  (For this insight, I am grateful to Ed Steer:  http://www.caseyresearch.com/gsd/home).

The following PDF is a summary of the portfolio’s precious metals performance to date. Thanks to Ben, I have now recovered all losses from the terrible trades earlier this year (see here).

Gold & Silver Sheet2