January 21st, 2021 | 14:21 CET
Silver Viper, General Electric, Aurelius - Silver will fly!
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"[...] In our experience, the local communities are supportive and friendly. [...]" Steve Cope, President, CEO and Director, Silver Viper
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Silver Viper - At the best silver site in the world
Canadian junior explorer Silver Viper Minerals Corp. manages an exploration zone in Sonora, Mexico, with La Virginia. The project phase is still at the beginning of the activities, but the state is an Eldorado for gold and silver production. Large companies have already left their footprint here. In recent years, the most successful companies have been Fresnillo, First Majestic and Silvercrest Mines, which have significantly increased their production in Mexico.
Fresnillo is the world's largest pure silver producer with 55 million ounces of silver. Its silver mines are located in the world's most silver-rich ore regions, primarily in Mexico. One in ten silver ounces ever mined in human history comes from there. Since the pure production costs of the silver mines are usually between USD 5 and USD 12, well below the current silver price of USD 25.75, the producers are pushing the search for new deposits.
Silver Viper is seemingly in precisely the right place at the right time to become attractive for a major like Fresnillo or First Majestic. After all, a mine doesn't build itself, and integration into an existing infrastructure is quickly accomplished. As of September 30, the balance sheet still shows a cash reserve of CAD 4.2 million - roughly the exact amount spent on drilling and exploration in the first 9 months. The running costs are meager at Silver Viper, so further exploration can still be done vigorously. The focus in 2021 is the El Rubi zone.
The Company currently has a CAD 32.6 mill market capitalization, with management holding 23% of the shares. With the silver correction, the stock has lost 50% since August 2020, so now is the time to reinvest.
General Electric - The past is the past
A well-known representative of the past stock boom of the 90's is undoubtedly the US General Electric, and it is still one of the world's largest conglomerates. Its headquarters have been located in Boston since 2016. With a turnover of USD 95.2 billion, the Company achieved an operating profit of USD 3.47 billion in 2019. Not much remains of the Jack Welch era's former glory and the world's heaviest stock at the time in the new economy. The Company was restructured entirely in 2018, and Lawrence Culp has been in charge ever since. He is a big proponent of a complete digitization strategy.
In the fight against the high mountain of debt, the industrial giant has frozen the pension plans of tens of thousands of employees. The measure is expected to reduce the group's pension deficit by USD 5 billion to USD 8 billion. The financial debt has already fallen by USD 4 billion to USD 6 billion due to this step. The figures are now gradually improving; from July to September, there was a financial inflow in the industrial business of USD 514 million, while analysts had still feared an outflow of USD 876 million.
For the fourth quarter, the new CEO Larry Culp expects a positive free cash flow of at least USD 2.5 billion. However, this is still not enough to make up for the losses from the first half of the year. In 2021, the free cash flow should be positive overall, and then the debt can finally fall. The stock has been rising steadily since September 2020, standing at USD 11.45 yesterday. Chart-wise, USD 12.50 is still in play, after which the way is free. GE seems to be successfully leaving the past behind.
Aurelius - Well on track and pro-climate protection
Aurelius Equity Opportunities SE & Co. KGaA is an investment company based in Germany that focuses primarily on the information technology and business services, industrials and chemicals, and lifestyle and consumer goods segments. The Company's investment portfolio includes global subsidiaries such as Office Depot Europe, Working Links, Regain Polymers Limited, HanseYachts AG and many others.
The Company fully repaid its maturing convertible bond 2015/20 to bondholders on December 1, 2020, leaving liquidity of more than EUR 300 million. Around EUR 100 million of this war chest is existing cash in the holding companies and can be used for further acquisitions and investments in the portfolio. Management sees many attractive takeover candidates in the coming months, and the tense situation in many sectors due to the Corona pandemic is likely to be responsible for this. As a possibility to expand the current financing strategy, Aurelius is also examining co-investment funds at Group level, which can be used to address additional investor groups under the umbrella of the Aurelius Group.
In the first 9 months of 2020, the portfolio companies together generated a solid operating EBITDA of EUR 100 million. The observed trend is also expected to be positive for the full year. As part of the measures to reduce CO2 emissions already introduced at the beginning of the 2020 financial year, the Aurelius Group is offsetting the CO2 consumption for the air travel of all holding company employees for the 2020 financial year. A total of 507 tons of CO2 emissions were generated for this purpose in the past financial year. Aurelius will again offset these by making compensation payments to the climate protection organization "atmosfair". The share price successfully left the lows of EUR 10.8 behind and is now quoted again at EUR 18.4, resulting in a market capitalization of EUR 545 million. The Aurelius story is coming back to life.
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