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Nexvu on Economics, Politics and the Markets

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Uranium Value

Posted by nexvucapital on February 26, 2014

With the heat rising in the Uranium sector the focus should initially be on value and those companies that can come on-stream in the near-term…for example:

Macusani Yellowcake Inc. an exploration Company with over 900 km2 (90,000 hectares) of claims
on the Macusani Plateau. Located in south-eastern Peru, the Plateau is in one of the largest, most
highly prospective uranium districts in the world. The Company owns four advanced exploration
projects, all situated near significant infrastructure.

In December 2013 the Company released an updated Preliminary Economic Study (“PEA”) with
cash operating costs estimated to average $20.57/lb U3O8 for a 4.30 M lbs per annum operation
over a 10 year mine life. Initial capital expenditures are estimated at USD$331 M.

Corporate Fact Sheet

 

 

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Robots and Automation – Where Are We Now? Where Are We Going?

Posted by nexvucapital on February 21, 2014

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Did anyone else notice the TSX Venture is waking up…

Posted by nexvucapital on February 18, 2014

Today’s TSX Venture Chart speaks for itself…small-cap resource is waking up…

download

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Junior Copper – Another Takeover

Posted by nexvucapital on February 10, 2014

Another substantive in-ground copper asset receives a takeover offer as the Mid-Tier Producers look to take advantage of historically low valuations:

The National Post reports in its Monday edition that HudBay Minerals (HBM: TSX) launched a $540-million (Canadian) hostile bid Sunday for Augusta Resource (AZC: TSX). The Post’s Peter Koven writes that in order to sell the deal to Augusta holders, HudBay argues it is in a much better position to develop the large Rosemont copper project in Arizona than Augusta is. HudBay says Augusta has “few financing options” remaining for the $1.2-billion (U.S.) project after it already sold a joint venture interest, committed most of the offtake and sold a precious metals stream. Financing would not be an issue for HudBay, as it has plenty of cash flow and greater access to capital than Augusta. HudBay believes Augusta’s management is “overly optimistic” about the permitting timeline for Rosemont, and believes its own team could do a better job. HudBay is offering 0.315 of its shares for each Augusta share. That works out to $2.96 (Canadian) a share, which is an 18-per-cent premium over Augusta’s closing share price on Friday. HudBay has been interested in Augusta for a long time. It made an initial $30-million (Canadian) investment in the company in 2010, and raised its stake above 15 per cent last year.

This trend will continue as long as valuations reflect historic lows. The movement of fresh capital into the sector will look to find the “Next” targets as the recovery process in the Junior Sector continues.

 

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Junior Resource – Shareholder Letter

Posted by nexvucapital on February 7, 2014

The following is a letter to a shareholder of a Junior Resource Company:

I hate to be blunt but you are about to execute on the atypical pattern of behaviour that removes most retail investors from exposure to the above-average returns in any sector.

As an example, when the US markets broke to new highs in Q1 2013 they did so on the new highs being made in the interest sensitive sectors – utilities etc. Retail ran into those top performing sectors to get back into the market (which had gone up for 4 straight years from the bottom in 2009 – the valuation event of our investing life-times). The Utilities have trended down since as the move toward higher interest rates is on…we are in the growth phase of the economic cycle and it is early as the US is chugging but the EU, Japan and China are just coming off the bottom.  

Most retail investors buy Junior Resource companies when they “look good and are trending higher on the consensus general economic news which is confirming the story” and this exposes retail to purchases at the highs. No one ever knows the absolute top/bottom of the market but we can do our best to be close.

When a sector is on all buy lists (loved) it is at or close to the top and when a sector is on all sell lists (hated) it is at or close to the bottom. This is distinct from the periods in between (1) a bull-market which climbs a wall-of-worry with periodic corrections which moderate the velocity of the move up and present the buy-on-dip opportunities for the trader, and (2) a bear-market which does the opposite with periodic up-ticks which moderate the velocity of the move down and present sell-the-pop opportunities for the trader.

The entire base-resource sector has been in a free-fall correction since 2011 and for the base-metal exploration companies this bear-market began in 2008 at the onset of the Financial Crisis. Precious Metals have had their time in the sun as the pundits convinced all that the path to returns was to bet against recovery. These pundits were proven wrong in the end and the recovery is taking hold so the only thing that will make precious metals trend back higher will be inflation – too early for that one but we will see down the road.

We are finally at the end of this process…a reflection of the timing of your email and the peak of your hatred toward the companies you own in the resource sector – the final leg of the bear is apathy and loathing toward the investment. Now, is not the time to sell these companies – it is time for the opposite as the events that are unfolding in the world are aligning to be supportive of this sector for the first time in many years – growth. The Economic Cycle is the overriding factor in the Junior Resource sector. We are now in the growth phase of the Cycle – see Nasdaq and Russell 2000 performance – both growth company indexes.

The early Junior risers have been the producers (see Capstone – CS.TSX has gone from $1.75 in August to as high as $3.20 in the last 30 days) and now we are seeing the holders of in-ground substantive assets begin to quietly edge higher. The money moves down the risk tree till eventually it hits the explorers.

Remember, the secret to holding all investment classes is to own them during their period of out-performance.

So when you look at your holdings you have to ask one question: to which sector can I deploy this capital that will present better upside than these current resource holdings based on where we are in the Economic Cycle?

As for our investment strategy – we have transitioned away from our previous exposure to exploration & discovery because the current valuations on development assets are at secular lows and it is our opinion that this will not continue. In this type of environment one can earn an interest in an already discovered development asset for the same cost as a far riskier exploration/discovery program. This is a once-in-a-generation value opportunity. My organization has been increasing its exposure to these resource companies during the entirety of this multi-year correction in order to capture the “bottom” valuations before the inevitable turn to higher prices.

After this long-winded essay, I will end with the following – you need to do what best serves you and this needs to take into account your mental/emotional well-being. What is ironic, is how many people come to us and ask how they can get into a resource junior at <$0.05 like “the insiders” when the sector is in-vogue – hopefully, you now know the answer.

 

 

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Facebook – Monetizing the Mobile

Posted by nexvucapital on January 30, 2014

In November of 2012, we high-lighted Facebook as a future winner in the race to monetize the Mobile platform.

Yesterday, we saw the continuing result of those efforts with Facebook reporting “street-beating” numbers. We opine that the Company will continue to demonstrate leadership in this space and its latest app is simply a brilliant example of taking traditional consumer behavior and migrating it to the mobile platform.

Take a look at PAPER from Facebook…

paper

 

 

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Google-Effect: Home Automation Investment Wave Spreads…

Posted by nexvucapital on January 15, 2014

After yesterday’s news on the $3.2 Billion Google takeover of Nest, the Home Automation (HA) wave spread today to one of our favorite HA Companies – Control4 – which we high-lighted on October 12th when we introduced our new Long-Term Theme:

“The Internet of Things”

The Business of Home Automation – interview with Control4 President and CEO Martin Plaehn (Bloomberg)

We have included both the October 12th chart and today’s chart for Control4…

download1

download

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Google adds “Jet Fuel” to Home Automation…

Posted by nexvucapital on January 13, 2014

Google to buy Nest for $3.2 billion in cash

http://www.cnbc.com/id/101313395

SAN FRANCISCO (Reuters) – Google Inc on Monday announced plans to acquire Nest Labs Inc, a maker of smart thermostats and smoke alarms, for $3.2 billion, signaling the Internet company’s intention to expand into a broader array of devices and bringing valuable hardware design expertise in-house. Nest, which was co-founded by one of the creators of Apple Inc’s iconic iPod music player, will continue to operate as its own distinct brand after the all-cash deal closes, Google said. The deal is the second-largest in Google’s history, after the $12.5 billion acquisition of mobile phone maker Motorola. “Nest Labs appears to be focused on thermostats and smoke alarms, but it’s not far-fetched to see Google expanding this technology into other devices over time,” said Shyam Patil, an analyst at Wedbush. “Home automation is one of the bigger opportunities when you talk about the Internet of everything and connecting everything. This acquisition furthers their strategy around that,” he said.

Shares of Google were up 0.5 percent at $1,128.49 in extended trading on Monday.

Nest will continue to operate under the leadership of Chief Executive Officer Tony Fadell – a former Apple executive who is referred to as the “godfather” of the iPod – with its own distinct brand identity, Google said.

Nest, which counts Kleiner Perkins, Lightspeed Venture Partners, Google Ventures and Shasta Ventures among its investors, employs a large number of designers and engineers from Silicon Valley firms like Apple and Google. It gained a large following with its first thermostat – a round, brushed-metal device with a convex glass screen that displays temperature and changes hue to match the color of the wall it attaches to. It also tracks usage and employs that data to automatically set heating and cooling temperatures. The Palo Alto, California-based, company employed about 280 people as of October.

Google CEO Larry Page praised Nest’s current products and its founders’ talents in a statement and said that Google was “excited to bring great experiences to more homes in more countries and fulfill their dreams.”

Google said the deal is expected to close in the next few months pending regulatory approval.

Source: Reuters (Reporting by Alexei Oreskovic with additional reporting by Noel Randewich and Poornima Gupta; Editing by Jonathan Oatis)

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The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

Posted by nexvucapital on January 4, 2014

The new book by Erik Brynjolfsson and Andrew McAfee, authors of Race Against the Machine

A revolution is under way.

In The Second Machine Age MIT’s Erik Brynjolfsson and Andrew McAfee—two thinkers at the forefront of their field— make the case that we should be optimistic about the future because technological progress, ‘the only free lunch that economists believe in,’ is accelerating quickly past our intuitions and expectations. But we should also be mindful of our values and our choices: as technology races ahead, it may leave a lot of people, organizations and institutions behind.

This is the book that explains the new age we’re quickly heading into and shows why we should be optimistic about it, yet also discusses the challenges it will bring.

51VZR0zq8AL._SY344_BO1,204,203,200_

 

SecondMachineAge_Ch1

Source: http://www.secondmachineage.com/about

 

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The Single Greatest Predictor of Future Stock Market Returns

Posted by nexvucapital on December 22, 2013

The Single Greatest Predictor of Future Stock Market Returns.

Source: Philosophical Economics

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