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Friday File — Hodgepodge of Updates on Altius, Fosun, Leucadia and Lancashire

By Travis Johnson, Stock Gumshoe, December 11, 2015

Several stocks I own or write a lot about have some news (or have made some big moves) in the last week or two, so I’ll focus on answering some of the reader questions and updating my opinion on those this week.

Altius released their results, so we’ll take a gander at those since lots of folks are worried by the concrete boots the shares have been wearing in recent months… Lancashire has surprised a bit with an executive departure that got a lot of analysts nervous and brought the shares down a bit… and, in perhaps the strangest news, the CEO of our “baby Berkshire” in China, Fosun, just disappeared. Oh, and Leucadia keeps dropping. What’s the story? Am I feeling compelled to do anything?

Altius Minerals (ALS.TO, ATUSF) represents my single largest exposure to commodities and natural resources, and the stock has been going down — it mostly traded in the C$12-14 range for most of the past year, and now it’s down at C$10… so what’s going on? Other than me generating some paper losses in my portfolio?

Well, as you’ve probably noticed, “commodities” is a dirty word now. So far in 2015 (and most of these had a horrible 2014, too), gold is down about 10%, copper is down 25%, nickel is down 42%, iron ore is down 30%. Those are all commodities that matter to Altius to one degree or another — the only real “positive” standout among commodity prices that matter to Altius is potash, which is only down 3% this year. So that’s obviously part of the reason for Altius’ drop in share price.

The other major driver of Altius’ cash flow, aside from royalties on those named commodities, is their coal portfolio in Western Canada. These are the big cash generators from the royalty portfolio they bought about two years ago from Sherritt, and most of it comes from the fact that they have tonnage royalties on several coal mines that are colocated with large electricity generation facilities. They don’t sell coal, they don’t ship it, they don’t price it — they just get paid a certain amount per ton for the coal that is dug up and burned to generate electricity, mostly in Alberta. So the good thing is that they’re not exposed to coal prices, which are cratering… but the bad thing is that they ...

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