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-- Posted Friday, 5 March 2010 | | Source: GoldSeek.com
"In this game," according to Marin Katusa, senior editor of Casey's Energy Report, "you only get profits when you sell." The zero-capital investing philosophy he advocates wins the hearts and lines the pockets of investors. At the same time, though, it often puts him in the doghouse with some the companies and people he admires most. That's because following this strategy, you a) recoup your original investment once your stock rises, b) pull your original investment out, and then c) return for more when the price dips to the point that the company becomes an undervalued bargain. In addition to learning more about the Casey Free Ride approach and Marin's current energy sector views, get an early glimpse of the European shale plays that have captured his fancy in this exclusive Energy Report interview.
The Energy Report: Let's start with your quick macro overview of the various energy sectors—would you be in oil, gas, uranium? Then we'll drill down into what you see as some opportunities.
Marin Katusa: Sure, I'll start with natural gas. As I've told Energy Report readers before, natural gas is a very localized market. It's very geographic-dependent, based on varying infrastructures. With that as a backdrop, we see North American natural gas going sideways or down near term. We don't see it going to $10, and in fact, expect it to stay under $6.50, even maybe below $6 over the next six months. I discussed our main reason for that view in an article called "The Hidden Supply of Natural Gas in the U.S." Thousands of wells have been drilled, waiting for to be completed. Any of them could come on stream within 72 hours, so that's a lot of supply.
TER: What do you think about uranium these days?
MK: Again, I am going to sound like a negative guy. Uranium is going sideways to down. The long-term spot will stay where it is—sideways to down—but that doesn't matter. Five years ago, when uranium was at $15, if you had asked uranium companies how they would feel about $40 uranium, they would have been ecstatic. This just proves to people that you want to be investing in companies that are real. In the uranium world, that means ISL (in situ leaching) in the U.S. or the Athabasca Basin where grade is king and where $40 is economic for certain deposits.
TER: And oil?
MK: I believe $80 oil has a lot of weakness. Even though there's a lot of speculation, I don't see oil popping to previous highs in the near term (within six months), because people are looking for tangible assets. We use $45 per barrel for our numbers. That's proving very successful in our newsletter because you only invest in the most undervalued and best companies that can actually return a significant profit at $45.
TER: The markets have run up since the March lows last year. What are you telling subscribers in terms of whether they should commit more capital to this market?
MK: Let me set a bit of context here before I answer that. When we introduced the Casey Free Ride formula in the June 2008 issue, I went on TV and radio, and I was ridiculed for telling investors to take a "Casey Free Ride." People were emailing and phoning. Brokers in the streets were saying, "You've lost your mind; you should go back to teaching calculus at the university. How do you not understand this is the greatest bull market of our career? How could you be selling these stocks?"
That's because the Casey Free Ride is all about taking profits off the table when a stock you hold has appreciated by a certain percentage or amount. People fall in love with stocks. The companies get angry at you for selling their stocks. It's a very small world here in Vancouver, so I've become very unpopular for selling these junior companies. Do I care? No, because I make our subscribers money. This is the real world; selling stocks is how you make money. If your broker gets upset with you for selling a stock because he's friends with management or he sees an upside, fire that broker. He is not working in your best interest. It's about making money.
So I introduced the Casey Free Ride in mid-2008. We all know what happened four months later. Was I a little bit early? Sure. Did we nearly get the top? Yeah. So, was it a great call? It was a fantastic call when we mentioned to take a Casey Free Ride in the June 2008 Casey Energy Report.
It's funny when I think back to the summer of 2008, for two months people were laughing at me, but subscribers who followed that advice did very well. We put five buy recommendations in the November 2008 issue; that's a very rare newsletter with five recommendations in. And those produced potentially up to more than 10 times your money, depending on if you bought, if you went in. In this game, you only get profits when you sell.
So what are we telling subscribers? We're telling people to make sure they have zero-risk capital in the game. If you invested $10,000 in a stock and it's trading at $16,000, pull out that $10,000. The liquidity of these junior stocks is so brittle. In an environment where a junior's trading at four, five, 10 times its average volume, you have to sell. We've all seen these markets go zero bid or illiquid and then you can't sell your stock. So, that's what we've told our subscribers.
So why do I say that? Number one, I want people to book gains and have their powder dry when the market correction hits. One of the most important lines you'll hear in this report is "keeping your powder dry"—that's keeping cash on the side. The Rockefellers were famous for saying, "Buy when there's blood in the streets." You can only do that if you have cash when there's blood in the streets. You have to be forward-thinking.
TER: And how's that working for you now?
MK: In the last issue of the Casey Energy Report, we basically said we cut a third of our companies and closed the positions. It was a tough thing to do as you like holding the winners, and its psychologically difficult to sell, but you must stay disciplined and sell. We've used the Casey Free Ride Formula on almost 75% of the portfolio and we have closed a little over 35% of all the stocks in our portfolio. We've had fantastic runs. We've had stocks return over 10 times.
Our portfolio has done fantastic; we're sitting here on the sidelines; we've got a lot of cash, and we're waiting. We've not just been watching the Olympics every day. We're actually doing our homework, interviewing companies, running our database models. And we're waiting for companies that I like that are overvalued right now so they hit our price targets. We run fundamental values. When I introduce the stink bids I get a lot of negative feedback, but that's a psychological reinforcement confirming that the market is overvalued right now.
TER: Moving on to lithium companies, I was wondering how many lithium companies own 100% of their land?
MK: Very, very few. A lot of these companies are earning in, there are option payments, JV agreements. In South America, where probably the best brines really are, one or two companies own 100%.
The hybrid car manufacturers of the world are looking for a lithium supply. When you're a 100% owner, you've got a lot more to work with than if you're a 40% owner or earning into a 60% option. TER: It's important for investors to understand that lithium is almost like a lake, and if you don't own 100%, somebody else can put a straw in on the other side and be taking your lithium.
MK: Another big problem there is the legal angle. The lake is a good way to visualize it. You're producing on your side of the lake. Someone's going to pop in a straw on the other side. You're not going to allow that, so you'll go to court and it will be in litigation for years. So investors have to be careful about that.
TER: Lastly, I understand you're planning another conference.
MK: We are. It's Crisis Investing Opportunities and it's going to go from April 30th through May 2nd in Las Vegas. Doug Casey, Louis James, Bud Conrad, Alex Daley and Rick Rule—we have a whole list of characters coming out, some big names, the best in the mining, energy and tech sectors. We have a panel, with everyone giving three top picks. After the last conference in Denver, everyone's picks at least doubled. Mine gained an average of 500%. And the companies we like will be there, some virtually unknown in the market. It's going to be an exciting show, and I look forward to it. This is definitely a show you want to see.
TER: We'll see you there.
Investment Analyst Marin Katusa is the senior editor of Casey's Energy Report, Casey's Energy Opportunities and Casey's Energy Confidential. He left a successful teaching career to pursue what has proven an equally successful—and far more lucrative—career analyzing and investing in junior resource companies. With a stock pick record of 19 winners in a row—a 100% success rate last year—Marin's insightful research has made a great deal of money for his subscribers. Using his advanced mathematical skills, he has created a diagnostic resource market tool that analyzes and compares hundreds of investment variables. Through his own investments and his work with the Casey team, Marin has established a network of relationships with many of the key players in the junior resource sector in Vancouver. In addition, he is a member of the Vancouver Angel Forum, where he and his colleagues evaluate early seed investment opportunities. Marin also manages a portfolio of international real estate projects.
Streetwise - The Energy Report is Copyright © 2010 by Streetwise Inc. All rights are reserved. Streetwise Inc. hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part. The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report. From time to time, Streetwise Inc. and its directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise. Streetwise Inc. does not guarantee the accuracy or thoroughness of the information reported. Streetwise Inc. receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734. Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
-- Posted Friday, 5 March 2010 | Digg This Article | Source: GoldSeek.com
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