New DROOY Institutional Holdings
Jason Hommel
If you go to Nasdaq.com, and you enter in your
favorite stock, like DROOY, there are a number of things you can check
about the stock. An interesting link is the "Holders/Insiders" link.
You can see that 4.2% of DROOY is held by 32 Institutions. Even
further, you can see the names of these institutions. Even better, you
can see the total holdings of these institutions, and even what stocks
they are invested in. For example, Jennison Associates LLC has $7
million worth of DROOY, but the value of their portfolio is $45
Billion. DROOY's next largest institutional holder is FMR Corp, which
recently purchased $4 million worth of DROOY, and the value of their
portfolio is a staggering $452 Billion. Here is a table of DROOY's
largest institutional investors, the value of their DROOY holdings, and
the values of their overall portfolios.
The tiny portion these institutions have invested
into DROOY when considering the overall net worth these institutions is
huge. The potential buying power in these few institutions is mind
boggling. DROOY's entire market cap is less than half a Billion.
That DROOY has attracted the attention of FMR Corp
and other large institutions is indeed welcomed news! FMR Corp has a
potential buying power of $452 Billion, yet DROOY, and their tiny stake
in the company relative to their entire holdings, seems somehow not
beneath their interest! They hold over $452 Billion, and have invested
$4 million into DROOY. Why? Why would anyone take the time to bother
investing less than a thousandth of their portfolio into something?
Something to think about.
The next significant thing I note is that there are
6 brand new institutional holders of DROOY as of 12-31-2001. These 6
also have a MUCH larger investment pool than the rest. Total investment
size of old holders vs. new: 89.4 Billion vs. 983 Billion! This is
extremely bullish news. DROOY is attracting the attention of BIG money
investors; and several of them will have to compete with each other for
stock if they want to invest in any size that would be significant
relative to their overall portfolio!
Another interesting thing is that the address and
phone numbers of these institutions are available at Nasdaq.com. To me,
this means that I, or anyone, could contact them and advise them about
certain facts relative to DROOY.
I wonder if these large funds are aware that several
market analysts have recently determined that DROOY should be valued at
anywhere from $5-$10 per share by the time the first quarter 2002
earnings report comes out? This is assuming of course that the gold
price and rand remain steady, and DROOY's stock price moves to a
relative P/E ratio of 10 or so.
Here are my own calculations:
Considering CURRENT rand devaluation AND dollar/gold
price gains to derive an estimated short-term price target for DROOY
stock, assuming current values of rand/dollar/gold stay the same.
If we assume DROOY is a "break even" company at
$280/oz gold & 9 rand/dollar, and if we assume DROOY's costs stay
the same in rand, and IF those assumptions are ACCURATE, then we can
conclude that the difference between the "break even" prices and
current prices will accrue straight to the bottom line as earnings, and
those are numbers we can calculate as follows.
DROOY mines 1.1 million ounces of gold per year.
At average prices of $300/oz. of gold, and at 11.49 rand/dollar
Fixed costs = 1.1 million oz x $280 dollar/oz x 9 rand/dollar = 2772 mil rand.
Likely profit = 1.1 x 300 x 11.49 - fixed costs =
3791 rand - 2772 rand = 1019 rand x 1 dollar/11.46 rand = 88 million
dollars - 30% for taxes = 62 million.
If we then assume DROOY's stock price will move so
that the P/E will go to 10:1 ratio, then DROOY's market cap should be
880 million.
With 157.3 million shares outstanding, simply divide
880 mil by 157.3 mil = $5.59/share for DROOY, or perhaps $3.94/share
after taxes.
Of course, I have read from other analysts that
DROOY is expecting to mine 20% more gold, but I don't know if that
number is accurate, so I have not included it in my estimates. But, of
course, that would significantly improve the bottom line.
I wonder how much DROOY stock a fund like FMR could
buy before their purchase decision alone caused the price for DROOY to
rise to $10 per share? The huge problem that large institutions face
when buying into a small cap stock like DROOY is that they cannot buy
in any size without significantly affecting the share price. Small
investors may complain about 2-3% commissions, but the large
institutions end up paying much higher commissions to get into a small
cap company simply because their buying power can drive the stock price
up 20% or more. Fortunately for our big friends, they can still buy
DROOY cheap, and also benefit significantly if the gold price continues
to rise.
Jason Hommel
February 21, 2002
Other essays by Jason Hommel:
25 Reasons To Support The Sound Money Bill - 08 July 2004
I'm Insanely Bullish On Silver - 19 June 2004
Silver Stock Evaluations - 22 May 2004
The Silver Bull Is Back - 04 May 2004
Late April Silver Update - 22 April 2004
Silver Juniors With Cash Flow - 04 March 2004
Major Frauds of the U.S. Monetary System - 26 February 2004
Market Perspective & Cabo Mining - 12 February 2004
Usury Enslaves - 19 January 2004
Sterling Mining - 29 December 2003
The U.S. Trade Advantage With China - 17 December 2003
Rising Gold Prices Will Help The Economy - 02 December 2003
Miners to Use Silver as Cash - 27 November 2003
Private Placements in Silver Companies - 20 November 2003
Is the Silver Market Too Small to Buy? - 13 November 2003
Inflation & Deflation During Hyperinflation - 06 November 2003
Silver Price Expectations of Silver Stock Investors - 30 October 2003
Buying & Tracking Canadian Silver Stocks - 29 October 2003
Canadian Zinc--Silver Potential - 23 October 2003
Silver Stocks--Comparative Valuations - 4 - 13 October 2003
Silver Stocks--Comparative Valuations - 3 - 06 October 2003
Silver Stocks--Comparative Valuations - 2 - 29 September 2003
Silver Stocks--Comparative Valuations - 1 - 22 September 2003
Silver and Cardero Resource - 08 February 2003
The Moral Failures of the Paper Longs - 22 January 2003
CFTC Response to Silver Problem - 14 January 2003
People Talking About $32,567/oz - 10 January 2003
Letter To Authorities of Silver Markets - 06 January 2003
Why no talk of $32,567/oz ? - 02 January 2003
Refuting Myths about Gold - 28 October 2002
Controlling Gold with Paper - 10 June 2002
Impending Gold Futures Default - 29 May 2002
Certain gold stocks are still cheap - 07 May 2002
A Few Supply and Demand Fundamentals of the Dollar and Gold - 06 May 2002
New DROOY Institutional Holdings - 21 February 2002
Hommels View of Gold - 23 March 2001
Gold Price Under Differing Scenarios - 24 June 2000
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