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Follow the Founder of Pan American Silver

August 17, 2012 | About:
matsandalex

matsandalex

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Mining stocks rarely feature insider buying. Most mining stocks have millions of warrants that are ready to be exercised by insiders and brokers. However, when you come across a mining stock with substantial insider buying, it pays to pay close attention.

Recently, Ross Beatty, the founder of Pan American Silver (PAAS), bought about 300,000 shares of the company. His total stake is now over 2.1 million shares. Beatty paid between $15-17/share which is around where the shares currently trade ($16.33).

First of all, Beatty is not just any mining executive. He is largely viewed as one of the savviest and most honest mining stock executives in the industry. In fact, his nickname is "the broken slot machine" which is a reference to how many shareholders he has made wealthy.

A few years ago, Beatty gave up the reins of PAAS in order to focus on an alternative energy company called Alterra Power. As the shares of PAAS have been crushed over the last year, along with other mining companies, Beatty backed up the truck in a big way.

Beatty is not the only insider buying PAAS. In fact, the company has completed a 5.4-million-share buyback. PAAS also plans to apply for approval to be able to purchase another 7.6 million shares.

The board of PAAS and Ross Beatty most likely see several catalysts that could take the stock price higher. First of all, PAAS wants to start a large project in Argentina called Navidad. Unfortunately, the Argentine government wants to tax the property excessively. This situation will most likely be resolved when a new government takes power. For now, PAAS is content to patiently wait for a resolution.

Secondly, the company owns a mine in Bolivia. The threats of nationalization have most likely spooked many institutional investors. However, the actual threat is most likely not nearly as great as the saber rattling would suggest. The local workers are actually in favor of PAAS and the government would be crazy to upset a large union that is currently content working for PAAS.

Thus, the political situation is most likely being exaggerated to the detriment of the share price. Savvy investors like Ross Beatty and the board at PAAS have taken this opportunity to purchase shares at fire-sale prices.

Rating: 3.4/5 (15 votes)

Comments

tonysmith
Tonysmith - 1 year ago
Most undervalued company on all of the indexes.
BEL-AIR
BEL-AIR - 1 year ago
I owned PAAS, BOUGHT IT AT $14.97 SOLD IT AT $15.07 a few weeks after...

Now it was not my long term stratagey LOL..

Be very afraid of companies with mines in many latin american countries due to fear of being nationalized... Brazil, Argentina, Boliva, the risk is very real...

Just read this...

http://www.zerohedge.com/news/another-energy-company-nationalized-bolivia-follows-argentinas-footsteps-more-pain-spain

And also....

http://www.bbc.co.uk/news/business-18553454


here


http://www.telegraph.co.uk/finance/newsbysector/energy/9242333/US-warns-Bolivia-that-nationalisation-of-Red-Electrica-company-will-damage-investment.html


and here


http://www.greenleft.org.au/node/51802


Bolovia has a history of this....


http://en.wikipedia.org/wiki/Bolivian_gas_conflict


http://www.upi.com/Business_News/Energy-Resources/2011/04/25/US-mining-firm-given-Bolivian-assurance-against-nationalization/UPI-31081303761868/


Canadian-owned silver mine nationalized in Bolivia

http://www.canadianmanufacturing.com/general/canadian-owned-silver-mine-nationalized-in-bolivia-70793

http://www.cbc.ca/thecurrent/episode/2012/07/12/nationalizing-canadian-mining-in-bolivia/

And finally...


South American Silver Plummets As Bolivia Announces It Will Nationalize One Of World's Largest Silver Deposits

http://www.zerohedge.com/news/south-american-silver-plummets-bolivia-announces-it-will-nationalize-one-worlds-largest-silver-

I guess this was just to much for the CEO and president on South American Silver......

South American Silver Announces Change in President and CEO

http://finance.yahoo.com/news/south-american-silver-announces-change-212500100.html


Bolivia says to take control of mining project

http://www.reuters.com/article/2012/07/12/southamericansilver-bolivia-idUSL2E8ICF6L20120712?feedType=RSS&feedName=basicMaterialsSector&rpc=43

So many more....


Yes it could double from here, since it so cheap, but it is facing all kinds of similar problems in varous countries as we speak, they are in alot of unsafe countries....

You really have to do your homework if you want to be a investor. And I did not have the time to figure all this out, so I sold for a small gain, and told others to sell to, perhaps it will be ok, but who knows, and I like to sleep at night.

So I put it in the to hard pile and moved on...

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