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Sally Jones
Sally Jones
Articles (580) 

Unsinkable Molycorp Inc. - 52-Week Low for Rare Earth MCP

April 08, 2013 | About:

The GuruFocus 52-week low screener reveals that the rare earth and metals company Molycorp Inc. (MCP) is at a 52-week low of $5.30 (high was $35.79). According to the GuruFocus Value Screen for 52-week lows, MCP is 85.2% off its high. But top investor Gurus, John Griffin and Steven Cohen appear to be holding on, and Molycorp’s insider traders were busy in February.

Guru John Griffin is the largest Guru MCP stakeholder, with 2,864,700 shares as of the fourth quarter, when he made the new buy. With Griffin’s trading history, his MCP shows an average share price of $9.58, and a 47% loss. GuruFocus research shows that Molycorp Inc. (MCP) is down 85% over 12 months, off 49% since January. With a market cap of $1 billion, and a P/B ratio of 0.5, the company reported consolidated net revenues of $528.9 million during 2012, a 33% increase over the full year 2011. The company generated a gross profit of $17.3 million in 2012, as compared to $218.9 million during the prior year. According to the company, gross profit decreased as a result of significantly lower pricing and increased production costs, offset in part by increased volumes and the acquisition of Molycorp Canada in June 2012. The company also acquired a leading rare earth processor, Neo Material Technologies, for $1.3 billion (Canadian) in 2012.

Commenting on Molycorp's 2012 performance, President and CEO Constantine Karayannopoulos said, “The economics of our model of vertical integration on a global basis remain strong… Our fundamental strategy going forward is to return confidence to rare earth customers through supply security and price visibility.”

Owner of the largest U.S. deposit of rare earth, Molycorp Inc. mines and processes rare industrial metals and minerals needed in a wide spectrum of manufacturing applications. The open-pit Molycorp mine in Mountain Pass, Calif., was once the world's largest producer of rare earth elements (REE). The mine was closed due to numerous leaks of radioactive wastewater as well as competition from China, the world’s giant REE producer. The global company, headquartered in Colorado, re-opened the new and improved Mountain Pass mine in 2012, calling it “Project Phoenix.”

Molycorp products and materials are critical to the manufacturing of electric vehicles, smartphones, solar power systems, advanced water treatment systems and a great deal more. The defense and aerospace industries use Molycorp materials in satellites, guidance and control systems, and global positioning systems.

Guru John Griffin is the largest Guru stakeholder, with 2,864,700 MCP shares as of the quarter ended Dec. 31, 2012, when he made the new buy. With Griffin’s trading history, his MCP holdings show an average share price of $9.58, and a 47% loss.

His holding history:

The same quarter, SAC Capital Advisors’ Steven Cohen increased his MCP position by 32.37%, and now holds 46,568 shares.

His holding history:

Cohen’s MCP holdings over nine consecutive quarters represent an average price of $24.11 per share, and a 97% loss.

See more MCP Guru trading activity.

Check out the GuruFocus special feature 52-week low screener. This special feature helps you find the stocks hitting new lows but are still held by top investor Gurus and Insiders. If billionaire Gurus own these stocks and are still increasing their positions, it means that they believe the stocks are undervalued. Researching these stocks may help you find deep valued stocks.

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.0/5 (5 votes)


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