The May issue of Ultimate Value Finder is out. I covered three investment opportunities:

Investment Opportunity 1

The first opportunity features a company that is an undisputed leader in a growing industry. To dominate a particular industry would be a dream for any business owner because being number one usually comes with respect, recognition, and most importantly profitability. From our point of view, it is very hard to be able to buy a profitable leader at a cheap price. Fortunately for us, the market offers such opportunities from time to time, and this is exactly what investment opportunity number one is all about – owning a great business at a great price.

Investment Opportunity 2

Investment Opportunity 2 is truly one of the most remarkable turnaround stories. In 2008, under the previous management, the company was not able to operate profitably. It was on the brink of bankruptcy. The board of directors was dissatisfied, fired the previous CEO, and asked one of the board members to turn the company around. Since he took over, positive things have started to happen. The company became profitable while continuing to grow. Currently, the company is on track to grow revenues six-fold within the next 12 to 24 months. I don’t think the market is realizing this.

Investment Opportunity 3

The third opportunity is a company that is growing fast while the market is pricing it as if it was declining. As long as the management continues to execute on its business plan the way it did over the last 10 years, the business will continue to grow. At some point, earnings per share will be too high for the stock price to stay this low.

If you already subscribed to Ultimate Value Finder, then you already received a separate e-mail with the full May issue. If you didn’t subscribe yet, then you do not know what you are missing. If you wish to subscribe or get a sample issue, click here.

“Cash flow positive by June”

Hit or miss?

“150k oz of production this year”

Hit or miss?

“Averaging 4,600 tpd by December”

Hit or miss?

It is no secret that the major shareholders and the management of Yukon-Nevada Gold Corp have considered selling the company because of the inherent value of the company’s assets in Nevada. Today, the company announced that it has initiated a process to explore and evaluate potential strategic alternatives to maximize shareholder value. This may mean a sale, business combination, joint venture, merger, acquisition, strategic investment or other alternatives identified.

Robert Baldock, CEO stated, “The decision to initiate a Strategic Review process at this time coincides with attainment of our primary goal to turn around operations and complete refurbishments at our Jerritt Canyon mining and milling facility. With these primary milestones now achieved, this is a natural and opportune time to review all options at our disposal to determine which tactical direction will add maximum shareholder value going forward.”

The stock price is up almost 20 percent on this announcement. I am a little surprised that this announcement came before the company’s gold production reached the targeted production of 150,000 ounces per year. If this whole thing is about the sale of the entire company to one of the majors such as Barrick or Newmont, things could get very interesting. To any one of them, buying Yukon for $1 billion or $1 per share would be a steal. With their deep packets, they could take Jerritt Canyon to a production level of 300,000 ounces of gold per year, thus generating approximately $300 million in cash flow per year.

What are your thoughts about the announcement? Do you think it is positive? Do you think this is about the sale of the entire company?

Disclosure: The author owns shares of Yukon-Nevada Gold Corp.

The biggest reason why I was down in 2011 was because I own a few of them. December was really hard because they kept on dropping. However, since then, they recovered so much that I was up almost 40 percent on the entire portfolio and approximately 30 percent for the year 2012 up until March.  Now, we are in mid-April and since March, I went from being up 30 percent for the year to being up 3 percent. This all happened within several weeks. I can tolerate a certain amount of volatility, but this is more than crazy. This is psychotic behavior on the part of the investors who own these stocks.

Over the last few days, I have been talking to several investors who were involved with the miners and I am hearing similar sentiments:

“I hate these miners.”

“They will never go up.”

“I am selling them and moving on.”

“I will never touch another miner in my life.”

While I am totally exhausted by the miners, these kinds of comments are music to my ears because they tell me that even the bargain-hunting value investors are totally burned out. If they are gone, who is left to sell?

I don’t really use technical analysis, but a friend showed me an indicator called Gold Miners Bullish Percent index. From time to time, I look at it just to see how crazy mining investors get. The following chart is from StockCharts.com and shows the Gold Miners Bullish Percent Index.

As you can see, the index is at 10.71. This pretty much means that only 10 percent of investors are bullish and 90 percent of them are bearish on the mining sector. I don’t know about you but whenever I see 90 percent of investors being sellers or wanting to be sellers while these stocks are massively undervalued, I want to be a buyer, not a seller. The last time the index was at such low levels was in December and my portfolio took off 40 percent a few weeks later.

Even though I am exhausted, the pain feels like it will never end, and my fingers are shaking from the thought of buying, the only prudent thing is to buy, buy, buy.

Value investors have been chasing Pinnacle Airlines since 2005. A total of five write-ups have been posted on Value Investors Club. To say that the investment in Pinnacle Airlines has been a nightmare for investors is an understatement. The stock price declined from approximately to $20 per share in 2007 to $0.30 per share on April 10, 2012. This is a decline of almost 100 percent. Ouch. I do not envy anyone who has been involved with its ownership.

I never really looked at Pinnacle before, and it is probably because of Warren Buffett’s negative attitude towards airline companies in general. However, after receiving several e-mails mentioning the company, I decided to take a look. Even though the upside can be tremendous, I am not interested in this company. With that being said, interesting dynamics are taking place – there is renewed interest in the company at the same time that a very well-known value investor is selling his shares after losing almost all of the capital invested. Almost every single day someone e-mails me about Pinnacle and how much potential it has. While this is happening, Mohnish Pabrai is selling shares. Per the most recent public filing, his fund sold 158,464 shares at a price of $0.70 per share. He still owns 777,868 shares.

I wonder why he would want to sell at this point. He lost almost everything, what does it matter? He was already wrong on the stock so why not just hold it and pray for a miracle? Maybe he thinks it is going to zero. What are your thoughts?

Disclosure: No Position

Energold earned $0.65 in 2011 and approximately 50% or $0.30 per share came from the fourth quarter of 2011.  The fourth quarter is usually the slowest. The stock is still trading for a little over $5 per share. Mr. Market needs to get hit with a bat in order to wake up.

Energold was included in the January Issue of Ultimate Value Finder.

Disclosure: I now have a full position in Energold.