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Lundin Mining and Moody's

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September 16, 2008 – Comments (4) | RELATED TICKERS: MCO , LMC.DL2

How's this for a gutsy call? Today Moody's's (MCO) share price is almost 12 times the share price of Lundin Mining (LMC), but within the next two years, Lundin's share price will be 12 times Moody's's. 

The simple fact is that silver and gold and those who mine and sell them are completely disrespected by default. They get respect (and high share prices) only when everybody recognizes that bad economic times, including inflation, are on their way.

Financials, on the other hand, get respect by default. Everybody, for instance David Gardner, thinks that financial companies like Moody's are good and honorable until proven guilty. Well, the fall of financials and the corresponding inflationary government rescue attempts and rise of gold and silver are just beginning. I don't see how Moody's can protect itself from the lawsuits as Bear, Lehman, AIG, and Merril all go under because of ABS's that Moody's incompetently rated investment grade. The same goes for Standard & Poor's, though that is a subsidiary of McGraw-Hill, a publishing company with other interests and positive equity. Moody's has nothing and even less than nothing, as their negative equity keeps getting more and more negative, even before the lawsuits start.

David Gardner said on his CAPS pitch for his outperform call on MCO that Moody's will always be around. With all due respect to David, Moody's shares will probably not be around in September of 2010, and the company will be nothing more than a bankrupt litigant appealing unfavorable decisions of the lawsuits against it.

Meanwhile, any silver and gold miners that survive the next two months (probably including Lundin) will be laughing all the way to the bankrupt bank, as stagflation drives the price of precious metals up faster than the cost of mining them.

4 Comments – Post Your Own

#1) On September 16, 2008 at 4:10 PM, DemonDoug (82.77) wrote:

Flea, I'm with you 100% on this one.  I think the motley fool as an organization is a very ethical and well run place, and to me the continued support for Moody's is a huge black eye.  I've posted my reply under David's pitch, I'm not sure if he checks caps all that much or if there is a willful ignoring of this call, but for many years on the fool.com home page, there were articles touting the values of Moody's and how great of an investment it was at any price, I think it's a Stock Advisor pick or something, in any case, I really wish the Gardners and staff at the fool would issue a mea culpa and say hey, we got tricked like many others, yeah, this isn't exactly what we stand for when we talk about investing.

I think Lundin is way undervalued, if I had a couple of spare bucks around I might put some in.  SLW is also a real good buy right now as silver is way lower than the fundamentals would have it.

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#2) On September 16, 2008 at 5:01 PM, HooDaHeckNose (96.04) wrote:

I'm with you guys. I bought Moody's when SA recommended it then sold for a small profit a while ago. I hate this company and think they need to get their asses sued off. In a recent Minyanville article they were compared to 3 year olds with a loaded gun.

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#3) On September 16, 2008 at 7:43 PM, nuf2bdangrus (< 20) wrote:

I own LMC calls, and have owned the stock.  It manages to do nothing but go down.  It was basing nicely at 5, So I bought calls, and as usuall, just days after, the stock collapsed by 40%.  I seem to have a nack for finding stocks that go down drastically right after I buy them.   I took what was remaining of the call $ and deferred them out 6 months.  THe stock continues to go down.  We are in rampant deflation, andit is so contrary to my investment thesis, the despite the fact I read about it, I can't bring myself to go along with something the defies logic.

 Speaking of picking losers,f or example, I took a small position in  a small company, PDRT, held firm at 1.80 for 3 years.  Nice emerging drilling technology.  Not 5 days after I buy it, it drops 85% to .35

 

This is really getting old.  I think I am truly cursed.  And of curse, just when I give up on a stock, it moves.

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#4) On September 17, 2008 at 12:14 AM, FleaBagger (29.74) wrote:

I almost think I know how you feel, n2bd. But I have had success with MA, was having success with PCU temporarily, and MVL is doing okay. WNR, the first Fleabagger Portfolio pick that I didn't own, also went way up. Other than that, though, everything has looked like it should go up, and has gone down anyway. I'm still very optimistic about CDE, LMC, SIGM, ACAS, NDAQ, and a few others, though options might be a loser of a way to play them, considering the tremendous gravity of the current bear market. I'm not buying calls again until Wall Street looks like Pamplona por la segunda semana de Julio.

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