COVID update: vaccine apartheid + the mRNA stocks are better than the shots

• Vaccine coercion is having some effect on the economy as Southwest Airlines and many other companies are going out of their way to create a labour shortage problem with mandatory vaccination.  I don’t know if the vaccine apartheid madness will turn into a world-changing issue but it could have consequences for the political stability of the Western world, trust in doctors, and demand for pharma products.
• Most people have such a low risk of dying from COVID that the risk of death shouldn’t matter.  Instead, their main concern should be disability from COVID or the vaccine.  Yes, disability is a side effect of the COVID vaccines.
• Biontech (BNTX) looks undervalued because at least 2 booster shots every year looks like the new normal.  Their product may be terrible for your health but the stock may be wonderful for your wealth.
• Most of humanity will catch the coronavirus but probably only 5-20% of the population in developed countries will test positive every year.

The culture wars are going to explode (part 1)

Back in August, I wrote about how the explosion in woke politics is something to pay attention to.  It has since taken over major media institutions and tech companies.  America is becoming a surreal place as these corporations are passing up on profits so that they can persecute their customers for wrongthink.  There is also a growing cultural movement that views the destruction of Trump supporters’ lives as virtuous; the politician AOC openly calls for the suppression of political views on Twitter.  What’s happening isn’t normal and will get a lot uglier.  Most investors don’t understand the cultural shifts because most mainstream media outlets spread false propaganda and are participants in the culture wars.

The culture wars will likely lead to:

• A continuing boom in gun demand (RGR VSTO SWBI).d
• Potential catastrophe for journalistic institutions like the New York Times (NYSE:NYT) and Thomson Reuters (TSE:TRI).
• Splitting of the economy into a woke and anti-woke economy.  Many corporations with dominant market share will see their earnings take a hit when they jettison their customers for having non-woke political views.

A coronavirus vaccine may not save us

If you read up on coronaviruses that affect livestock, you will quickly discover that some viruses remain a problem despite vaccination.  Chickens continue to die from IBV (Infectious Bronchitis Virus) despite being vaccinated.  While vaccines improve the chickens’ health overall, they are not good enough to fully solve the problem.  If a SARS-Cov-2 vaccine would be similar to our vaccines for IBV, then we will have to deal with the limitations of vaccines.

The simplest way to think about the current COVID-19 situation is that there will be a range of outcomes, with the worst outcome being a prolonged economic depression where a vaccine doesn’t exist (or that people die despite being vaccinated).  You can make your portfolio robust against COVID-19 risk by ensuring that you own “safe” stocks that will do fine in a world where social distancing is the new normal.

I apologize for my recent blog posts because they’re uncomfortable.  I want to believe that the world will be ok.  But the further I go down this rabbit hole, the more I realize that health authorities spread misinformation and ignore scientific evidence.  The most disturbing element of the current situation is that many Western scientific authorities promote bad science so that companies have a chance of profiting from the situation via drug treatments, the experimental use of invasive ventilators, and vaccines.  They stand in the way of science saving us.

Most countries are ignoring aerosols, a significant route of COVID-19 infection

There is controversy over how Sars-Cov-2 spreads from human to human.  China and South Korea believe that a significant route of infection is through aerosols; they are trying to safeguard against it as much as possible.  The World Health Organization argues that the coronavirus is NOT spread through aerosols.  Those who follow the WHO’s line of thinking generally do not take precautions against aerosols (unless there is an aerosol-generating procedure in the hospital).

As investors, we need to pay attention to these differences of opinion.  Countries acting on bad advice may take far longer to contain COVID-19 in their country.

Pretium Q3 2019 production results – management lowers guidance

Highlights from the production results:

• 2019 guidance lowered from 390-420k ounces to 340-350k.  ¯\_(ツ)_/¯
• Mill capacity is excessive as throughput fell from 3562 tpd in Q2 to 3367 tpd in Q3 2019.

It’s incredible that this management team is still around.  They have repeatedly misled investors and continue to destroy shareholder capital.

Nonetheless, despite all of the problems with Pretium’s management, the underlying deposit is probably one of the better mining assets out there.

Healthcare inflation is driven by bad medicine

According to the Commonwealth Fund (an endowment-supported US foundation), US healthcare spending has increased to 16.6% of GDP in 2014.  Other countries have seen less rapid increases in healthcare spending.  For the most part, inflation is being driven by doctors with a vested interest in pushing medical services, expensive treatments, and pharmaceutical drugs.  To my surprise, what I’ve found is that many aspects of modern medicine aren’t supported by rigorous scientific evidence.  While the FDA drug approval process superficially appears to be scientific, it often isn’t.  One way that pharma companies game the system is to prove that a drug (e.g. statins) affects a dubious biomarker (e.g. cholesterol) rather than prove that the drug causes more good than harm (e.g. lower mortality).

Unfortunately, mainstream views on science and medicine are quite ignorant of what goes on.  We are taught to only trust medical advice from “trained and licensed professionals”.  Much of society worships technology and has blind faith in the claims made by medical authorities.  I would argue that this environment is a fertile ground for the trend in healthcare inflation to continue going forward.  And if that trend continues, it is likely that American health insurance stocks will continue to do quite well.

Pharmaceutical companies researching active placebos may also do quite well.

Pretium was mining ore at only 2520tpd in H2 2017 + Why Viceroy’s research is nonsense

I must admit that there is a somewhat useful tidbit of information in Pretium’s environmental filings that I discovered through Viceroy’s hit piece: Pretium was mining ore at a rate of only 2520tpd (tonnes per day) in the second half of 2017.  I would note that management has repeatedly talked about expanding the mill to 3800tpd, possibly because institutional investors don’t understand why Net Present Value matters more than growth.  Unfortunately, the mill expansion plan looks crazy when the underground mining was 2520tpd versus milling being done at 2895tpd; this indicates that underground mining has been the bottleneck.  Management has not been forthcoming about this bottleneck.  Nonetheless, I don’t think that this changes the short thesis much as it is overshadowed by the litany of Pretium’s other disclosure issues (e.g. the Ivor Jones resource model has the ultra-high-grade Cleo vein in a zero-grade domain).

This blog post will also discuss why I covered most of my Pretium short and has a section on why Viceroy’s research is nonsense.

Viceroy’s research on Pretium is terrible

Viceroy’s research can be found on archive.org or Viceroy’s website.

First off, there is the issue of plagiarism.  It’s so strange that Viceroy also happened to stumble across Simon Dominy’s paper on the Brucejack deposit.  (To be fair, Viceroy did generate original research of very low quality.)

Secondly, the Viceroy report contains major inaccuracies.  It insinuates that Strategic Minerals LLC improperly inflated the bulk sample results.

The facts surrounding Strategic Minerals LLC are as follows: […]

Grade results for the Brucejack mine from Strategic Minerals LLC were far higher than those reported by Strathcona’s tower sample.

In reality, grade results were very similar between Strategic Minerals and Strathcona.  Table 9 of Dominy’s paper (draft version with working images, final version) shows that the difference was -10%… well within the expected error coming from a high-nugget deposit.  Despite referencing Dominy’s paper, Viceroy seems to have reached some strange conclusions.

In the past, I have criticized Viceroy because they have not been transparent about their relationship with CTS Labs.  Now, my problem with Viceroy is that they didn’t read up on mining or hire a fact checker before publishing their report.  Viceroy’s reckless and irresponsible behaviour gives short selling a bad reputation and may make life more difficult for other short sellers.

Pretium Q2 2018 update

According to Pretium’s financials published on SEDAR on Thursday evening, the Brucejack mine is generating very strong cash flow.

Cash and cash equivalents increased by $72.5M.  This is largely inconsistent with fraud.  If Pretium were engaged in Worldcom-style fraudulent accounting where expenses were improperly capitalized into capex, then the capex number would be dramatically higher than $5.771M while the increase in cash would be closer to 0.  Given how low capex is (even lower than what the feasibility study anticipated, which is $76.8M over the first four quarters of production)… I think that we can safely conclude that Pretium didn’t engage in Worldcom-style accounting for Q2.  The market seems confident that the cash generation is real, sending the stock up 19% following the filing of financials on SEDAR.  Needless to say, this development is not good for my short position.

When you shouldn’t trust mining analysts with professional training

I’m aware that there’s information on mining stocks from guys like Angry Geologist, Exploration Insights (Brent Cook and Joe Mazumdar) and investment bank analysts with mining degrees (P.Geo, P.Eng, etc.).  The danger is this: just because they CAN perform due diligence doesn’t mean that they ACTUALLY perform due diligence.  I don’t mean to be disrespectful to these people.  (*I do understand that I am attacking their credibility.)  However, they often come to conclusions without having access to key technical data.  For example, Simon Dominy and Strathcona have unique views on Pretium’s Valley of Kings deposit.  They had access to all of the sample tower data, including the sample tower data on the Cleo vein.  Strathcona had access to the drill core so they could make their own interpretations about the lithology (Wikipedia) of the rocks and therefore the appropriate geological controls.  If you don’t have access to accurate lithological information (e.g. pictures of all of the drillcore), then you cannot build a reasonable resource model.  Insiders have this information.  The investing public doesn’t.  When mining professionals make conclusions without access to key technical data, you should take their opinion with a grain of salt.

Secondly, one should question an analyst’s optimism about deposits.  With the benefit of hindsight, we can figure out that mineral exploration has been a disaster since 2000.  Past optimism about exploration stocks seems quite dubious with the benefit of 20/20 hindsight.