Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of rare-earths miner Molycorp (NASDAQOTH: MCPIQ ) were not earthbound Monday, leaping by nearly 17% as insider buying and looming commercial production at the company's Mountain Pass mine continue to inject renewed strength into the stock.
So what: After the revelation in November that the SEC was conducting an investigation of Molycorp relating to "the accuracy of the Company's public disclosures," short interest in the shares grew to extreme proportions with more than 60% of the float sold short by mid-November. Since that time, multiple senior executives and directors, including CEO Mark Smith, have conducted a spate of convincing share purchases alongside influential hedge fund manager David Shaw and 12.3% stakeholder Molibdenos y Metales SA. Even as Morgan Stanley (NYSE: MS ) reportedly liquidated a 6% stake in Molycorp, widespread buying interest has dominated the tape since the shares touched an all-time low beneath $6 last month.
Now what: Molycorp expects to achieve a phase 1 production rate of 19,050 metric tons per year at its Mountain Pass rare-earths mine before the end of this month, marking a watershed moment in the company's emergence as a leading supplier of mined rare earths and value-added products through its integrated, global supply chain. I have carefully scrutinized the array of strategic acquisitions made by Molycorp to fulfill the company's "mine to magnetics" business strategy, and encourage readers to watch for my forthcoming research report outlining both the opportunity and the risks relating to an investment in Molycorp. My research compelled me, personally, to initiate a long-term position in the shares of Molycorp. Accordingly, while side-stepping speculation over the near-term movements in this famously volatile stock, I do believe the shares are ultimately heading higher from here.
By embracing an alluring strategy of vertical integration combined with a pervasive emphasis upon innovation, Molycorp is taking a page out of the fascinating history of aluminum giant Alcoa. To learn more about Alcoa's efforts to repeat its past success by leveraging those core competencies, please access my premium research report on Alcoa by clicking here.