Why ANN, CommScope Holding, and Thompson Creek Metals Jumped Today

During the past few weeks, investors have noticed a trend on Fridays, as traders who got burned by Russia's initial moves against Ukraine have been reluctant to take the risk of having positions over the weekend. That dynamic seemed to be at work today, as markets initially posted reasonably sizable gains before giving them up late Friday afternoon. Even with the turnaround, though, ANN (NYSE: ANN  ) , CommScope Holding (NASDAQ: COMM  ) , and Thompson Creek Metals (NYSE: TC  ) all managed to hang onto strong share-price advances today.

Women's retailer ANN jumped 13% after private equity investor Golden Gate Capital disclosed a 9.5% stake in the company behind the Ann Taylor chain of stores. Unlike many hedge funds and private-equity firms lately that have taken positions with plans to act as activist investors and propose major changes, Golden Gate said that it doesn't expect to follow that aggressive course. As a result, shareholders took the move as validating the turnaround efforts that ANN has made to keep its Ann Taylor brand strong and to build up its successful Loft concept, as well.

CommScope rose more than 10% following last night's announcement that the telecom-equipment company expects better results from strengthening conditions in its wireless business. With new expectations for 13% sales growth for the current quarter, and overall revenue growth in the mid-single digits for the full 2014 year, CommScope is benefiting from substantial investments by major wireless-network operators to improve the coverage and quality of their networks. Moreover, as areas around the world catch up and make improvements to their 3G networks, CommScope is getting its share of that business, as well. With so much growth potential, CommScope has further to climb if it can maintain its market share in this expanding niche.

Thompson Creek Metals added 9.5%. Friday was a strong day for copper companies and, increasingly, market participants have treated Thompson Creek like other copper miners in light of the huge prospects of its Mt. Milligan copper and gold mine. During the past several weeks, copper has gotten hit hard, as some fear that a potential crisis in the Chinese financial systems could have an impact on the base metal, which is used as collateral for loans in many cases. As long as Mt. Milligan's prospects remain solid, Thompson Creek's long-term growth seems assured, albeit with the potential exposure if copper prices were to fall dramatically from current levels.

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  • Report this Comment On March 22, 2014, at 5:48 PM, techpatriot wrote:

    Sorry Dan. While everything you said about Thompson Creek Metals, is, indeed, true, those are not the reasons the stock "jumped" nearly 10% on Friday.

    A few savvy investors are aware that TC just received a favorable EIS for their Modified Mining Plan of Operations for their TC Molybdenum mine from the U.S. Department of Interior and the U.S. Bureau of Land Management. While this is no guarantee the the MMPO will be granted, it is a very crucial and decisive positive step in a process that has been several years in the making. (Government moves slowly.) The draft EIS/RMP amendment has now been entered into the Federal Register and the process will proceed much more quickly from here, most likely reaching approval by the end of this year or the beginning of 2015.

    In addition to the MMPO, TC is also proposing a land swap to the BLM for private land that TC holds for Federal Lands. This is also likely to be approved as it is self serving for both parties. The current Federal Lands are more valuable to TC for mining purposes, and the private land TC holds is much more valuable the the BLM as Federal Lands (for a number of reasons I will not go into here).

    Why is this so important?

    It will extend the life of one of the lowest cost primary moly mines in the world out to 2030, while materially increasing TC's market value.

    Additionally, it would be smart to understand that this changes the ball game at the named "Thompson Creek Mine" substantially.

    To the extent that upon full approval of both the MMPO and BLM land swap I would not be surprised to see TC Metals pull the TC mine off of the C&M schedule and resume regular mining operations there.

    TC should be able to make a nice profit on that mine at current (and ridiculously low) world wide moly prices, and even lower prices, should they choose to do so. (I think they choose to do so and make more money.)

    While it's nice to have exposure to copper and gold via the rapidly ramping up Mt Milligan cash cow of a mine, it's even better in today's environment to be a tri-poly metal miner with a "three legged" revenue stream.

    So much more secure than a single revenue stream. Especially since gold usually trades the opposite of industrial metals most of the time, for a virtual built in "economic hedge".

    Moly and copper prices will not stay down forever as the worldwide economy gradually recovers and with over a billion people waiting in the wings hoping to be the next ones able to have an opportunity at a "middle class lifestyle" within the next 10 years.

    With three revenue streams and their new, more cost conscious CEO, TC can and will be able to retire their debt and prosper.

    Now may be a good time to get into TC before any of this relatively "new" value from an extended TC mine life and the full cash stream from Mt Milligan get factored into it's market value.

    (Or before they get taken over by a major fed up with bribing third world governments.)

    TC is still "priced" by the market for the possibility of insolvency, which, if you just do the math for a "worse case" scenario and connect the dots properly, is absurd.

    The market is rarely going to mis-price an AAPL or a GE, or a CRM. But it can, and often does mis-price smaller, under followed and less loved securities.

    Which obviously is the biggest advantage we as Fools have going for us.

    It is patently obvious that none of the analysts following TC have factored this information in yet, if indeed they even knew about the MMPO.

    And based simply on their price targets and written scenarios, I could make a very good case that none of the analysts that follow TC, (with the exception of the BAML analyst), had a clue about these developments. They probably have been too busy waiting to see if the price of moly drops to $8, copper to $2 and gold goes back to $800!

    (All of which are well below the costs of production for the majority of the worlds miners, FYI.)

    And no, don't look for any information in the quarterly CC transcripts on the MMPO or the EIS submission, or BLM land swap, because it's not there. (Although you can bet there will be a lot of questions about it on the next CC. LOL!)

    You needed to have researched older filings and done a little detective work to have found this information out.

    For more research check out TCREEK,com, and the associated relevant links on there. And don't expect TC to go up in a straight line like a "rocket stock". It is seriously under priced right now, but that's not to say TC does not have issues that need to be overcome. They do. But if you wait until all the issues are resolved, then you've just given up your "Foolish" edge. GLTA!

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