Tuesday, September 28, 2010

Lithium Drive: Warren Buffett: BYD Will Play Important Role In New Energy Technology BYDDY, TNR.v, CZX.v, RM.v, LMR.v, ALK.ax, LI.v, WLC.v, CLQ.v, LIT, LTH.to, AVL.to, TSLA, HEV, AONE, VLNC, F

  In time of quants, flash crashes and cybertraders good old common sense and understanding of basic instincts and emotions will keep us cool and our investments in our publishing business save. Yes, we will be talking about Warren Buffett. Most of the people these days will spend more time selecting the plasma TV than stocks they own. We call it "plasma TV effect". We are still wondering - why is it so difficult for us to get rid of the warm herd feeling and it is so easy to chase the stocks which are going up? "Buy when nobody wants it" - we reminded to ourselves this summer and enjoyed the party. With plasma TV we are always happy when it is on Sale, with stocks it is so difficult to buy, when they are down. Warren Buffett says: "Be Fearful When Others Are Greedy And Greedy When Others Are Fearful." What makes him different? He is able to act as he says. He was buying BYD stake when the world was falling apart in Fall 2008 and his investment of 232 million USD made an incredible 1 billion dollars paper profit by Summer 2009.

  Please do not get us wrong: in order to act like this you need to be Warren Buffett, that is why we are always following him. And another very important notice: do not forget to check the plasma TV which is on sale - it should be showing video in a high definition and with a 3D sound.

  Warren Buffett is endorsing new technology revolution: electric cars. BYD has its own challengers with growth and, maybe, it does not have the quality of Mercedes yet. But the price, again, is different and it is positioned in the market with enormous potential. This Warren Buffett's trip will bring a new wave of EVs marketing drive in China, where government is very serious about electrification of transportation. People will take notice about Buffett and Electric Cars. CNBC is on air with Buffett in China today as well. For us it is the very powerful combination: Warren Buffett, China and electric cars. Latest move by BYD into Lithium space in order to secure supply of strategic commodity confirms our observations and investment thesis. In our educational exercise on this blog we are privileged to learn from the Master himself.

"Now Chinese BYD backed by Warren Buffett moves to secure supply of Lithium. It looks like every major lithium end user would like to participate in Lithium mining company to ensure supply of this strategic commodity. As you can guess, there are not so many Lithium developers left to chose from."

"China to Invest Billions in Electric and Hybrid Cars. Nothing will be left to a chance in this methodical execution of the state-level plan in China: transformation of the country's transportation system into the base of 21st century clean tech industrial revolution to further power its rise. China has already surpassed Japan as a second largest economy in the world and it is the largest auto market now.

  With investors like Buffet involved, we do not have any doubts that electric cars will be on the streets very soon and in numbers. It is time to revisit our Lithium developers story. We are very encouraged that Lithium developers are confirming Second Leg Up in this Bull now:

  Western Lithium is breaking out to the upside with a volume and a Buy signal now, company has its own challengers with lithium production from clay, but pilot plant is underway. Small Cap Ventures has announced that they decreased their holding and that selling was suppressing the price before.

"Western Lithium used to be the media darling in lithium junior mining space with its lithium deposit in Nevada. The company has a number of investment banks following it and used to have a strong institutional shareholder base.

The problem here is that this deposit is lithium bearing clay and, we think that the game of the moment is Lithium Brine as the most economical way of lithium production. Company claims a very attractive cost for future production with credit from other products, but it need to be confirmed. Western Lithium is advancing now the pilot production plant to address this concerns."

  Western Lithium market action is important, because of the size of the company among lithium juniors and its high visibility. But the real action was so far among potential lithium brine producers. We are looking for the next M&A targets in lithium space: TNR Gold with International Lithium is our top pick here with its vast portfolio of lithium brines and hard rock mining projects. Cyber trading of late has brought share price to the very attracting entry point for us to increase our position. On a long term chart above, this action is nothing more than aberration - those who would like to sell will sell and those who are buying will hold larger stake in the end. We do not know what this market action means: preparation for the bid from another company or games around its Copper assets, but when insiders are holding 50% of the company and buying more we would like to increase our position. Retire Fund with its very good track record on lithium M&A activity likes the stock as well. There is nothing for certain in this world, but it is worth your extensive DD if you are studding markets with us. Company has posted new presentation on International Lithium on its website, we found that Potash grades, particularly, are very interesting at Mariana in addition to all lithium and REE assets.

"As you already know, our top pick in Lithium space is TNR Gold with its coming spin out of International Lithium. You have Copper, Gold and Lithium in one portfolio of properties holding by this one company. Do your own DD particularly here - we have a position in the company - nothing should be taken as an investment advise here, we are biased, but you can still find a lot of information about the company on this blog.

The company is followed now by Jay Taylor and Richard Mills. The stock is building its upward momentum from the recent double bottom this summer, and after announced developments on its major lithium brine project in Argentina. Insiders are buying more shares and the company is raising capital for its pre IPO financing. Investors coming on board will give us another hint on the future development of this company. The most important value play will be in TNR Gold's ability to position the International Lithium portfolio of properties among strategic partners in order to rapidly advance Mariana into development stage and make a consolidation of projects in Nevada for US based Lithium development play."

Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.

  Our another M&A candidate in Lithium space - Rodinia Lithium - is moving up nicely after completing its financing and reporting very encouraging results from its lithium salar in Argentina. Stock has made a Buy signal on volume couple of weeks ago.

"One of our Top Picks in Lithium Juniors' sector has reported today very impressive results from its exploration program in Argentina. Company has raised 5 mil capital now, hired PR company and is ready to move up with other lithium juniors. Today's deal of BYD investing into Chinese lithium brine developer will continue M&A fever in this very tight sector. Reliable supply of Lithium is the basis for Electrification of our transportation system to address Energy Security and looming Peak Oil situation."


Warren Buffett: BYD Will Play Important Role In New Energy Technology

By Joanne Chiu

Of DOW JONES NEWSWIRES SHENZHEN (Dow Jones)--In his first official visit to BYD Co.'s (1211.HK) operations in China, U.S. billionaire investor Warren Buffett said Monday he believes the battery and car maker, in which his investment firm has a near 10% stake, will play an important role in the future of new energy technology.

"BYD is the right choice for me and I hope it'd be the same for you," Buffett told hundreds of BYD car dealers at a company event in its headquarters in the southern Chinese city of Shenzhen. Buffett described BYD as a "young and energetic" company, which on Monday marked the sale of its one millionth car.

BYD has organized a number of events that started Monday in three Chinese cities intended to showcase the company's advanced electric vehicle technology along with the launch of several new projects, in a major media drive that coincides with Buffett's visit.

Buffett said he test drove the E6 electric car being developed by the Chinese company earlier this year, saying he was "amazed" by its performance. Earlier in the day, he presided in a signing ceremony between BYD and China Southern Power Grid Co., one of China's two grid operators, to provide an energy storage system.

Buffett is in China this week, together with Microsoft Corp. co-founder Bill Gates, on a mission to encourage China's richest citizens to donate to charity.

The visit to BYD by Buffett, who the carmaker said will be attending its events in Shenzhen, Beijing and Changsha, comes at a time when the firm faces a slowdown in its car sales at home and uncertainties over the timing of the launch of its electric car.

Amid softening demand, BYD's domestic car sales fell 19% from a year earlier to 353,129 cars in the January-August period and were down 6% to 31,069 cars in August from 33,046 in July.

The changing business conditions prompted the company in August to slash its 2010 auto sales target by 25% to 600,000 from 800,000.

Analysts have also said they were concerned BYD has put too much attention on developing battery technology, and hasn't paid as much attention on the overall quality of its cars, which tend to be cheaper than competing brands and targeted mainly at first-time car buyers.

Established in 1995, BYD began as a manufacturer of rechargeable lithium-ion and nickel batteries and branched out into producing cell phone parts and alternative-fuel cars.

Its background in battery production caught the attention of Buffett as interest in electric vehicles grew in the face of surging oil prices and the likelihood of international efforts to reduce emissions from fossil fuels. Buffett's investment helped underpin the company's ambition to sell cars in developed markets such as the U.S.

MidAmerican Energy Holdings Co., a unit of Buffett's Berkshire Hathaway Inc. (BRKA), bought its 9.89% stake in BYD in 2008 for US$230 million. BYD's shares have jumped nearly seven fold since Buffett's stake purchase was first announced.

-By Joanne Chiu, Dow Jones Newswires; 852-2802-7002; joanne.chiu@dowjones.com"
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