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Royal Gold (RGLD) - Largest public Gold royalty co.

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Well one of the directors flogging 102,000 shares isn't exactly going to help support the price.

 

I didnt see that. Thanks

 

Inadequate cost discipline has also raised some eyebrows.

This business OUGHT to be trading better than it is, and that is not a great sign either.

Having said that, I recently added some calls, hoping these guys will get their act together soon,

and earnings will be helped by the high Gold price

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I have been nibbling though. I noticed that there are Jan 2009 and Jan 2010 LEAPs quoted for RGLD and although the spreads aren't good and the volume almost non-existent, the premiums (premia?) aren't too bad. With a sensible in-the-money strike price, owning the 2010 calls feels to me like owning the shares but with roughly 2 x leverage. Don't get the dividend yield though.

 

I built a model on RGLD this past weekend. I was surprised to find that RGLD is not very leveraged to the price of gold on a NAV basis. According to my model, if gold doubles, RGLD's NAV only goes up by about 60%. They do seem to be trading slightly below NAV by my calculations, but there's not much of a margin of safety. The good thing is they have a lot of cash, free cash flow going forward looks strong, and they are ready and willing to do some big deals. And there are lots of miners out there who may need financing now that the banks are tightening up their lending requirements.

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I built a model on RGLD this past weekend. I was surprised to find that RGLD is not very leveraged to the price of gold on a NAV basis. According to my model, if gold doubles, RGLD's NAV only goes up by about 60%.

 

Thanks for that.

What is the leverage calculation based upon?

 

The chart looks right for a rally from here

aa0jh7.gif

 

(assuming that support holds)

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What is the leverage calculation based upon?

 

Future free cash flows from all of the royalties RGLD is holding - discounted to present value.

 

The lack of leverage on the common is a good thing, I think. RGLD is not exposed to a falling gold price. Options can be used to increase the leverage.

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"CDNX (mostly Jr.Miners & Explorers) has rallied back to a key resistance level"

 

Wednesday's rises ...

 

GLD- : 93.24 Change: +1.66 Open: 90.84 High: 93.31 Low: 90.75 Volume: 10,633,281

Percent Change: +1.81%

(volume over 10mn is good. It was good to see a dip into the gap before the rally too.)

 

GDX- : $50.95 Change: +1.35 Open: 49.13 High: 50.95 Low: 49.00 Volume: 6,070,612

Percent Change: +2.72%

(nice. more perky than gold.)

 

RGLD: $30.09 Change: +1.01 Open: 28.92 High: 30.24 Low: 28.55 Volume: 637,979

Percent Change: +3.47%

(even nicer. It's good to see RGLD back over $30.)

 

CDNX: 2,642.49 Chg:+19.89 Op: 2,618.43 H: 2,642.49 L: 2,608.17 Volume: 182,000

Percent Change: +0.76%

(The move was small. And it hasn't proven anything yet.)

 

...were what I wanted to see. All systems are GO !

 

Let's hope this continues

 

 

Hello all, first post. It was a very good day, but the after close sell off was pretty huge, down 0.63 to 29.50 (-2.09%). Seems a bit much to be explained by profit taking after today's rises. Still seems to be something suspiciously negative about RGLD. What do you think? Could it be the price is being held down until the preferred stock conversion in March, or is it something more sinister?

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It was a very good day, but the after close sell off was pretty huge, down 0.63 to 29.50 (-2.09%).

 

Any news driving that?

let's see if it stays down in Thursday's trading.

 

RGLD has been diasppointing while gold rose.

I am very surprised to see it trading below $40 with gold over $925.

(suppose: RGLD/Gold goes back to 0.050, then $944 x 5%: $47.20)

 

The company has real earnings, and real cash flow.

Dividends too, as this news reflects:

"Royal Gold board hikes annual dividend to 28c" - Nov.2007.

 

But obviously, some big holders keep dumping the stock everytime it starts to move.

I wish I knew why. But I am still willing to bet that the selling will dry up.

 

= =

 

After Hours Trading

RGLD: 2/20/2008 5:07:00 PM Last: $29.4988 Change: -0.5912 Volume: 52,025

 

that's big volume for after hours, but compare with trading during normal hours:

30.09 Change: +1.01 Open: 28.92 High: 30.24 Low: 28.55 Volume: 637,979

 

Less than 1/10.

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Thanks for the reply Bubb,

 

I've seen no news to justify the fall, but I'm wary nonetheless.

 

Something similar happened towards the end of January, where the share price seemed determined to move down regardless of gold and despite no significant bad news. I had a feeling back then that something was wrong and it stopped me from buying at over $30, something I'm pretty glad of now.

 

Anyway, I'll persevere with this one as the potential seems excellent and most of my holding is sub $29. I just hope the price is only being held back on sentiment and it catches up with gold over the next few months.

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History shows that such concerns have been well-founded

 

Look how Goldcorp/GG outperformed RGLD

bigkn4.gif

 

But RGLD had less downside too.

 

My view is that this is a long correction for RGLD, andf it may soon end.

Remember, RGLD's business model means that it should benefit if gold really soars.

It doesnt have the same exposure to rising mining costs. Albeit, management has thus far

show too-little discipline in controlling its own overheads

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Gold pushing $970 and still this refuses to budge. I really expected this to fly once $950 was broken, but someone or something has put a real downer on this share.

 

Today has been particularly frustrating. Just as gold finally broke through the resistance just above $960, RGLD inexplicably sold off and has barely recovered.

 

This seems way undervalued on every level and I'm at a complete loss to explain why. Can the conversion of preference shares really be the reason? I just can't see it somehow. In the meantime I'm considering the prospect of this lagging the price of gold right up until the next big selloff (which will come eventually), at which point I can see RGLD dropping like a stone and wiping out any gains made so far in an instant.

 

Am I right to worry, or am I just being an old woman? :lol:

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Hey Bubb,

 

Are you still in this one? Performance has been dire when compared to gold in all honesty, $970 GLD and RGLD is barely holding $30. The preferred stock will be converted on 10 Mar, works out to roughly 4 million common shares. That's an awful lot for the market to digest, particularly if gold sells off.

 

I'm not sure whether to stick with this one to be honest, I'm in profit at the moment, but as I explained in the post above, if gold sells off I can see that turning into a loss all too quickly. I make take the profit and wait for gold's next move, what are your thoughts?

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Royal Gold. A faourite on the board here. Is it not presently at a GIP?

 

Seems to me short, medium and long term MA are very close, with short MA just breaking through medium-term, with the long-term (200) acting as a floor, so bullish. And with the gold price kicker.....

 

Edit: Copied and modified from the GIP thread

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Hey Bubb,

 

Are you still in this one? Performance has been dire when compared to gold in all honesty, $970 GLD and RGLD is barely holding $30. The preferred stock will be converted on 10 Mar, works out to roughly 4 million common shares. That's an awful lot for the market to digest, particularly if gold sells off.

 

I'm not sure whether to stick with this one to be honest, I'm in profit at the moment, but as I explained in the post above, if gold sells off I can see that turning into a loss all too quickly. I make take the profit and wait for gold's next move, what are your thoughts?

 

Yes. Im still in.

 

I most recently bought calls, when it dipped below $30,

and I will probably start selling as many shares as the calls I bought if/when it shoots up thru $32 today.

 

That will leave me with a lower cost position, with less risk, than when it was last at $32.

 

This type of trading is not an easy way to make money, I would rather get paid by seeing RGLD soar through $40,

on its way to $50. And I am still hopeful that we will see that.

 

I dont know what is "wrong" with the stock, apart from:

 

+ They have not done a great job of controlling costs,

 

+ They made an acquisition of BMGX (which is what got me into the stock, since I held BMGX),

and that brought some dillution. I heard there are "fears" that they will make more acquisitions

 

+ The real juice from the acquisition is the Minefinders royalty, and that is only now beginning to

kick in,

 

+ Franco Nevada, a better managed royalty company, is now public again, so people may be swapping

into that one.

 

RGLD needs to report a jump in earnings from higher gold, and Minefinders royalties, in order to

get teh stock moving again

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Gold to see the uptick in RGLD yesterday on such a bad day for many gold shares

 

A Routine Dividend announcement was made

 

Royal Gold Announces Second Quarter Dividend

TUESDAY, MARCH 18, 2008 4:57 PM

- PR Newswire

 

DENVER, March 18, 2008 /PRNewswire-FirstCall via COMTEX/ -- ROYAL GOLD, INC. (RGLD) (CA:RGL) , the leading precious metals royalty company, today announced that its Board of Directors has declared its second quarter dividend of $0.07 per share of common stock. The dividend is payable on April 18, 2008 to shareholders of record at the close of business on April 4, 2008. The Company has paid dividends since 2000.

 

Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metal royalty interests. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol "RGLD," and on the Toronto Stock Exchange under the symbol "RGL."

 

The Company's web page is located at http://www.royalgold.com.

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RGLD SUMMARY

 

Year- ended June-- : - 2003- : -2004- : -2005- : -2006- : -2007-

 

Average Gold price. : $ 334. : $ 389. : $ 423. : $ 525. : $ 638.

Earnings per share.. : $ 0.34 : $ 0.43 : $ 0.55 : $ 0.50 : $ 0.79

Earns. fully dlluted.. : $ 0.33 : $ 0.42 : $ 0.54 : $ 0.49 : $ 0.79

Dividends per share : $ 0.10 : $ 0.15 : $ 0.20 : $ 0.22 : $ 0.26

Ratio: EPS.fd/ Gold.. : 1012.1 : 926.2 : 783.3 : 1071.4 : 807.6

 

Qtr.- ended -------- : 12/06- : 03/07- : 06/07- : 09/07- : 12/07- : 03/08-

 

Average Gold price : $ 613. : $ 650. : $ 668. : $ 782. : $ 787. : $ 906E

Earnings per share.. : $ 0.24 : $ 0.14 : $ 0.20 : $ 0.20 : $ 0.13 : $ 0.20E

Dividends per share : $ 0.06 : $ 0.07 : $ 0.07 : $ 0.07 : $ 0.07 : $0.07

Ratio: Gold/4xEPS.. : 638.5 : 1160.7 : 835.0 : 977.5 : 1513.5 : 1130E

 

The quarters ended: 3/07 and 12/07... were particularly disappointing

 

((Q1.FY'08))

DENVER, Nov. 1 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. (Nasdaq: RGLD; TSX: RGL), the leading publicly-traded precious metals royalty company, today announced first quarter fiscal 2008 net income of $5.8 million, or $0.20 per basic share, on royalty revenue of $12.8 million. This compares to net income for the first quarter of fiscal 2007 of $5.0 million, or $0.21 per basic share, on royalty revenue of approximately $9.9 million. The increase in earnings of 16% was offset on a per share basis due to new capital issued to finance the Company's substantial growth in reserves and royalty ounces over the last year.

 

((Q2.FY'08))

Royal Gold Reports Record Revenues and Strong Free Cash Flow* in Second Quarter of Fiscal 2008

 

DENVER, Jan. 31 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. (Nasdaq: RGLD; TSX: RGL), the leading precious metals royalty company, today announced second quarter fiscal 2008 net income of $5.1 million, or $0.13 per basic share, on record royalty revenue of $15.4 million. This compares to net income for the second quarter of fiscal 2007 of $5.6 million, or $0.24 per basic share, on royalty revenue of approximately $12.9 million.

 

Extraordinary, non-recurring expenses related to the Company's evaluation of a business development opportunity and non-recurring Battle Mountain-related charges totaled $2.2 million, or $0.05 per share on an after tax basis. In addition, accounting for accumulated dividends on the 7.25% mandatory convertible preferred shares resulted in an adjustment to earnings available to common stockholders of $1.2 million, or $0.04 per share. This preferred dividend payment will terminate on March 10, 2008, when all preferred shares are converted into shares of common stock. Per share results were also lower than the prior period due to additional shares outstanding relating to the acquisitions of Penasquito, Pasqua-Lama, and Battle Mountain assets, which are expected to be major contributors to the Company's future growth.

 

Net income for the six-month period ended December 31, 2007, was $10.8 million, or $0.33 per basic share, on royalty revenue of $28.2 million. This compares to net income of $10.6 million, or $0.45 per basic share, for the six-month period ended December 31, 2006, on royalty revenue of $22.8 million. For the six-month period, non-recurring Battle Mountain and extraordinary business development charges totaled $2.2 million, or $0.05 per share on an after tax basis. The Company also recorded an adjustment to earnings per share of $0.04 for the six-month period associated with accumulated dividends on the 7.25% mandatory convertible preferred shares.

 

Free cash flow for the quarter was approximately $11.2 million, totaling 73% of revenue. This compares to free cash flow for the second quarter of fiscal 2007 of approximately $10.0 million or 78% of revenues.

 

Link: http://www.royalgold.com/news.asp

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Yes, saw the rise, quite comforting on a day like yesterday. Missed the dividend announcement though, could it be the board signalling an intent to lend more support to the share price in the future, rather than proceeding with moves which create share dilution? After all, they have the cash to make purchases without going back to the market.

 

If gold recovers we may just see that $40 in short order. The cynic in me says that now RGLD has started to play, gold itself will stop. Anyway, I'm off to take some prozac or something. :lol:

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Looks like the board pulled a good trick here, it's really put a floor under the share price. For once RGLD is outperforming it's rivals.

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Floor didn't last long though, it's back below $29, as I predicted would happen if gold sold off. I took the gift of the dividend announcement to get out completely, although I had no idea it would drop this far so quickly, so I dodged a bullet more by luck than judgement to be honest.

 

This is already looking oversold, and will probably become more so if gold breaks below $900. I'm ready to jump back in if and when gold goes below $887.

 

Be wary of the next big bounce in the gold price, it could just be an correction upwave setting up bigger falls. Patience and nerve will pay over the next few weeks.

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...And back up to $31.

 

It's nice to see it outperforming Gold

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...And back up to $31.

 

It's nice to see it outperforming Gold

 

 

I'm going to wait and see if we retest $900 gold, which I think will hold. I can see RGLD doing another nosedive on the retest though, if that happens I'll jump back in with both feet.

 

I don't see any evidence of the short position evapourating yet. I think that will come once this correction has been worked through. The upside potential for gold once $1000 has been crossed again will scare the shorts to death.

 

Ditto for Silver Wheaton I think.

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I'm going to wait and see if we retest $900 gold, which I think will hold. I can see RGLD doing another nosedive on the retest though, if that happens I'll jump back in with both feet.

 

I am lightening up on RGLD a bit, since I bought below $30.

 

But I shall be watching closely the volume on the retest of the lows, if we see it.

Be careful, very careful, if the downside volume is heavy

 

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I am lightening up on RGLD a bit, since I bought below $30.

 

But I shall be watching closely the volume on the retest of the lows, if we see it.

Be careful, very careful, if the downside volume is heavy

 

 

Thanks for the advice Bubb. I've raised my caution level in a big way over the past 2 weeks. The gold sell off caught me by surprise, but thankfully I wasn't heavily exposed when it hit. That was pure luck, however, and it made me realise that I'd been taking a few too many risks.

 

The market seems to be back in goldilocks mode at the moment. Banks are rising, builders are rising (apparently on sector consolidation rumours, ludicrous when you think about it), so I can see gold taking another kicking before we break over $1000 again.

 

The next month or so could be a real test of patience and nerve for those who are waiting for the best price to enter. It could also dish out some savage lessons to those who jump back in with too much too soon. Another big sell off could put newcomers to the gold market off buying for a very long time.

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Royal Gold. A farourite on the board here. Is it not presently at a GIP?

Seems to me short, medium and long term MA are very close, with short above medium above long so positive. And with the gold price kicker.....

 

Yes, Chazza. You could be right.

 

Here's a key ratio: RGLD-to-GLD (the etf for Gold)

003ix8.png

 

A break above 0.34, and RGLD could be "off to the races"

 

Today's Ratio-

 

RGLD : $ 31.00 Change:-0.07 / Percent Change: -0.23%

GLD- : $ 92.24 Change: -1.22 / Percent Change: -1.31%

Ratio : $31.00 / $92.24 = 33.57 ... 34% would be: $31.36

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I like the relative strength in RGLD today, so I added some July in-the-money calls,

getting them at a better price that the April calls (same strike) I sold a few days ago

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Looking Good... RGLD: $31.75 + 0.55

 

Bailing out of some April $25 calls, which I have already rolled into July $25 Calls.

 

Current level, gives me a nice profit on the roll

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QUOTE (chazza @ Mar 15 2008, 03:17 PM)

Royal Gold. A farourite on the board here. Is it not presently at a GIP?

 

 

Hi guys forgive my ignorance - what does GIP stand for in this context

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