Timminco Again

The last time I wrote in this blog about Timminco, the Toronto, Canada-based silicon-processing concern, was late August of this year. The stock price was around C$15 at that time.

The price has slipped to $2.75 since.

The reason for returning to the subject, though, isn't that slide in itself. It is morethat the company has removed a positive report on its technology from its website. The report was called the "Photon Consulting Operational Review," and it purported to review Timminco's production of materials used in the manufacture of low-cost solar cells.

The review came under fire as soon as it was issued, back in the spring, i.e. back when the stock price was C$24.90! Now Timminco seems to be admitting that its critics had a point. In corporate-speak, it "believes that some of the material factors or assumptions originally used to develop the forward-looking information in the Photon Report, including in respect of revenues, production volumes and costs, may no longer be valid."

Here, as in many other instances, the short sellers of a stock aren't nasty manipulators throwing dirt at a well run company. There has surely been short interest in Timminco, but the shorts in these situations come out looking like detectives who ferreted out valuable information, thereby making themselves a profit while performing a public service.

Don't you love it when things work out?

Investing in Timminco: Counting on a Miracle

A recent analysts' report, in preparation over a period of three months, suggests that investors should be very wary of Timminco, a Canadian silicon-processing company.

The report, by Neeraj Monga and Chris Silvestre of Veritas Investment Research, was picked up on last week by a reporter for the (Toronto) Globe & Mail.

Timminco claims to have developed a revolutionary way of producing the silicon used in solar cells at low cost, a claim that is certainly an enticing one in the present lets-escape-from-hydrocarbons climate.

These claims became especially newsworthy this spring when Sprott Asset Management went public. Timminco's stocks are central among those assets Sprott has been managing of late.

The Veritas report says: "Our review of industry literature, the view expressed by various industry participants in public forums, circumstantial evidence surrounding lack of progress in volume delivery at Timminco, a convoluted ownership structure ... all suggests it will be a miracle if Timminco can deliver on its promises."

The story is worth following, because this is one of several cases in recent years when a company experiencing a stock price drop has blamed malicious rumors spread by short sellers. And, as with many other such cases, those malicious rumors turn out to be true. The short sellers were on to something.

I could name some other examples of company's blaming shorts for telling truths, but instead I think I'll just move on to a couple of bits of housekeeping.

Damien Park, of Hedge Fund Solutions LLC, has started a new blog on "activist investing."

If you're interested enough in the struggles for control in corporate suites to be reading Proxy Partisans, you'll probably want some familiarity with Park's new site, too.

In other news of a bibliographic sort, CRC Press has published an Encyclopedia of Alternative Investments, edited by Greg N. Gregoriou.

I haven't seen it yet. But Gregoriou, an associate professor of finance at the State University of New York (Plattsburgh) has an impressive reputation in the field.

Stay groovy.