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发帖数: 5997 | 1 http://247wallst.com/2010/10/27/rare-earth-etf-impact-the-tail-wags-the-dog-mcp-ree-res-v/
Posted: October 27, 2010 at 3:31 pm
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Molycorp, Inc. (NYSE: MCP) is surging today along with some rare earth
companies. Today’s news is not that China is lowering rare earth oxides
and rare earth elements, it is that an ETF for rare earth materials is
coming. Talk about the tail wagging the dog. Van Eck Global is said to be
launching the Rare Earth/Strategic Metals ETF as a global trade on rare
earth materials.
Rare Element Resources Ltd. (AMEX: REE) is surging 11.6% at $12.56 and its
market cap now eclipses $400 million. Its 52-week range is $1.15 to $13.71.
There is another rare earth stock on the Bulletin Board called American Rare
Earths and Materials Corp (OTCBB: AREM), although this company recently
changed its name and we do not usually care to report on Bulletin Board
companies with micro-cap market capitalization rates.
In Canada, one other winner is RARE ELEMENT RESOURCES LTD (RES.V) as shares
are up over 13% on last look.
Molycorp is now one of the top IPOs of 2010 and it now has a market cap in
excess of $3 billion. Shares have been up more than 10% today, but the
stock is up 8.2% at $38.08 on more than 8 million shares with just over 30
minutes to the market close.
ETFs by their intent are meant to track sectors and meant to expose
investors to moves in certain sectors. By and large, these were intended to
be tracking instruments. Rare earth oxide and rare earth element companies
are by and large still very much niche and emerging companies, many of
which have little to no revenues. If this ETF takes off, it will have the
unfortunate effect of running up stocks to the point that just being in the
ETF would allocate too much ownership by an ETF and that in turn creates a
phantom valuation premium in the underlying stocks. Perhaps the discussed
ETF should be forced to become a closed-end fund to avoid having an impact
like this.
Some of the names of the rare earth material are not exactly household words
… Bastnasite, Cerium, Lanthanum, Praseodymium, Neodymium, Europium, and
Yttrium. There is now going to need to be the term ETFium.
Rare earth elements are not exactly rare by definition. What is rare about
them is that the quantities of locations capable of being mined at cost-
effective commercialization are rare. Rare earths are used in many
applications, from tech to water filtration to defense to alternative energy
to batteries and much more.
JON C. OGG
Read more: Rare Earth ETF Impact, The Tail Wags The Dog (MCP, REE, RES.V) -
24/7 Wall St. http://247wallst.com/2010/10/27/rare-earth-etf-impact-the-tail-wags-the-dog-mcp-ree-res-v/#ixzz13iO4DXji |
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