Posted this under the SYR thread, but there are also some very good points made, many of which I have raised with SYR holders myself, that also apply to other graphite stocks....
An extract from Ben Kramer Miller on Seeking Alpha...full story here....
My Favorite Contrarian Idea: Short Syrah Resources
Summary
http://seekingalpha.com/article/313...2b7abc6f69f21ffa6c12419c7996486&uprof=45&dr=1
- Balama is the largest graphite project in the world, but in a market the size of the graphite market a bigger project doesn't mean more sales.
- Syrah's margin estimates are too optimistic: graphite price assumptions are too high and operating cost assumptions are likely too low.
- Management is claiming that Balama can supply non-existent sources of demand for graphite such as carbon anode blocks and recarburizers.
- If Balama actually gets into production it will be a much smaller project than management anticipates.
- Shares have substantial downside risk while management's unrealizeable scenario is priced in, making Syrah an excellent short candidate.
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