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Silver Wheaton Corporation: Lackluster performance of late

slw logo.JPG

We are struggling to understand just why silver prices are doing so well and yet the stock price of Silver Wheaton Corporation (SLW) has been lackluster over recent weeks. One explanation could that the resignation of Peter Barnes has had an effect, as changes at the top of any organization sometimes do. Anyway, we have registered our concerns with Brad Kopp, VP Investors Relations and hope to have an explanation for you soon.

In the meantime we found this piece on BNN that you may find interesting:

Silver Wheaton (SLW-T 40.45 0.67 1.68%) could close new deals within six months as it seeks to become the world's top silver producer, confident that wary miners will seek out its financing model once soaring prices flatten out.
Silver Wheaton pioneered a business model where it provides up-front financing to miners to build projects in exchange for the right to buy the silver by-product at the time of production, something known as stream deals.
The model has worked well for the company, which has grown from 9.7 million ounces of silver equivalent in 2005 to 23.9 million ounces last year, without mining a single ounce. It was one of the top 2010 performers on the Toronto Stock Exchange.
"I see us continuing to strive towards 100 million ounces a year in silver production," Chief Executive Randy Smallwood told Reuters in an interview. "We'll be at about 43 million ounces by 2015 with our current portfolio, so I believe that that's an achievable target."
But to keep growing Silver Wheaton needs to secure new deals—a daunting task as rising metal prices prompt mining companies to shun hedging and stream deals and hold on to their silver.
Smallwood, who helped found the company in 2004 and took over the top job this month, said interest in stream deals has never been higher.
"We're in discussions with quite a few companies right now," he said. "I'm hopeful that we'll close some acquisitions in the next few months, within the next six months or so."
"But I won't commit to it," Smallwood quickly added. "Mainly because the silver prices are so volatile."
Silver hit a 31-year high of $45.71 US an ounce on Thursday, as worries over the U.S. economic outlook increased the allure of precious metals as safe-haven investments. The price of silver, which also has industrial uses, has more than doubled in the last year and most analysts forecast $50 an ounce by year-end.
This rapid rise has translated to huge profits for Silver Wheaton, which pays about $3.90 an ounce for its silver at the time of production.
"What we've seen over the last several months, as silver has gone through this dramatic growth, is companies are very interested in stream financing," said Smallwood. "But they want to wait for some stability in the silver price."
Smallwood, an avid skier and a geological engineer by trade, said he is bullish on silver, but the price won't keep going up forever.
"Every commodity is cyclical—and silver's no different," he said. "We'll see some down cycles in the future.
Once silver starts moving down, Smallwood expects a "flurry of deals", as miners try to lock in top value for their by-product rather than hanging on to it.
"As long as there's mine construction or mine development going on in the world, there will always be a need for capital to help fund that," he added.

The new CEO is an organic promotion from within who has been with the company for some time, Randy Smallwoood.

Randy Smallwood.JPG
Randy Smallwood

According to Forbes, Mr. Smallwood holds a geological engineering degree from the University of British Columbia. He was previously Director of Project Development for Wheaton River from 1993 through its merger with Goldcorp and until 2007. He has been instrumental in building Wheaton River, Goldcorp and Silver Wheaton over a 12-year period of acquisitions. Prior to joining Wheaton River, Mr. Smallwood worked with Homestake Mining Company, Teck Corp. and Westmin Resources.

We'll be back.


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sk charts 19 April 2011.JPG

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Reader Comments (21)

One reason silver wheaton stock is lagging is becaues it is being minipulated and is being NAKED SHORT sold! Stocks that trade millions of shares daily are subject to Naked SHort selling. I Have called for a investigation into this. I Have own companies that have been NAKED SHORTED and the similarities all look the same, the charts and graphs are very similar! M.A. Leyba

April 22, 2011 | Unregistered CommenterMichael A. Leyba

I believe you will find it across the board. Most miners were sold by hedge funds to capitalize on the metal.

April 22, 2011 | Unregistered Commenterbimetalbug


April 22, 2011 | Unregistered CommenterWyn Harter

Yeah, I was dumbfounded why a silver company, with the price of silver itself on a rocket ship to the moon, had a share price falling off a cliff.

But now that I know the new CEO is an "avid skier," well, I guess I can exhale now? ;-P)

April 22, 2011 | Unregistered CommenterJoeBronx

Oh, and I think the term "lackluster" doesn't do this company's performance justice as of late. Maybe "outrageous" or "pathetic" would be more appropriate?

April 22, 2011 | Unregistered CommenterJoeBronx

Don't forget that it has already increased over 800% from December, 2008. Not too shabby in my opinion.

April 22, 2011 | Unregistered Commenternotindenile

SLW's first quarter is going to be very strong earnings-wise. It might be a catalyst to get this stock off the snide.

April 22, 2011 | Unregistered CommenterBee Thousand

I received the following response to my inquiry.

Thanks for your enquiry. As you may have read in the news last week, Silver Wheaton has a new CEO, Randy Smallwood, at the helm. Randy was a co-founder of Silver Wheaton, and has been instrumental in helping to build Silver Wheaton into one of the world’s largest silver companies in the world. In recognition of his significant contribution to the company’s pre-eminent position as market leader in its sector, Randy was appointed Silver Wheaton’s President in January 2010. While he was seen by most as the natural successor to Peter Barnes, it is not unusual for this type of news to have a short term impact on a company’s share price.

The bigger picture, however, is that in the last month the senior silver producers as a group have underperformed versus the price of silver. Some of the feedback that we are receiving is that institutional investors are concerned that the silver price has advanced to quickly and a correction is overdue. In light of this, they have been selling silver equities (in particular their top performers, such as Silver Wheaton) in order to lock in profits. Today’s price action is difficult to explain. It was communicated to us, however, that a large seller entered the market in the last hour of trading which put a significant amount of strain on our share price.

Please don’t hesitate to contact me if you have any further questions.

Kind regards,

Teya Aasen

Manager, Corporate Communications

Investor Relations

April 22, 2011 | Unregistered CommenterThe Lone Ranger

well I won't be owning this stock, SLV is out preforming it by a long shot.

April 22, 2011 | Unregistered CommenterL

What the hell are you talking about?

Have you not noticed that EVERY silver miner is being held down by an "invisible hand"?

April 22, 2011 | Unregistered CommenterG

Dear Bob,

Thanks for your email. Brad Kopp is out of the office until Tuesday. He will reply to your query on his return next week.

Kind regards,

April 22, 2011 | Unregistered CommenterSilver Prices

My big question is “Why did Peter Barnes leave so quickly and abruptly?” I haven’t been able to find an answer to this on the web. Many thanks for your excellent reporting on silver. It has been very instrumental in my investment decisions. Thanks to you, I have a large position in Silver Wheaton and done very well. You’ve done an outstanding job.

April 22, 2011 | Unregistered CommenterK

Read Saturday's WSJ about the silver ETF's and also Friday's WSJ inre to large put buying in the futures. I too was surprised the other day when silver was up and SLW was significantly down. There is alot going on in the markets with silver and the company. It's not a BIG surprise that PB left,but usually there is a little time before a CEO departure. That one worries me more than anything. Keep your heads up!!!

April 23, 2011 | Unregistered CommenterBrianM

Well ,We do know that precious metals tend to be seasonal and we are entering a period when normally that is so.Last year around this time there was a sell off in the stocks even as analysts were telling us to buy. VGZ was a good example. However a summer rally quckly followed and continued. I have done really well with Silver ETFS , better than the stocks, and believe that Joe public finds them easier to trade than individual stocks. My top ETF is up 450% over two years.Our real problem now is calling a correction . I suspect big institutions are going to cash to wait for a buying opprtunity and are also waitng to see if QE3 takes place . If it does not watch the correction !

April 24, 2011 | Unregistered Commentersilver bug

IN my statement on Naked Short selling and Silver Wheaton. I mean't to say that one reason the silver stock may be being "NAKED SHORTED" The similarities are very close to some of the companies if have own that were. I have no Idea if they are thet are or not! M. Leyba

April 24, 2011 | Unregistered CommenterMichael A. Leyba

silver bug - Is the capital gains tax on ETF's higher than on mining stocks? Thanks.

April 26, 2011 | Unregistered Commenternotindenile

notindenile, What Capital gains you are liable for will depend on the tax regime of the country you are in. I live in the UK and therefore have a tax system where your first £10K of gains is not taxable but better still we have ISAS in which you can make unlimited gains without tax

April 26, 2011 | Unregistered Commentersilver bug

silver bug is bang on with this one, it all depends on which tax regime that you toil under, and they are very different indeed and also note that they are in a constant state of flux and need to be monitored.

April 27, 2011 | Unregistered CommenterSilver Prices

If someone can prove Silver Wheaton stock is not being "Naked Short Sold" I'll eat my dog's poop!M.Leyba

April 28, 2011 | Unregistered CommenterMichael A. Leyba

Re: “invisible hand”.
That is evident in all anti-dollar markets; equities and hard commodities. Read this link re: "Market Manipulators":

April 28, 2011 | Unregistered Commenterbimetalbug

Of course the silver market is manipulated!!! Am sitting on nice gains in SLW, but the day will come when this run jumps the shark,it just isn't right now. Will probably see 60 PTO by summers end, after that who knows.

April 29, 2011 | Unregistered CommenterBrianM

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