How To Pull Profits In A Financial Breakdown

Untapped Wealth
October 2008 Edition
How To Pull Profits In A Financial Breakdown
There’s no question, we are in a hard and trying market. That being said, just because it
has dipped into this grey territory doesn’t mean that profits have dried up, they’ve just
moved to a market.
Where do we start and who’s to blame? That’s the biggest question out there, especially
from the political blowhards who let this whole thing go unregulated in the first place.
What gets me is how the house as well as the Bush Administration didn’t see this
coming; what happens when government backed mortgages get saturated with sub-prime
loans? Well it’s simple…have a look at the industry and you’ll find your answer.
Now, we’re looking at the Government attempting to pass a “bail out” at our
expense…Either way we’re going to see things get worse before they get better..
So where do we profit if the bailout goes through and where do we profit if the bailout
gets voted down?
That’s simple; for the October 2008 Issue, we’ll be capitalizing on two distinct markets
that both have the potential to kill during these times.
The first position is an Argentinean based online trading platform that is severely
undervalued and we need to pounce right away to ensure some real strong profits.
The second position is a Vancouver, BC based silver miner that has been doing very well
over the past few years. We’ll be watching silver closely as I believe that silver is the
place to be for 2 reasons; the fact that it is extremely undervalued and the fact that it is a
big time hedge in a questionable market.
So let’s get right to it.
Tim Fields
Table of Contents
How To Pull Pofits…………………………………………1
October Recommendation #1, MercadoLibre………….2
MELI Principal Services………………………………….3
MELI Market Opportunity………………………………..3
MELI Strengths…………………………………………….4
MELI Strengths Continued……………………………….5
MELI Earnings & Closing……………………………….6
October Recommendation #2, Silver Wheaton………..6
SLW Activity……………………………………………….7
SLW Earnings & The End…………………………….….8
Model Portfolio……………………………………………9
www.untapped.wealthonline.com
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The first position for your Untapped Wealth October Edition goes to Argentinean based,
MercadoLibre (MELI: $22.46*).
MercadoLibre hosts the largest online trading platform in Latin America, which is
located at www.mercadolibre.com.
The company is a market leader in e-commerce in each of the following, based on unique
visitors and page views during 2007:
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



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Argentina
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
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Uruguay and Venezuela
The company has also launched online trading platforms in Costa Rica, the Dominican
Republic and Panama.
Being that the market contains over 550 million people and the region is one of the
world’s fastest-growing Internet penetration rates, MELI provide buyers and sellers with
a robust online trading environment that fosters the development of a large and growing
e-commerce community.
The company additionally, offers a technological and commercial solution that addresses
the distinctive cultural and geographic challenges of operating an online trading platform
in Latin America.
Two Principal Services
MercadoLibre offers the following two services: (courtesy MercadoLibre)

The MercadoLibre marketplace: “The MercadoLibre marketplace is a fullyautomated, topically-arranged and user-friendly online trading service. This
service permits both businesses and individuals to list items and conduct their
sales and purchases online in either a fixed-price or auction-based format.
Additionally, through online classified advertisements, our registered users can
also list and purchase motor vehicles, vessels, aircraft, real estate and services.
Any Internet user can browse through the various products and services that are
listed on our website and register with MercadoLibre to list, bid for and purchase
items and services.

The MercadoPago online payments solution: To complement the
MercadoLibre marketplace, we developed MercadoPago, an integrated online
payments solution. MercadoPago is designed to facilitate transactions on the
MercadoLibre marketplace by providing a mechanism that allows our users to
securely, easily and promptly send and receive payments online.”
Market opportunity
MercadoLibre provides services to a region with one of the world’s fastest growing
Internet penetration rates. The company was one of the initial entrants into the Latin
American e-commerce market.
The region, which consists of South America, Central America, the Caribbean and
Mexico, is home to over 550 million people, or approximately 8.5% of the world’s
population. The International Monetary Fund estimates that Latin America’s combined
annual gross domestic product in 2006 was greater than $2.9 trillion.
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Based on information released by InternetWorldStats.com, estimates for Internet
penetration in Latin America on May 7, 2007 range from a high of 42.4% for Chile to
17.2% for Brazil and 6.5% for Panama with an average penetration of approximately
18.4%. Between the end of 2000 and May 7, 2007, InternetWorldStats.com estimates that
Latin America’s Internet user base increased approximately 466.2% with a compounded
annual growth rate of 30.9%.
The Latin American market has the potential to present a significant opportunity for an
Internet-based marketplace provider, specifically MELI.
E-commerce platforms much like that of MercadoLibre , offers distinct opportunities of
“scale, information availability and accessibility to markets”, which indeed take in hand
many of the inefficiencies regarding traditional offline trading in Latin America, such as
limited access to information, high number of parties in distribution chains, limited
inventory, and obstacles to efficient communication and interaction between market the
market community.
Competitive strengths
The following are traits that give MercadoLibre a competitive advantage in appreciating
the potential of their market opportunities: (taken from MercadoLibre’s Prospectus)
“We have a strong brand and are one of the leaders in the Latin American e-commerce
market. We were one of the initial entrants in the Latin American e-commerce market,
and we host the leading online trading platform in the region based on unique visitors and
page views. We have built strong brand awareness and a growing online community that
provides our users with the advantages of a sizable network with a large number of
participants in a single marketplace. In some countries, we operate the only large-scale
online trading platform that covers a wide range of product and service categories.
We operate a proven business model. Business models similar to ours have been
successfully implemented in many countries around the world, most notably by one of
our stockholders, eBay Inc., or eBay. We have had the advantage of working closely with
eBay in exchanging industry best practices and developing and improving our services
and strategy.
Our business model offers significant economies of scale. Since we started
operations in 1999, we have shown significant revenue growth from year to year. Our
business model has substantial operating leverage because a significant portion of our
costs are fixed, such that increases in revenues have resulted in higher margins year after
year. From 2004 to 2006, our annual revenues increased from $12.7 million to $52.1
million, a 311.1% increase, while total costs and operating expenses grew from $16.0
million to $46.7 million, a 191.4% increase.
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Our product range and information is extensive. We offer our customers one of the
broadest selections of products and product categories among e-commerce sites in Latin
America.
Our sites offer on average over 2.9 million total listings per month from a selection of
over 2,000 different product categories. Our product selection ranges from traditional ecommerce items such as books, music, videos, electronics, computers, hardware, cameras
and cellular telephones, to industrial goods and services, to real estate and contractor
services. Our website offers an efficient shopping experience with extensive information,
ratings and reviews on listed products.
We provide creative and innovative solutions. We have developed creative and
innovative solutions to the challenges of conducting e-commerce in Latin America. For
example, in addition to offering sellers an auction-based format to sell an item, the
MercadoLibre marketplace also offers a fixed-price alternative to respond to the current
preferences in the region for fixed-price listings.
In order to address the specific needs of buyers and sellers of motor vehicles, vessels,
aircraft, real estate and certain services, items for which buyers will typically require a
physical inspection or specific types of interaction, we offer our users an online classified
advertisements service that is dedicated to these items.
To complement theMercadoLibre marketplace by providing an end-to-end service that
facilitates the completion of transactions online, we have developed MercadoPago, which
operates as an escrow service that allows our users to make and receive payments
efficiently and securely online.
In order to meet the demand for product information by potential purchasers, we have
launched product content sections on our platform that encourage user ratings and
product reviews, and provide product catalogues and purchasing guides.
To improve the efficiency of our MercadoLibre marketplace, we launched a relevancebased algorithm to sort listings, which provides users with a superior buying experience
by matching supply and demand.
We have acquired considerable local market expertise. As one of the first Internet
trading platforms in the countries where we operate, we have developed an understanding
of the needs and preferences of our users and customers. We have historically used this
expertise to develop services and products that cater to the unique needs of Latin
American e-commerce clients.
We have an experienced and highly qualified team. We are led by a team of highly
qualified management and information technology professionals who run our business
and websites from our offices in Buenos Aires, São Paulo, Mexico City, Caracas,
Santiago and Bogotá. Our ten most senior management officers and our four most senior
technology professionals joined our team in 2000 or before, which provides us with
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stable and seasoned leadership. The commitment, knowledge and track record of both our
management and technology teams are valuable assets to our company. We believe that
our corporate culture contributes to the high level of satisfaction of our employees and to
the retention and commitment of our team.”
Latest Earnings
For Q2, MELI’s earnings were as follows:
Q2: The company's revenue jumped 81.7%, to $34.5 million, smoking analysts'
expectations for $32.2 million.
In the End
As MercadoLibre grows throughout 2008, we expect that investors should pick up a
heavy profit from their extremely undervalued nature.
Position #2; Silver Mining
Your second October recommendation goes out to a small silver operation based out of
Vancouver, BC. The company is Silver Wheaton (SLW: $9.07**).
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Silver Wheaton is a mining company with 100% of its operating revenue from the sale of
silver, unlike the industry standard which includes other metals.
Silver Wheaton’s principal product is silver that it has agreed to act as a purchaser from:
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The San Dimas Mines
The Zinkgruvan zinc-lead-silver mine in Sweden
Glencore International AG
The Stratoni Mine
The Peñasquito Project
The Corporation is an active seeker when it comes to future silver purchases. The
company has a history of pursuing future growth opportunities, primarily by way of longterm silver purchase contracts.
Silver Wheaton is currently engaged in discussions with respect to such possible
opportunities and at any given time, discussions and activities can be in progress on a
number of initiatives, each at different stages of development.
Recent Activity
Over the past year, Silver Wheaton has been holding up to their historic tradition of
profits as they expanded on their already large silver portfolio. The following is a
chronological look on 2007 and the company’s contracts.
April 23, 2007
Silver Wheaton entered into a silver purchase contract with European Goldfields and
Hellas Gold, a 65%-owned subsidiary of European Goldfields, in which SLW agreed to
purchase 100% of the silver produced by Hellas Gold from the Stratoni Mine over its
entire mine life.
July 25, 2007
Silver Wheaton entered into a silver purchase contract with Goldcorp and Minera
Peñasquito, S.A. de C.V. ("Minera Peñasquito"), a wholly-owned subsidiary of Goldcorp,
in which the company penned an agreement to purchase 25% of the silver produced by
Minera Peñasquito from the Peñasquito Project over its entire mine life
November 5, 2007
Silver Wheaton completed the acquisition of common shares of Mines Management, Inc.
Following this acquisition, SLW owns approximately 11.2% of the outstanding common
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shares of Mines Management and has been granted a right of first refusal over any silver
stream sales by Mines Management from any of its projects in Montana.
December 20, 2007
Silver Wheaton entered into a binding letter agreement to purchase between 45% and
90% of the life of mine silver production from the Rosemont Project owned by Augusta.
Mach 17, 2008
Silver Wheaton agreed to purchase all of the silver produced by Mercator Minerals Ltd.
May 13, 2008
Silver Wheaton agreed to purchase 75% of the life of mine silver produced by Farallon
Resources Ltd.
June 3, 2008
Silver Wheaton agreed to purchase 50% of the life of mine silver produced at the La
Negra mine located in Queretaro State, Mexico.
Earnings
On July 29, SLW announced earnings for Q2 and they were in typical Silver Wheaton
fashion- they killed.
The company announced the following in a statement:
“Net earnings of US$23.3 million (US$0.10 per share) from the sale of 2.9 million
ounces of silver, compared to US$22.9 million (US$0.10 per share) from the sale of 3.1
million ounces of silver in 2007.
Record operating cash flows of US$35.9 million (US$0.16 per share) compared with
US$27.8 million (US$0.13 per share) in 2007.”
In The End
In the end, these two positions, MercadoLibre and Silver Wheaton both have the potential
to gain strength during the latter part of 2008, in the face of the financial meltdown we’re
currently subject to.
During this time, these positions may be subject to sharp declines and increases as the US
economy makes or breaks, so be prepared. With that being said, a stop loss program is
strongly advised and 20% should be your absolute max.
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Have a great October.
Tim Fields
Editor In Chief
Untapped Wealth
Untapped Wealth
*MELI Investor Alert price $22.46, however position opened at $21.83
**SLW Investor Alert price $9.07, however position opened at $8.93
Publisher: Kyle Hodgens
Editor in Chief: Tim Fields
Marketing Director: Angela Vazquez
Customer Service: (800) 479-5084
Website: www.untappedwealthonline.com
All information, research, and opinions are
deemed to be reliable but are not guaranteed.
Untapped Wealth does not provide individual
investment advice. Before investing in any of
the recommendations made in this or any
other newsletter you should research as much
and from as many sources as possible.
No employee of Untapped Wealth may
hold positions in any recommended equities
until 10 days after the date of recommendation.
The ideas and information in this newsletter are
of value only if you’ve done your research. It is
entirely likely the recommendations made within
these pages will result in losses…such is life.
Thank you for reading, best of luck.
Postmaster: Send address changes to
Untapped Wealth, 103 NE 4th Street, Delray
Beach, FL 33444.
Model Portfolio
Company
Initial Rec Price
Current Price
% Gain/Loss
Mindray Med (MR)
Directv (DTC)
ACM Corp (ACM)
Clearwire (CLWR)
Halliburton (HAL)
COMPANHIA VALE (RIO)
ID Systems (IDSY)
Raser Tech (RZ)
Mphase Tech
(XDSL.OB
Adv Photonix (API)
AZZ Inc (AZZ)
Quidel Corp (QDEL)
Cal-Maine (CALM)
Dollar Tree (DLTR)
Family Dollar (FDO)
Star Bulk (SBLK)
China TransInfo (CTFO)
Ituran Location (ITRN)
StealthGas Inc (GASS)
Patriot Sci (PTSC.OB)
Dreams Inc (DRJ)
MeracadoLibre (MELI)
Silver Wheaton (SLW)
$24.95
$22.35
$24.99
$25
$32.60
$20.89
$12.32
$13
$0.07
$32.47
$25.46
$23.89
$11.35
$31.82
$18.69
$8.83
$7.70
$0.04
30.09%
13.91%
(4.40%)
(54.72%)
(2.39%)
(10.53%)
(28.33%)
(40.77%)
(45.71%)
$2.65
$34.69
$16.69
$34.20
$37
$20.87
$9.40
$5.80
$11.61
$15.32
$0.27
$1.03
$21.83*
$8.93
$1.70
$41.13
$16.03
$28
$36.35
$24.43
$6.88
$4.33
$10.81
$13.58
$0.16
$0.90
$20.04
$8.27
(35.92%)
18.56%
(3.59%)
(18.13%)
(1.76)
17.06%
(26.88%)
(25.34%)
(7.67%)
(11.36%)
(40.74%)
(12.61%)
(8.2%)
(7.39%)
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