RE:SP and risk/rewardsWhat has changed?
I continue to monitor this stock but even after the big downturn do not want to get in.
the same issues that we had in the past are still here with the difference that the company managed to spen all the cash, the V prices continue to go down, interest rates continue to go up, no battery sales (really!!! even I am surprised by this one), etc
what do I expect in the near future?
1) the company going to the market to get a lot of cash by diluting shareholders or even worse
2) the company giving away another big chunk to Arias and other insiders at the expense of retail investor (same way as Arias became the majrity shareholder).... BTW Arias already took out alll of their initial investment on ths company and more using the same approach
A black night? No, I do not expect this for the same reason pointed by others. With a couple of institutional investors holding the majority of the shares there is no way for another company to come in and buy Largo on the cheap.
gltaisignlongs wrote: IMO the SP is a reflection of where shareholders see price based on different probabilities in terms of risk/reward....
First of all - I do not hold a position on Largo at the moment but have been in and out multiple times - Last time I was invested in Largo was when we expected to make some money with the sales of iron ore. The main reason to sell after the CC was the shameless LIES and lack of transparency (I do not believe for a second that PV the head of sales did not know about the issues with iron ore...since he was the head of sales he would have been the first to know about China nott wanting it)
Why I am still out... (not only from LGO but from almost everything)
1) Rome was not built in one day and thesamegoesfor integrity: either you have integrity or you don't... I do not trust management.
2) Market conditions:
- We are in a bear market even if we have bear rallies: stocks in general go down
- interest rates are going up (normally dollar goes up and commodities go down)
- China continues to struggle with Covid - this impacts everything.... China is the biggest consumer of everything
- the company is losing money with high V prices
- etc
3) I have big hopes for VRFB but this will take time - take a look at the projections that management provides and compare this to reality
- I do not trust this management on delivering on those projections
- one small sale in a year
- sales of VRFB in general are tiny compared with other technologies.
- it will take years for us to see profits from this division...in the mean time the mining business will have to pay the related expenses
4) IMO SP has gone up on the expectation that the buybacks will make a big difference and even this is questionable
- the share buyback is at management discretion - they might decide to only buy a fraction of what was announced and then stop
- the more the SP rises the less shares will be bought back
- timing of the buyback is questionable in relation to the market: in the past Largo has been sitting on a pile of cash and instead of doing something with this cash management has opted to borrow money and pay interest on the debt to enhance the working capital.... now that interest are going up management decides that it is a good time to spend a big chunk of this cash (many other companies aregoing on the opposite direction)
I still like this company but no the risk/reward proposition based on the points above.
GLTA Longs.