WestStocks wrote: Some commentary from John /BigDawgGmoney on NAK going forward
All,
Please ensure you do some work on valuation, and learn the value of NAK before you sell it. I will not suggest when you should sell, but realize, our analysis suggests shorts are trapped (as we have shared many times-see my past posts on the subject ) and as such, shorts want you to sell early so that they can cover and make a profit.
Valuation is always important whenever you own an asset, you don’t sell a car without knowing what similar cars are selling for, a house, or even if you are selling a used pair of skis on craigslist you look around at similar priced skis right? So the same should go for a stock. Now companies can be over and undervalued at any moment, market dynamics play a role – ie sentiment, shorting, manipulation etc. This is why ‘timing’ the market is pretty much impossible, one never knows when an undervalued stock will be fairly valued, nor when the market will decide that the Tesla’s of this world are overvalued. What you can do however, is find value and be patient and wait until the market recognizes that value, especially if the delta (difference) between what it’s trading in the market for and its intrinsic value is material, as it is here.
In NAK’s case the valuation gap is extreme for many reasons, but in our view primarily shorting and manipulation
I have shared my views on valuation prior, and while not a price target, I have expressed how material this valuation gap is, and how to ‘think’ about value. Cantor Fitzgerald’s report aligned quite closely with my views.
In addition to the valuation information stickied at the top (plus TD/Gabelli/Cantor) a very good comp was mentioned on Stocktwits by Logan recently. That comp is Auryn Resources.
Auryn is not even at the stage of development as Pebble / NAK, it has only Indicated and Inferred resources, it is a VERY early stage Au explorer.
The company’s market cap is USD$ 250 mil. Their company presentation suggests that they have just under 1 mil Oz of “INDICATED” Au –realize this is a step below NAK as Measured is a much more reliable estimate. Their grade is comparable. Auryn has immaterial amounts of copper and silver as well (relative to NAK).
NAK as we know has 70 mil Oz of “MEASURED and Indicated” Au, plus greater than 100years of strong grade copper and decades of silver. Again, grades are similar on Au.
So basic math, and not suggesting Auryn is not overvalued but this is just another comp and data point that continues to show how EXTREMELY undervalued NAK is relative to its publicly traded comparables on a resource valuation basis.
Auryn has 1.4% of the Au as Pebble/NAK and is trading at 50% of NAK’s market cap. On a comparable basis, if NAK was valued in the SAME manner, just on Au ALONE (no value for Cu – when it’s a copper mine! Or Ag! Or Moly!) it would be valued at $18 billion on an equity value basis (255 mil/.014)
I will reiterate, clearly I am not saying that is the value of NAK, and I am not saying Auryn is not materially overvalued, but even if you cut Auryn’s valuation by 60% and then used them as a comparable (which they ‘were in the past’ and no longer are given EARLIER stage, as NAK is now a DEVELOPER not an explorer), it would suggest a value of $7.1 bn for the Au alone. Let me repeat that, on a comparable basis to an EARLIER stage Au Mining company, if we cut their market cap by 60%, and just valued NAK equivalently, our Au alone would be valued at $7.1 bn.
What this comp, what the company presentation valuation suggests, what Cantor’s view on ‘materially undervalued with material upside” means is holding this stock is the smart decision. Sure you may not ‘win short term on the swings’ but will you be positioned for the day, that none of us know when it will occur, that the market decides to start valuing this company fairly.
All that I know is that I want to be heavily invested on that day, week, month etc. And none of us know when that is.
As a reminder, insiders, mgmt, Stirling, did not sell a share at $3.50 preveto lift. They know the true value of NAK. Since then, we have had a veto lift and intense shorting to ‘game the stock’ , and on partner it may continue, but the truest test of valuation is the actions of management and insiders. If they did not sell with both veto risk AND partner risk on the table at $3.50 why would anyone sell after those risks are gone at 3.50 or even marginally higher? Clearly, management and insiders believe that the value of this company is multiples of that price, and they have shown as such with their own money (ie not selling).
Finally, we have suggested what MM’s are doing (swinging NAK’s stock back and forth is their attempt to ‘wear out longs’ ) can metaphorically be likened to ‘training a dog’. With every move up then a short move down, they make longs frustrated (emotion right?), and get you one step closer to selling every time as you get tired of it. This is by design. They want you to trade on emotion, not on facts and valuation, but fatigue and frustration. Why? Well they are trapped! And trapped does not mean they cannot cover, be aware of that, it just means that if they want to cover, they will move the pps materially/thus decreasing their return, or even setting off a squeeze and creating a loss.
I am waiting until the market starts recognizing the value here. I cannot tell people to sell or buy, but “selling the pop”, is simply assisting those who may need your shares to cover!
Know what you own, learn about value, and Keep the Faith!
Good Luck to all Longs!
John