Value investor club spring write upThe author of the write up gave a few reasons why the stock could be a big winner. The stock was trading 0.76 then versus 0.48 today. Here they are with my assessment.
- High leverage causing fears of insolvency but a long debt maturity runway to solve the issue
Leverage going down with the debt buy back and more to come with the cobalt swap.
- Multi-year bullish thesis for core commodity facing a skeptical investor base
Thesis still unchanged and Sherrit is spitting out lots of free cash flow now
- History of management missteps, but old management replaced by a new competent management team
Still have to deal with the 2020 DSU/RSU but so far, new management has done all the right moves.
- High probability of earning its market cap in one year, taking leverage risk off the table and driving rerating
Yes sir
- Investor base limited due to jurisdiction, liquidity, small market cap concerns that ameliorate as the company rerates
Yes, but waiting for the rerate
- Multiple free options that provide valuation upside
We just had that a couple of them not included in the write up (debt buy back and cobalt swap)
So far, so good. Financials are still messy but the picture is getting much clearer for all to see.
As to management, of course they are the risk as Friendo mentionned. As soon as I see some signs of empire building, I am out. Typically, cash flow increasing increase pressure for management to piss it away. So far, they have done all the right moves.
GLTA