GREY:WFREF - Post by User
Post by
wilwalon May 24, 2015 3:28pm
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Post# 23758871
Stock consolidation
Stock consolidationIn my view, LRE needs to take a serious look at a stock consolidation, ie reverse split.
When oil prices collapsed, LRE's decline was accelerated by crashing through the $5 and then more importantly, the $2 level. At sub $5, a lot of funds can't buy in. At $2, many other funds don't buy in as well as margin disappears. I would expect there were a fair number of margin calls when the went below $2. Now, in order to climb back up, all investors have to be cash investors and that will make the climb difficult.
LRE should look at a 1:5 consolidation. While that wouldn't put it over $5 today, it is significantly undervalued in the .80-.90 cent range so it would soon rise above $5 and again attract a much wider group of investors. I know that I would have certainly considered a larger position had this been a marginable stock.
If Redwater or another major asset gets sold at a reasonable price, the stock could rise to over $2 fairly quickly so that alone could solve the current margin status of the stock.