WEF historical performanceAs the saying goes, the devil is in the details.
Seems pretty much all the time that the one thing missing from most SH boards is actual hard number crunching.
So here are some numbers to chew on, all readily available from SEDAR.
WEF shares started trading on August 3, 2004 upon the demise of Doman Industries via a receivership reorg. So for the rest of 2004 and all of 2005 there were only 25,631,795 common shares outstanding. And the company initially was making money again due to the decent lumber prices and the share price hit over $11. But that changed all too quickly so at the end of 2005 WEF was once getting into difficulty financially.
So in March, 2006 a massive financing and taking control was orchestrated by Brookfield Asset Management which resulted in the issuance of 178,781,770 more shares at $1.65 - this bringing the total outstanding shares to 204,413,565! WEF then limped along just barely making money until of course all hell broke loose with the 2008 meltdown.
Thus in January, 2009 another massive Brookfield orchestrated financing was done which this time resulted in the issuance of another 204,413,565 more shares at only 19 cents. This now brought the total outstanding shares to 467,570,860 of which only 128,625,000 are voting shares and the rest - 338,945,860 - are non-voting common shares which are not listed for trading but may be converted into voting shares. Brookfield has a chunk of the voting shares plus all of the non-voting shares.
The bottom line is that when you look at the past years share prices to see how the current WEF share price compares you need to adjust the data. For all data from April, 2006 to the end of 2008 we would divide by a factor of 2.2874 - being 467.57 million divided by 204.42. Thus the highest share price of $2.45 reached in October, 2007 would become $1.07. This means that once the share price of WEF rises to 1.07 it will have reached the same level as it had peaked in October, 2007.
Doing the same adjustment of data we would have to divide any pre 2006 share price data by a whopping factor of 18.2418! Which means that the $11.25 peak WEF hit shortly after the end of the Doman receivership would actually currently be the equivalent of only about 62 cents! A perfect illustration about how way too many investors get completely fooled by historic data when they are looking to bottom fish ''cheap'' company shares as pumped by a poster here this weekend for example.
So based upon this analysis it would appear that SandHeads was correct in concluding that his 58 cent target fully valued WEF at this point in time. SandHeads, having been a multi-year WEF long, likely knew very well all of the above share history. However, my analysis also suggests that a buck to buck fifty is quite likely down the road once the full recovery in the forestry sector kicks in.
But with our WEF here is the real kicker. You of course likely are fully aware of the massive devastation of the BC pine forests by the pine bark beetle? It is now projected, likely with good accuracy by now, that about 5 to 6 years down the road not only will have the beetle died off since there won't be any pine trees left for it to eat but also by that time pretty much all of the beetle killed trees will have been salvaged. Then there simply will NOT be much timber in much of BC for decades to come which should result in a huge shortage of North American supply, thus likely moving lumber prices to highs never seen before in real dollars. And since WEF logs only out on the coast where there are no pine beetle issues, their timber holdings will continue to produce lumber forever if properly managed.
Going very long on WEF in your TFSA would be the best bet. And likely the hectic day trading speculation madness of last week will soon fade as the hordes of hot money chasers rapidly tire on move on. Thus SandHeads may get a decent opportunity once again to buy back in - I believe this would be at least the 3rd time for him over the years?