NCIB I must praise the company by the value they are creating for all shareholders by buying back its own stock under the Normal Course Bid Issuer (NICB). Since mid 2011, DSM bought back 6.35M shares at an average price of c$ 0.75 good for a value of c$ 4.75M. Those 6.35M shares would be worth $1.25 per share (fully diluted), or the company created a $c 3M in added value by cancelling those shares. The best investment this seasoned management can make these days is buying back the company’s own stock!
The company had at 1st of Jan still room to buy a further 400K of DSM shares, again this would further increase the value of remaining shares. With $3 mio cash at hand, the company is able to fund these buybacks and can cover running costs for another few quarters.
Even more. Once the current NICB has been done, can the company start with a new one? [as an European investor, I’m missing on full details of Canadian law and its issuer course bid, could someone confirm this?). The new/second NICB could be funded by the outstanding options being converted into shares. Total shares would further diminish at an attractive discount. DSM would cash in 10M by converting all it outstanding options/warrants, more than enough to fund 2 buyback programs at current share price and laying a strong floor below the stock price.
DSM is currently trading at a 55% discount (fully diluted NAV per share of $1.25 vs share price of c
.53). Or seen from a different angle, you buy one share and get one for free !!
- DSM stock is oversold and broke today long term downtrend
- Price action in most of REE since summer should be seen as a short term consolidation after that huge run, longer term perspective did not change and current prices offer an attractive step-in.
- China quota news of splitting up quota’s into light vs medium/heavy REE got lost in holiday trading
https://online.wsj.com/article/SB10001424052970204296804577124343176436540.html
- DSM is owning with Dysprosium and Terbium the “right” REE-mix
- DSM sold its entire Apogee Silver stake in October and is now a “100% pure REE-company”
- Company is buying back own shares at accelerated level
- Mid $c 0.40s should act as a wall of support (IPO lvl, strike price of warrants)
- Huge discount of 55%
- If this discount persists, company may be taken out/raided below NAV
All this makes me believe upside is huge (up to $c 1.25) with limited downside. I was DSM shareholder last summer before and I bought back my DSM shares this week at
.48 and will add on any dip.
Remark: I am taking 1 cad = 1 usd