Over the years, I've seen a lot of quality companies get thrashed by the market.
Whether it's because of a less-than-stellar quarter or an orchestrated attack by disgruntled shareholders or hedge funds, when a company's public, the risk of such events is just part of the deal. And you know this going in.
That being said, it can be very frustrating to watch a particular stock struggle when the company itself is solid. Certainly this is what we've witnessed over the past year or so with Western Wind Energy Corp. (TSX-V: WND)...
I've actually watched this company grow over the years — and even took a trip out to Tehachapi to visit one of the company's wind farms. I met with management and maintained contact with the CEO since 2007.
All in all, I've always rooted for this company. Its growth strategy was smart, its fiscal discipline was to be applauded, and its early entry in the wind space gave it an advantage over so many other firms that were late to the wind energy party.
So since 2007, we've shared the developments of WND with you — both good and bad. Some years, the stock crushed it... other years, it struggled.
But through it all, we've never doubted the value of the company (which unfortunately has never matched its share price)...
So when I learned on Sunday that the company and all of its assets were now for sale, I can't say I was surprised.
Last year, Algonquin Power launched a $2.50 takeover bid, but WND blew it off as it did not fully represent the true value of the company. Some were not pleased with the decision, and since then a proxy battle ensued to replace the board.
Now, I don't know the ins and outs of what went down, but I do know that the stock has struggled since then. So when the press release came out on Sunday, the stock soared. It's clear the market knows this stock is worth a lot more than where it was trading last week.
Quite frankly, it could go even higher. At the lowest-end possible, I don't see any justification for a price less than $2.50 — and that's still pretty low-ball.
Tom Konrad over at Forbes thinks it'll sell for more than $3.00 a share. That seems more in line with a rational value.
Of course, by the way this stock has been treated over the past year — like a ball of yarn in front of drunken cat — it's hard to know how this thing will end...
I know some of you sold after the initial pop. One reader was actually quite pleased, writing to tell me he picked up shares at $1.20. He's sitting pretty with a gain in excess of 66%.
I also know some of our readers agree that the company should get more than $2.00 a share, so those folks are holding out...
At the end of the day, it is quite unfortunate that it came to this. I've been a fan of this company for a long time, and I hate to see things end this way. Sure, we'll walk away with a few bucks — particularly if we see a $3.00 price tag — but the company's intentions were honorable, and its management was comprised of folks who actually believed in growing the company, instead of living only for the next quarter and trying to impress those who have no interest in the long-term sustainability of the company.
Obviously, we'll keep you posted as the sale unfolds.
Jeff Siegel