CANEXUS CORP 6.5 PCT DEBS T.CUS.DB.D

RE:disproportional reaction

[pm1231]

I would concur with your comments and add - this was an event driven selloff.   I think there is a lot of speculation that is moving the price downward.  The facts are straightforward.  Announcement on 40% cost overrun was made January 14th - price reacted - bottomed out at $5.48 - then recovered to high of $6.15.   CEO resigned - triggered a 17% drop in price to date from $6.00 range.....to the current price

Unless someone can tell me otherwise - there is no other material news driving the price apart from speculation....and I would argue a lot of that speculation has been factored into the current price - so the upside at this point seems compelling relative to further downside.  

If someone can lay out an investment thesis based on facts and analysis why the price would move to $4.00 - would love to hear it (most other comments seem to be opinions without the analysis)
 

As for speculation, perhaps the CEO was fired because of what is about to be reported this week.....maybe....but I mentioned the potential downsides in my previous post:

- Inabilty to get full utilization of NATO  - possible
- Delays with rollout of NATO - possible
- More cost increases - possible but not likely given the 40% announcement last month.

My bet (and hence my long position) - perhaps the CEO was actually held accountable for not informing the board in a timely manner of the 40% cost overruns .....and that everything else is on course - if so - huge upside from these prices - if there are delays or inability to get utilization - then there will be some more downside - but the risk reward at these levels are compelling.

Best of luck.