RE:RE:RE:2nd quarter report
firecracker74,
You are right. This stock ranks as the second most undervalued junior gold producer. Why does it have such a low market cap? As a long term shareholder since 2014, here are my 10 reasons why the stock is still trading below its 2008 lows:
- This is a conservative company, and the market hates conservative stocks.
- Copper has been in a bear market since 2007, and the market hates copper stocks.
- This company has a majority shareholder which controls the Board of Directors, and many investors don't like investing in stocks that the shareholders don't control.
- Political Risk--Bolivia is perceived as a high risk jurisdiction.
- Complex financial reporting--This is a stock which the market doesn't understand because it is non-linear, and the market doesn't like complex stocks.
- Price suppression and short interest--As bullish as the set up is for this stock there are still 16 short trades on the TSX with a volume of 40,000 shares or 6.1 percent of shares traded in the last 15 days. Who would be dumb enough to short the most undervalued major gold producer on the planet? The answer is 16 dummies!
- MD&A Risk--This stock is so undervalued that there is a possibility that your shares could be bought out before this stock hits its intrinsic value.
- Complex flow sheet--You need to be a metallurgist and a geologist to understand this stock. The market clearly doesn't understand this stock.
- Conservative Accounting--The CFO at Orvana expenses everything in the current quarter which makes the stock look worse than it actually is.
- Zombie stock status-- For better or worse, the market assumes that a stock with a low valuation is ultimately headed to ZERO, and therefore is not worth investing in. Hence, the thin trading volume and the lack of investor interest in this name.
Each one of the above points is worthy of its own post, and I will address each point with a subsequent post. But the bottom line is that the market is a slave to collective bias and crowd perceptions, so it takes an exceptional investor to be that little kid who yells: "The emperor has no clothes!"