Excelsior's Market ValuationI’ve been an investor for more than forty years. Until my investment in Excelsior, which I started acquiring in 2015, I’ve never invested in a so-called “penny stock”. Here in the U.S., brokers at the major “wire houses” (Merrill Lynch, Morgan Stanley, etc.) are prohibited from recommending them to their clients. The same holds true for certified financial advisors here in the U.S. For liability reasons, they tend to stick with the tried and true Fortune 500 companies or other large cap stocks. They are reluctant to step out on the limb and recommend low priced securities. By and large, institutional players such as U.S. mutual funds, unless they are structured specifically to invest in low cap stocks, shy away from penny stocks as well. (A twenty to one reverse split may be in order one day so the institutions in the U.S. can begin to get on board).
Since my foray into the Canadian market via Excelsior, I’ve been looking for another mining company just like it to invest in with the same fundaments – low capex, smooth path to permitting and financing, safe jurisdiction, “reasonable” number of outstanding shares, near term production, steep discount to NAV with a reasonable discount rate, skilled management, etc. I haven’t found one. Which brings me to what I want to talk about – Excelsior’s valuation and an observation about the Canadian penny stock market.
The way I see it, the Canadian penny stock market is essentially a market for day traders. “Hey, I’m up three cents, I’m out”. That sort of thinking. Those who invest long-term in real companies, (Excelsior is a real company) are few and far between. (There are a few on this Board, thankfully).
For this reason, until the company can sell itself as a great long-term investment (which it is), we’re not going to see the two to three dollars (USD) a lot of us think Excelsior is really worth. In my view, it’s worth that now when considering the seemingly universal view that copper will be heading toward $4 in the near future.
Of course, everyone should do their own due diligence, but Excelsior in my view is “on sale”. Whenever you can buy a valuable asset for cents on the dollar, I’m referring to Excelsior’s huge discount to NAV, my advice is load up. I am.