OTCQX:GXOCF - Post by User
Post by
p.yuon Feb 10, 2019 12:21pm
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Post# 29343751
Extreme valuation discount
Extreme valuation discount There is little doubt that Granite's current share price represents an extreme discount to its value but that discount is well earned. First, let's be clear, oil price differentials were a big factor but management is responsible for sending out mixed messages and by not taking decisive action in 2018, the market punished them. They cut the div back in Oct 2018, a month later, they cut it again to ZERO. They were not clear as to why they did the partial cut versus a full cut and as year-end approached, they cut the DIV to ZERO bringing on a significant wave of selling due to year-end tax loss issues.
Their goal now is to pay down debt even though there were no signs or indication that the bankers were getting nervous. They did a PP at the lows and will now direct excess cash flow to pay down debt. That in time will improve the valuations and we now know that diffs have improved but when your valuation is pummeled to such levels as we see today, one has to question the logic of paying down debt vs buying back stock. Is there something in the reserves report that might unsettled bankers?
Granite has excellent properties suitable for royalty trust or dividend-paying O&G companies but the company needs to improve its valuation and reputation.