RE:Comparative Story.mercedesman wrote: A poster on here (Rock Lobster?) pointed me in the direction of another undervalued Holdiing Co. with a symbol ELC. (note: this is not a recommendation for this Co. as an investment).Given that it was a gold investment banker/holding co. , it was more up my alley, so I checked it out. (note: ELC was and is to Gold equities as QCA was is to Cannabis).
At the time the stock was trading at .44 - .48 with a NAV/sh of over .60. So being an investor that is attracted to value, I did a bit of DD and I bought some in the mid to high forties.
Anyone folowng gold knows that the price has generally been falling from Aug 2020 until about April. Nevertheless the Company was able to: push up earnings especially before the fall, pay a dividend, and educate shareholders as to their portfolio..
Recently they reported NAV/sh of around .68 and eeked out a small income on the latest Qtr. They also paid investors a special dividend based on 2020 performance. I exited the last of my ELC positions in the range of ..72 to .74. Why? Because they were finally trading at a much deserved premium to the NAV/sh. They likely will continue to command a premium, but again this is not a commercial for ELC.
It's simply a comparative story to QCA, just with a different industry focus, and a different experrience for the average investor. It should be noted that in a down market for gold, ELC was able to close the discount (SP to NAV/sh) and trade at a premium. Qca, in an up market for Cannabis, has not closed the discount at all.
We pay for a good manager to (1) beat the market sector (more often than not), (2) to get access to ground floor opportunities that hopefully will eventually pay off, and(3) to diversify our risk (across mulltiple co's within a sector, different countries ,etc). In other words, a good stewart of the assets, commands a premium and many investors will and should pay for that. What are we to make of a discount that is not a short term anomoly (which of course can happen from time to time in an imperfect market)?
Luckily ELC rectified the discrepancy and I was able to benefit as a shreholder. Not so here...so far at least.
MM
I feel this could be posted weekly. Also a reminder to deep value investors that these things take time, and those searching for deep value may find things long before the market. At least we have no debt on the books so that is very positive for hedging our bets.