RE:Income tax assets greater than the value of the SP Hi lifeisgood1010. Everything you said in your response makes sense, but just a few clarifications. First, I was suggesting that the Southern family could easily buy Akita through their ownership of Atco Ltd. shares, not that Atco Ltd. would buy Akita. Sentgraf Enterprises Ltd. is a holding company for the Southern family. Sentgraf currently holds about 26.7 million shares of Atco Ltd. with a current share price of about $38 per share. Thus, Sentgraf holds about $1 billion of Atco stock. With a 5.2% dividend for Atco, Sentgraf would collect about $52 million in dividends per year. It would take less than 18 months to raise the $73 million in cash dividends for Sentgraf to purchase all of Akita’s shares it does not own, at $2.18, a 50% premium to the current $1.45 share price.
You said you could “understand the selling price if you would think that this company is not profitable and is going under“. Actually, the $10.90 share price is the liquidation value of Akita as it has no reference to earnings. Your example is just selling all the assets and paying the liabilities off, the same as you would in a liquidation. There is no value placed on yearly earnings in your example, only on the values of the assets/liabilities.
You said “My biggest concern is the low price of nat gas.If it stays low for longer, I wonder if it will have a big impact on drillers”. This is why it is great to own drillers as they can drill for both oil and gas plays. So when the price of oil is high, oil companies will be mainly drilling and when the price of gas is high, gas companies will be able to bid higher for drilling rigs. I would rather invest in drilling companies when the prices of oil and gas are low as the share prices of drillers will increase as oil and gas prices increase. I think the oil and gas prices right now are both quite low, especially natural gas prices. Also, LNG Canada will start importing liquified natural gas from Canada next year which will tremendously help Canadian gas companies resulting in increased drilling demand and much higher rates for drilling.