Short Sellers are laughing all the way to the bank
Two years ago nobody in his/her right mind would even think about speculating LGO to be below its book value. The downward spiral of Largo’s market value since its commercial independence has been absolutely insane for a company that had plenty of cash, no debt, strong fundamentals and a bright future. In fact, at the start of 2022 Largo even announced the official filing of a Technical Report indicating a US$2.0B after-tax NPV for the Maracas Menchen mine. Contrast that with Largo’s current market cap of US$97.3M. Actually the stock has been under C$5 in the past 8 months and mostly in C$2s since Nov 9 2023. Seeing LGO under its book value is bewildering. Seeing LGO under its book value for such a long period with no end in sight is insane. The more I average down the higher my paper loss. And selling to realize my loss is not an option that I can afford. Even the contrarian investors who jumped in recently saw their investment in LGO cut down considerably in value.
The paper loss facing Arias, the company’s largest shareholder, must be in the C$100M range. With the exception of short sellers who are laughing all the way to the bank, it’s safe to say that no stakeholder is happy with the existing crisis where both the unprofitable mining pillar and the under-performing energy storage pillar are struggling to survive, not Arias, not the BoD, not Management, not the shareholders and not even the analysts.
I’ve been with Largo since 2008 and for the time I have to say that the current situation of decreasing V prices, increasing costs, under-performing management and increasing pressure to support the expensive battery business feels to me like a perfect storm battering Largo’s financial health.
I just have to ask: Is the situation so bad that Lago, a micro-company known for its overly generous 7-figure executive compensation, can not even attract a decent CEO since the departure of P Misk in Feb 2023?
I thought that Largo could realise positive earnings in 2024 but the chance of that happening diminishes day by day starting with a challenging Q1-24. However a strong 2025 is still a realistic expectation, imho.
The pain is excruciating but I just have to be patient.
Btw, my ignore list is full of bashers as well as pumpers who bombastically say that they are ecstatic at every sp drop. I despise them all equally.
My 2-ct rant
DYODD