RE:RE:Q3Good concise comment. Kavern has a tendency to overthink things.
BNE is a bargain, but (thank you Mr Trudeau) there is no market for small Canadian energy stocks at present. I am sure there are institutional investors who are well aware of the values that are emerging, but none will move until there is an end-date for Trudeau's regime and a window to start accumulating in anticipation of a happy day they can mark on a calendar. Other potential catalysts include a normalization of AECO and or even a modest spike in WTI. But it is a change in Canadian political landscape that will be the real driver.
As is constantly observed, BNE is a very closely held stock. What little trading that does show is, in some significant measure, the short-trade crowd taking in each other's laundry and punishing the day traders. We should perhaps be grateful as without them there would be even less liquidity.
Because BNE has such a low share count the argument has been that there is no advantage to it in spending on an NCIB. But these have become so omnipresent that not having one invites the short trade to drive down the share price of thinly traded names, and creates other issues; not the least of which is unhappy holders. It is no secret that management is contemplating one in the near-term and the correction in share value that would follow could be very interesting to anyone who has bought in recently.
Debt paydown is harped on by those who have, apparently, not read the financials. Most of BNE's debt is term debt on fixed repayment dates. It is very high interest and is a factor in valuing the stock. They have to pay this off but can only do this on a fixed schedule over the next two years. Having the cash to make these payments is a management priority, but paying this down early is not an option. Instead, they have thrown this into capex, and the results have been very impressive. As the debt does disappear the financial metrics start to look like the good old days.
M&A is another area that is, in my view, a red herring right now: potential buyers are only interested in bargain (and don’t want to use cash) while sellers want full price and (and real money).
A few of us are using the opportunity to accumulate (i.e. invest), and averaging down. My read of the financials says that this will pay off soon, and well.