We expect upside, want to be optimistic while holding CAA Royalties. Solutions lie with management.
It has been mentioned and I agree since I also track these companies. "Franco-Nevada & Royal Gold both trade well over 40 times their earnings. Much larger companies one can argue but neither generates income in excess of $250 million and both have market caps into the billions".
Management -- to attract the institutional investors of these companies mangement must also step up to the plate.
1. A listing on the TSX. This is where institutional trades. Oft mentioned, never done.
2. Leverage of retained capital to diversify. Institutional will not risk on one mining play operated by HBM. CAA management must leverage and acquire 2-4 others producing streams of revenue. This reduces risk of the royalty stream. Just ask, possibity of a mine disaster or long term strike at one minesite?
3. Stock split - 2/1 or 3/1 -- creates larger float and ability of institutional buyers to average in verses existing tight float at CAA.
Last, we are investors on the front lines. We see the concern and failed support on bull runs. We know global economy is not running on all pistons. There is a disconnect to saving. Low risk investments pay nothing so those dependant on low risk investment income are not achieving an appropriate yield to spend money in the economy. Those with higher incomes seek higher growth but those securities have been devalued again in 2011.
Not all is fault of CAA management. However, surely steps 1 -3 could provide the catalyst to upside when glabal markets entrench into a bull run.
Overall -- management B- .
Cheers Manxcan