Post by babybunnyon Oct 07, 2023 11:46am

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Post# 35674570
Still Plenty of Air under Velan?
Still Plenty of Air under Velan?So let me get this straight. Velan was trading at ~$5.25 in January before the takeover rumours started to swirl. That price imbedded not only the value of Velan as a going concern, but also the possibility (however remote) of a takevoer.
Fast forward to today, and from what I can tell the only thing that has changed is that the possibility of a takeover has been eliminated. So assuming $5.25 was a fair price in January, the fair price today is somewhere south of $5.25.
Furthermore, the body of shareholders now includes arb players who want to move on. Momentum is negative, and the mood of the long-term owners will be sour. Even earnings are unremittingly negative, and the unwelcome whiff of asbestos litigation hangs in the air.
The only price anchor I can see is a skimpy $0.12 annual dividend.
My expectation is that the share price will drift lower to around $4 in the coming weeks. This represents about a 25% haircut from the January price, and would bring the dividend yield to just 3%.
I would love to hear a counterargument to what I have laid out - a case for a $8 share price rather than $4. I am not currently a shareholder, and based on what I have seen thus far, do not expect to be. But I want to learn a lesson on how to pick up the pieces from such a shellacking.
Just my opinions of course.