This illiquid $35M exploration company is very difficult to value but could be worth up to $75-235M.
Contango Ore has issued a press release announcing (A) its initial resource estimate and (B) the engagement of a “strategic advisor”. The CEO, Brad Juneau, has stated: “We feel we have reached the stage of proving sufficient known resources and defined upside to attract a buyer for the Company.”
I’ll start with the resource estimate.
I closed my position at $1.74-$1.9. I think that Selwyn’s current valuation is reasonable given that:
The stock closed at $2.12 yesterday.I would say that this trade worked out fine. If you had bought at $8 and sold at $1.74, you would have made a low-risk 9.25% return after the $7 dividend (all figures split-adjusted).
Long: LMCA
Short: JKS, CSIQ, SPWR, ZU, PCYO, EBIX (puts and common), AMT puts, TTS, YONG puts, AVID
Closed: KWG*, short NUS.TO, short BBRY, short CREE, short TLT
New positions I have initiated without doing thorough research. (I’m not kidding when I say that I haven’t done much research…)
HART is a development-stage company that has successfully grown replacement tracheas (airways) out of a patient’s own stem cells. These replacement tracheas are then transplanted back into the patient’s body. This is a huge improvement over the traditional method of transplanting a donor trachea, which requires the patient to be on expensive immune-suppressing drugs that shorten their lifespan and have other complications.
HART has a market cap of $38M ($4.77/share). At the time of the spinoff, the company had $15M in cash and had spent around $16.5M developing its technologies so far ($31.5M in total). Given the risks in developing this technology, I believe that this spinoff may be undervalued.
The idea behind this is to buy assets for much less than they’re worth. You try to buy easily valued assets (cash, stocks) at a discount.
I don’t really like this style of investing. The problem is that many of these companies have terrible management. The discount can be described as “here today, gone tomorrow”. Often the companies will do dumb things with their money (or funnel it to insiders) and shareholders won’t make much money. But here’s a list of them anyways.
