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Congrats to r1!
RD I notice two references here t hat seem strange indeed. Here is one:
"On December 20, 2023, we entered into an agreement (the “Transfer Agreement”) with the holders of the 5,750,000 Class B ordinary shares issued by us prior to the IPO (such shares being referred to as the “Founder Shares” and the holders of the Founder Shares (including the transferees described herein) being referred to as the “Sponsor”) and IREEM LLC (the “Investor”) pursuant to which the Sponsor agreed to transfer, subject to approval of the Extension Amendment, to the Investor 5,455,000 of the Founder Shares held by them, the 6,000,000 ...." Later there is a similar reference to December 21, 2023." First I thought that the reference to 2023 was a misprint. But it is hardly possible to make the same misprint twice. The date is one day later in the second reference than in the first. Is it possible to enter into an agreement one year in advance? Is there a risk that what seems to be a capital mistake when it comes to the dates will make the agreement invalid?
downthehatch A few days ago one or several buyers purchased almost 100,000 shares. The pps did not move much. I rather agree with the poster who stated that this stock makes little sense - it moves in the opposite direction of what seems reasonable to expect.
The strange thing is that the shares that are available rignt now cost a lot more than shates traded at yesterday at the same time that there seems to be no news.
DSRT Is the ticker of the Norwegian company I refer to in part of my post.
I refer to both because I reply to a post that refers to both. In the first part I refer to HERB as far as I remember.
The recent purchase of shares by the dominant owner seems to have had a very good effect on the pps so far - much more so than the purchase of almost 100,000 shares actually.
RD I see that you have chosen to follow this stock closely. You are correct. Revenues were symbolic in both the second and third quarter. My impression is that management has no good understanding of attitudes in Arab countries. There is a joint venture with a big native company in the Emirates. Trust means a lot in these countries and it takes time to build it. Things have moved very slowly this year. It is the partner in the Emirates that decides the pace. Based on past experience it now looks uncertain when the pace will really pick up. It may happen within some months or it may take longer. But I take it that rational behavior will win the day after some time. But so far I have been way too optimistic in assuming that growth would be very fast thiis year because the effects of the liquid have proved extremely good in a substantial number of pilots.
With my assumptions this company would seem to be extremely attractive. It seems very cheap indeed even based on reported earnings. It seems absurdly cheap based on net assets of more than 20 dollars per share based on off-balance sheet assets. There is so far just one problem. The stock market totally ignores the latter, but this makes the stock absurdly cheap. When it comes to my Norwegian favorite I have based my timing on an extremely wrong assumption: that farmers and others who control very dry areas are rational people and that they will eagerly start using a liquid that will greatly enhance the profitability of their farming. They have burned their fingers in the past it seems and they want the liquid and its incredible effects demontrated on their own soil before they try it in significant volume. This takes a lot of time. For this reason the company cannot expect to get substatial revenues in the USA before 2024. Only time will show if HERB does any better. So far we have waited quite some time for the "promises" we have received have materialized. I have the impression that this company is in a Catch-22 situation. Is it possible to tackle this challenge in a successful way. The stock marked says a resounding no by its pricing of these shares. I still have hope that it will prove a good investment. At least these shares are even now worth more than twice what I paid for most of my shares.
Interesting
Based on reported earnings per share and a stock price of 10 cents per share I have the impression that the p/e ratio now is as low as about 2. Let's assume that the pricing of this stock was only based on off-balance sheet net assets and those were 25 dollars and that there is a one percent chance that this is correct and t hat there is a 99% chance t hat those assets are worth nothing for shareholders this stock would logically seem to be worth about 25 cents per share.
gosox He does not expect BDCO to go private either as far as I remember. Going private would seem to be a very attractive scenario financially. What looks the most probably explanation for the purchase of the shares a few days ago?
My theory
You may remember that we were told some weeks ago that the company is in negotiations to achieve some major financing that will do away with its debt that is in default and provide som fresh money that will be spent in various ways. My theory is that the owner of the bulk of the shares in this company bought a substantial bunch of shares very recently not to increase his stake per se but in an attempt to raise the stock price s good dfeal. The fact that the stock market takes such a dim view of the future of this compåny by according it an extremely lowly rating as far as the stock price is concerned suggests that the future for this company is reagarded as bleak indeed. It may not look attractive to provide financing for a company in this type of situation.
When the leader of a company buys a significant number of shares it normally suggests that he or she is very optimistic about the future of the company. It is common that this causes the stock price to surge more or less. This may or may not have been the motivation for the purchase of shares by the prime insider of this company. If he continues buying a lot of shares it will undermine my theory and bolster the theory that the intention is to take the company private. If he does not buy more shares it may make my interpretation look more convincing I think.
This is encouraging information for several reasons. For one thing, it is promising that a person who presumably has more inside information than anybody else is buying more shares. For another, the purchases reduces the float a bit.
downthehatch The reason may be that somebody bought almost all the shares yesterday and bought all the shares he or she wanted to buy. I think it is unlikely that many different people bought all those shares. These days it is normal that few shares trade. If anything is strange it would be that somebody bought all those shares I guess.
Moreover, more people may be interested in investing in gold if it turns out that inflation will continue at a higher level than before since tnat may make gold look more attractive as a relatively sfafe haven as far as preserving the value of one's assets is concerned.
Dear Laxmi, thaks a lot for the clarification! I guess it may be useful for othjers to know too. It is not always easy to evaluate the implications of new information.
In my view net profits are usually more important than gross profits. But based on net profits the shares are extremely cheap too. I expect earnings per share to be much higher than the current pps.
50,000 shares traded and the pps does not move much. Either there is heavy naked shorting or unhappy caampers using the buying interest to sell some shares.
The number of the float is of course so much nonsense. For periods this stock has traded as many shares per day as the alleged float. What I wonder about is what has happened in the second half this year. Next to nothing?
Is the time for Cow Capital to start operating extremely promising now? Here is a quote from a financial Norwegian newspaper today:
"Snart vil hedgefondforvalter Tor Svelland tilby gullhandel på Oslo Børs: – Det er på høy tid
Hedgefondforvalter Tor Svelland tror sentralbankene kan ende opp med å måtte kapitulere i kampen mot inflasjonen. Nå vil han tilby norske investorer beskyttelse i gull – som skal lagres i et hvelv i Sveits."
Before long the manager of hedge funds Tor Svelland will offer trade in gold on the Oslo Stock Exchange: - It is high time to do so. Hedge fund manager Tor Svelland thinks central banks may end up capitulating in the fight against inflation. Now he wants to offer Norwegian investors protection in gold - which will be stored in a vault in Switwerland."
Cow Capital may soon offer a better alternative?
RD The implications of this seem pretty unclear to me. The reference of cash already being used in the Chinese operations suggests to me that small sums of money are involved. After all, the Chinese activites t hat are reported are quite limited. Moreover, the crowd financing activity is of modest proportions. All indications I am able to see in what is mentoned by the company suggest very limited sums of money rather than hundreds of millions of dollars.
Actually I think the average of my almost 8,000 shares is about the same. So far we have had to be modest when it comes to the stock price of this company, lol. I hope t hat will change in a big way next year.
This means that the value of our shares is up 100% this year, which is not too bad.....
Catch 22?
Our problem In my view earnings per share and the changes of them from quarter to quarter matter much more than revenues if a company is reasonably profitable. Why is the pps so low? I think there are many reasons for it. I think the pps would have been not miuch below 2 dollars per share if the earnings per share had been around one dollar per share, which was the expectation based on the prices of crude oil, jet fuel and diesel during the third quarter. Instead earnings per share were not even 50% of what they were during the preceding quarter. In such a situalton it is normal that the stock price reflects the weak performance when it comes to what matters most.
Why were earnings per share less than 50% of what we had reason to expect? There could be several explanations. One possibility derives from the fact that the price of crude is down a good del during past months. If the company has speculated that that price would increase and has bought substantial quantities on that basis a big crack spread could possibly result in a loss instead. We have to see the numbers for the current quarter and what all the stored crude sells for once refined to get a better handle on the situation.
If future earnings per share come in at a much lower level than expected on the basis of the second quarter it will take a lot longer to pay back the debt that is in default. The uncertainty in this respect probably wiighs on the pps. Generally refiners are regarded as being in a sunset industry which results in very low multiples. If I remember correctly RD not long ago mentioned an example of that from Europe. It may also matter that this company is still on the otc which does not seem a good place to be right now. If there has been heavy naked shorting in this stock this could have had a strong imåpact too. Thus there are lots of reasons why the pps is so low in relation to earnings per share so far this year.
RD The name New York is intriguing right now. There is a stock exchange located there...
RD I thought you would have done that in 10 seconds or less...... BDCO does not exactly look vbvery promising these days. I thought you would have expected your investment friends to be very flush with cash before they sued HERB.
The same sort of thing happens again and again and again.....
RD It will take some time before we have lots of tradeable shares in CC.
RD That was faster than I had expected. I have taken for granted that it will be a one-off distribution. The value of the shares would be equal to cash dividends for more than one year. Once ITUP gets a regular listing on a stock exchange it will be possible without a prodblem to start paying ordinary cash dividends.
RD Thanks a lot! I still assume that the shares we paid 15 cents for will still be converted into shares in Cow Capital that others pay 10 dollars for.
RD I wonder how to interpret the role of IREEM LLC, which I have up to now taken to be a sort forerunner of Cow Capital. I had the impression that one share in IREEM LLC would result in one share in Cow Capital. Now it is called the sponsor of spacs. It is also stated: "20% sponsor capital". What does the 20% refer to? I also wonder what the sharecount of IREEM LLC is (just a rough estimate).
I get the impression that IREEM LLC (or its shareholders) will not just have a stake in Cow Capital but also in future SPACs. Thus there are several thinga that are not clear to me.
thirdman I t hink this is a complicated question. Your reasoning implies more or less that the refiner buys and refines the product largely simultaneously. If this company bought crude some months ago when the price was a lot higher than it is now there would be a loss even if the margins had improved somewhat in the mean time It has been stated that this company has crude to the tune of 20 million dollars that has not been refined yet. If that crude cost a lot more than today's price there may arise a loss when the refined products are sold.
It should also be taken into consideration that the market for crude oil is very negative today. One reason is the political proflems faced by the leader of China due to all the protests in relation to the worseing covid-19 epedemic.
The 19 million inventory. I have suspected that this relates to fuel oil than will presumably fetch the jhighest pride in the middle of the winter. Here is what I have just come across: "Current futures imply price premia for middle distillates, such as heating oil, will persist in the medium term. Heating oil-WTI spread averages almost $40/bbl of heating oil in 2024–2025, which is twice as high as the typical $20/bbl at midcycle. USGC heating oil spread is more than $70/bbl."
gosox Yes, It would be a new project. I myself prefer a less risky approach. In a best-case senario brinkmanship would pay off. In a worst-case scenario it could lead to bankruptcy. Usually I go for high risk but not in this case.
RD You may of course be right. Another possibility is that the plan is to produce oil for heatning during the winter when the price is presumably at its highest. I am against brinkmanship in t his industry. This company has enough debt already in my view. I go for a more conservative approach than you do in this case.
gosox New projects This is not a business with promising prospects. I am therefore sceptical about new projects. I would prefer that debt would be paid down to the extent that is required for cash dividends to be paid to the extent that is possible.
Enterprising specdulator I have the impression that you ignore the potential naked short position. With the more speculative stocks it is the possible illegal naked short positiions that are of intrest. The challenge is tjatusually one does not know of these are a figment of the imagination or not. I guess that is the case with tnis company as well.
It is encouraging that we get some information about the efforts to deal with the more or less defaulted debt. This information in itself should lift the pps somewhat. Moreover, we learn that we may get even more information in the time to come. This may make some purchase ahead of expected information that this company is out of the woods when it comes to its debt.