>>You always used to advocate improving company fundamentals as a major reason for SP appreciation. Do you still see that as the case in the current mining/POG environment?<<
I still believe that my basic premise is correct ... if a company is undervalued and profitable, the market will respond. I don't think it should matter much where the sector is going, so long as a particular company is doing well. That's not to say the performance of a sector doesn't come into play. If a sector is down, it's all the less likely any of the companies in that sector are doing well, and if there is a company that's doing well, it might be ignored due to the fact that individual investors and carefully planned investments in individual companies (e.g., the kind of transactions discussed here) make up a very small portion of the overall stock market. We don't have the money to throw behind investments that they do and they're not looking for any upstart gold in the jungle.
However, although sector economics play a role, a profitable company should still do well, even if sector forces bring it down a bit. For example, if the market for shower toasters is constantly losing money, but one shower toaster company does consistently well, year after year, then it should be valued reasonably close to other companies of similar PE ratio. If not, it can invest its profits into a buyback and limit the supply of shares, driving up the SP by default.
IMO, the reason Petaquilla isn't performing is (1) the PoG corrected, (2) the company isn't performing according to their past projections, (3) the sector is down, (4) P&P reserves are limited, (5) they're not buying back shares, and probably a few more things that don't come immediately to mind because I haven't been paying as much attention as I used to. Likewise, if the aforementioned factors were to be remedied, we would see significant appreciation in the SP. IMO, the second-biggest factor involved (next to PoG) would be to increase the P&P reserves. They're working on that, which is great, but Inferred resources are only credited at 12.5% in market valuations and M&M resources are only credited at 50%; only P&P reserves are credited at 100%. If everything that's inferred at LP were suddenly converted to P&P, the SP would double overnight.
"I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it." -- Thomas Jefferson
