Recently I was doing a due diligence of the Canadian listed Asian oil producer & explorer Pan Orient Energy (POE); in the last few weeks POE was hammered to under $2 a share despite having a significantly higher net asset value.
This morning POE announced the divesture of some of its Thailand assets and the stock shot up by more than 60%:
In an efficient market the above should not happen, stock prices are expected to reflect the real value of the underlying assets at all times, but obviously that was not the case at Pan Orient.
EQU is experiencing the same mispricing, the current stock price is not reflecting the value of the cumulative cash flows to be generated from our asset base; one morning in July or August EQU will announce a divesture or a deal, and similar to Pan Orient the stock will shoot to much higher levels.
Don’t get sucked in by the market inefficiency and pessimism; EQU is worth substantially higher than its current stock price.