and remaining down for 5-10 years as part of the downside of the commodity boom/bust cycle.Saudis not only want to bankrupt the frackers (which will take a couple years), but completely discourage them from ever coming back during our lifetime.
This group of Board members is not the most proactive bunch. Take a look at their ages. Just waking up in the morning is a major success story. Most of these guys will probably take illiquid, under appreciated stock to the "Great Beyond", or leave it as a mild nuisance to their heirs. With so little time left and knowing you only live once, I for one, would want to have one major victory to be remembered by, a legacy. This company seems to be merely an avocation for them, a more interesting, more palatable alternative to shuffleboard or bingo--not much more than that.
Even w/a turnaround clearly in place, better numbers, better visibility, insider buying etc. The only thing I can guess is that there is some perceived concern (rightly or wrongly) a Republican Congress will clamp down on all Federal spending for the next four years. What is completely clear now is that this is an event-driven stock that the Board of Directors will have to take action on the create shareholder value via some transaction. Maybe the stock has just been beaten down so long the credibility is shot as a public market vehicle. Never mind, the value is still there. The BOD just needs to unlock it. Most of those guys ain't getting any younger. They won't wait too long. That's my guess anyway.
Looks like a shared grant won on the basis of a competitive application in Poland. Relates to permafix medical's new process for Tech-99 production. A little surprised they did not PR this yet. Nice catch by you gonuclear.
The company (which has no debt) has a little over $2.50 per share in working capital. The remaining assets--- three company-owned buildings, design and assembly facilities, equipment, patents, tank monitoring contracts, customer lists are likely worth a bit more than the $0.28 per share (roughly $800,000) at which the market is currently valuing them. Even as a shell company, someone could buy the working capital, the physical space, and junk or fire sale everything else if they wanted (as it consistently produces no net profit), and avoid the cost of going public for a rather minimal investment. Turn it into a wine warehouse, or amped-up tech garage for a software start-up or whatever.
Time to take control of the company, Board seats, and seek sale of the enterprise. Any proxy contest to affect same would be well-supported by a majority of shareholders in all likelihood. The largest shareholder has been sitting w/dead, illiquid stock since he acquired it from Wells Fargo over a decade ago in the summer of 2004. It won't take much to convince him, or any other longer term holder. Get out there and sell this for $4-$5 per share to someone. It's either that or sit w/illiquid stock that trades around net working capital per share for another decade.
If the company came through with the earnings, they would not have to participate/jawbone prospective investors in any Conferences. Who wants to hear the helix story again for the umpteenth time. Just give me some good earnings results---quarter after quarter. Stay in Plymouth, save the T&E cost, do your job and post a strong bottom line.
More than 2.8 million shares were just voted against nearly the entire Board of Directors, who barely survived the November vote. You might have to convince those holders the stock is worth hanging on to. I think some of them may be selling at every opportunity. That's a lot of stock to work through on an average daily volume of about 20,000 shares per day--even if only half of that volume is disgruntled stock trying to find an exit. This could be buried for a while longer. However, I would not rule out a coup/proxy fight to force sale of the company or removal of Board members. The votes are there to accomplish it without a lot of effort or arm-twisting of the non-voting shares from the November meeting. Stay tuned, you may not have to wait 3-5 years. Every down day will bring even more pressure to bear on both management and the Board, and more motivation to those who want to see a change made.
But the public market is only one way to value a company, and often it is not fair value. The company execs can take it private, lever up, and then run it out of the public arena and distribute the free cash flow to themselves proportionately. They can sell the company to a PE firm, larger industry player, or even a private individual given the small dollar amount involved. What you don't want to do is sit w/illiquid stock at 70 years old w/no where to go in a forced sale to deal w/legacy concerns. Of course, everyone thinks they will live forever.
Almost 3 million shares in the hands of dissatisfied investors based on that shareholder vote. That could weigh on the stock for 12-18 months. Not an easy security to get out of in the open market.
Awilco can easily pay the near the current dividend amount for the next four quarters. Whether they should is the question. I think Tom Petrie is right that unlike the last decline in oil price w/the financial collapse of 2008, this decline will last a lot longer. The Saudi's clear intent is to permanently break the back of the N.A. frackers. That will take at least two years, because many of those fracking producers have hedges in place to protect them from a severe oil price drop for 2015, and many won't even face financial jeopardy until well into 2016. Two years is also the time frame for how long a general populace will accept austerity (in Saudi Arabia), or more aptly, relative austerity as they live pretty well otherwise. Witness Greece as the analog. The populace will grit their teeth for about two years, but then you hit the breaking point where something gives. It's a game of chicken as to who blinks first, the Saudi monarchy or the Fracking companies, and it will get intense by early 2017. I think most shareholders in Awilco could live w/a 50% dividend cut to nearly $2.00 per share annually for 2-3 years. That would be what I would suggest.
Jim Cramer, while not outright dismissing it, seemed to think the forecasts of oil at $14/bbl. were not likely as "everyone would go bust". So that's something. $26-$28/bbl. seems like a more reasonable bottom IMO. Too many people are looking for oil price to hold the double bottom at $33/bbl., and markets are prone to excess, so capitulation in the mid-to-high $20s makes some sense. Too late to sell, but too early to buy in this sector. They won't ring a bell at the bottom, but the knife is still falling.
Press release contained the "V-word". The single most important word for this company given the last two years. You know the word to which I am referring.
Not sure I'd want them to have the Helix technology. The Chinese have institutions dedicated to teaching and using reverse engineering to steal technology. It's kind of their forte. Ain't going to be any patent protection in China. Wasn't it about this same exact time last year that PRCP announced a big European contract w/a premium German auto manufacturer that popped the stock $5 or so per share, only to lose all the gain and then even more when installation delays made it a moot point. The best laid plans..... From the volume today, although the share price is higher, no one is really buying this news w/size purchases of stock. Once burned.... the company will probably have to deliver actual bottom line earnings for a few quarters before credibility is earned. I'm from Missouri on the news.
The discussion has probably shifted from what the two injection wells will contribute to overall earnings----to how much it will cost the company to shut them in. The Saudis are adamant about dismantling U.S. fracking permanently, no matter how low an oil price or how long it takes. Demand for oil futures in the $20s/bbl. is really accelerating. That price should accomplish the Saudi's goals. $40 is obviously not going to hold and everyone is targeting a double bottom at $33 per barrel, but markets are prone to excess and the price will overshoot that to the downside in all likelihood. But the stock price already has discounted all of that with the company selling at nearly 20% or so of Book Value. Golf courses and a hotel and related facilities have to be worth something as does net cash on the balance sheet. It's not like the company is riddled w/intangible assets. Hard to overturn downside momentum w/a fundamental analysis or breakup value analysis though. The stock probably continues to work lower to force that hand of Mr. Klingle and the Board. I would have offered to take it private already if i was him.
Kilduff is targeting $33 per barrel, I think Gartman is in the same range, but Stephen Schork says he will only feel comfortable saying a bottom is in when it hits $0. Obviously he is being hyperbolic, but you should note that oil futures in the $20s range have been seeing a real big pickup in interest recently. It could be hedging, or a speculative bet on an Armageddon scenario of widespread oil exporter defaults (Russia,Libya, Iran, Iraq, Venezuela, Indonesia). Canada, Brazil and Mexico will also face mucho pain. Hard to tell if any hedge fund is in trouble yet, but if someone has a heavy bet on Russian investments, foreign currency, or energy it could be hand-wringing time. This is the black swan as energy reverberates through everything (bank loans, sovereign funds, hedge funds, retirement accounts, and geopolitical balances of power). Gradual declines of the same dollar magnitude can be dealt with, shocks are a different story.
Depends on your time frame and where you bought. Those that bought at $26.43 a few months ago might argue as to whether a drop to $10 constitutes holding up. Separately, I think some major shorters may be targeting large hedge funds that have significant long positions in energy stocks and that employ leverage. The bet is that the hedges will have to unwind the long if they can create enough pressure or a "run the the stock" , an unwind forced by either excessive leverage held by the hedge fund or mandatory redemption calls by fund holders due to poor performance. While the short raid is played out on stocks like SD and NADL, there is still plenty of room in hedge favorites like RIG, SDRL, DO, etc.