Undervalued or overvalued?, page-54

Hi Gazza, no problem. I can only assume he is busy writing up his next company report.

Not sure if many follow DCN, but I bring it up, because they recently undertook a huge capital raising ($98m) at a discounted price of 70% before it stopped trading earlier in the year. It continues to produce (not overly profitably right now, but.. poor hedging was a major reason) and, without going into detail, was basically sitting at an MC of around $220m, with next cash of $8m. Producing around 120k p.a at a similar AISC than Darlot.

The cap raising was at $0.30, and the stock, even though massively diluted, did not get down to that to that price (lowest was $0.34), and today finally moved higher ($0.43) in a big way. As I read it, those hoping to buy in around $0.30, simply did not get the chance, and are now playing catchup.

As I posted above, I see a similar outcome for RED, although its hard to know exactly when it will move, I have a suspicion, it will be very close to when the new shares list (12th May), which perhaps sound counter intuitive, but... when a stock is undervalued, and a sector is rising, well... it just means the price has been stretched to the downside further than most, due to the cap raising.

All speculation on my part.