As a thought exercise, what is the fair value of a project with a 90% chance of being worth $1b and a 10% chance of being worth zero? If you were presented this bet with an investment cost of $250m-$400m, is its worth taking? What if the probability was 80% or 70% for success? Economically its sensible to make an investment of even $400m with that payoff structure, but there is a chance it doesn't work out and you lose your entire investment. If someone took this bet and it didn't come off, they would have massive losses. It doesn't make it obvious they shouldn't have done so. It doesn't mean they have mental illness in making the investment. It may simply mean they either made an error in judging probability of success, or they correctly judged the probability of success and a 10% outcome event occurred. It may make them extremely sour about the stock that presented the "opportunity" and caused them loses.
From your last comment you do not appear to have any comprehension of this idea. When EGR ran to $1, I believe investors were simply thinking that the chance of EGR successfully implementing its portfolio of projects was high. They were wrong (in the short and medium term). This doesn't mean they had a mental illness.
EGR had, and continues to have a portfolio of potentially very valuable businesses that could if all implemented deliver multi-hundred million dollar EBITDA returns. The challenge has been minimal progress on execution. The obvious starting point to realise that potential is an operating graphite mine but due to complications in Tanzania's previous government, EGR looked to start unlocking the potential in different order then pulled the pin on that strategy in a horribly executed way. Its now looking increasingly likely EGR will start to unlock that potential with its Epanko mine project. Is it certain that Epanko will proceed? Nope. What is, and remains uncertain is the probability of success. You clearly have a view its low (making EGR over valued in your opinion).
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)