@zaidi675, My initial investment thesis for this company was for...

@zaidi675,

My initial investment thesis for this company was for value realisation from:

1. Monetisation of the factory through sale-and-leaseback arrangement,

combined with

2. Cyclical recovery in earnings


The first milestone was not met when they announced the details of the property sale, which was far inferior to my expectations. I guess what I failed to appreciate was that it was not a vanilla piece of real estate which meant the buyer pool was limited.

My experience has been that when you invest in these "turnaround" situations, you need to have very clearly delineated milestones and when those milestones are missed, you need to have a strong sell discipline. Otherwise you get caught in the value trap.

So, no I'm not still a shareholder in MCE; I sold out of my modest position when the property deal fell well short of my expectations.

Of course, I wasn't to know that the second milestone, namely the prospect of cyclical recovery in earnings, was later to be kyboshed by the very significant events involving Russia disengaging from OPEC which caused the oil price to crater, thereby putting a hold on investment in new oil capacity.