Duxton should be a climatic-cyclical company. Unfortunately,...

Duxton should be a climatic-cyclical company. Unfortunately, management is trying to run it like a REIT, and water is not the same as land when it comes to values and rents.

As far as I can tell from their financial reporting, they are borrowing money to pay for operational matters. Essentially, they have borrowed $12m to use for $4.5m in asset purchase (fair enough), $1m in share buy backs (not sure why, but presumably to try and close the NAV vs Share Price gap?), $3m in dividends (never borrow to pay dividends!), and operational losses ($3.5m). And now they have extended beyond their $100m loan they are going into financial derivatives to generate more cash.

The cash flow statement is much more important than the profit and loss, and it really illuminates that management is so stead fast on paying dividends they are willing to sacrifice their balance sheet for it. Quite a risky game to play, even if they are at the bottom of the cycle. Would be better off to invest their dividends and share buy backs into more high security water assets that they can really benefit from when the rain stops.

I would love to know what any holders out there think. Seems to me, really good business idea with poor capital allocation?