It’s prudent for a company to retain a reasonable cash reserve to navigate the peaks and troughs. However, with the cash which continues to be generated has gone beyond a reasonable sum. Certainly a nice problem to have.
ATP has good people in management who are experienced operators within the pearl industry. They are appointed and paid to make smart decisions. Hence the decision to pull the pearls for the last auction when they felt they could get better prices.
Cash which is over and above a reasonable amount should used for growth purposes. This helps enable the company to be potentially valued at higher multiples as the company is increasing future revenue. To not do so, leaves the company to be reliant and at the mercy of pearl market prices.
Nobody likes a lazy balance sheet. So invest for growth, or return capital to shareholders. I say this as a general rule.
ATP Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
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