"Those posts are consistent., no return on equity investment is...

"Those posts are consistent., no return on equity investment is certain hence the use of the word potential."

Obviously, the precise future return on capital employed is unable to be known, but precision is not the issue; merely knowing whether the ROCE is going to exceed the company's cost of capital is what is required. Because if ROCE falls short of WACC, the value of owners' capital is going to be destroyed.

Not just that, but with the market value of APA equity being price at circa 5 times the book value of equity, valuation theory holds that ROCE needs to be meaningfully higher than WACC in order to prevent Price-to-Book contracting.


"You still aren't addressing why you're taking on additional unnecessary risk to try & take advantage of a pricing inconsistency in bonds."

Recall:
APA is a bond proxy trading at a discount to bonds which, themselves, are considered to be undervalued.

I'm unsure how it is humanly possible to distil the thesis to anything simpler.

I can control what I write, but I can't control what you can't understand.


(Moreover, it takes a pretty bizarre interpretation of the concept of risk to conclude that buying a discounted bond - in a bond market which itself is discounted - equates to something resembling "additional and unnecessary risk". On the contrary, objectively, it would be a struggle to fund more riskless equity investment.)


For further edification, if needed: https://hotcopper.com.au/posts/74425068/single
(As was noted in that post, I've been buying the stock, albeit not with Braveheart-grade ferocity and fervour of my co-respondent. Hence, "I think it's merely an OK investment proposition". OK investment proposition implying modest upside, but with low investment risk.)

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