In the last few days, as we have been hammered by the shorts, I took to thinking just how hard it is to get something up and running. The likes of Da.... [he cannot be named?] et al do represent the body of the population whom I suspect have never tried to create or innovate anything, ever, in their entire lives. Perhaps if they had tried something and appreciated the difficulties they would be a little more tolerant. [In my life I had a couple of red hot go's and ended up just having to pull my head in]
No one in the business world is cutting anybody any slack, especially after the GFC. I surf through the posts in a number of companies [which I have researched in some depth] and everywhere people are screaming. I posted that I am 'all in', in Linc. A lot of thought went into that before I did so. I carried out that decision 12 months ago, so perhaps you can guess how far underwater I am. [I would like the benefit of hindsight ... e.g. the shorts, but things seldom work out that way] Despite all that I am not regretting my decision.
More than one reason decided it for me, but high up in the list was the fact that Linc was not going to go out of business, no matter how bad the crash became. That is not something that can be said for many promising business' which, but for the GFC, would now be flourishing.
Like you I will be disappointed if this deal with GCL falls over ... the share price will take another hit, etc. But, the fortunes of this company do not rest on doing one deal and this deal is not 'make or break'.
I think it is a setback for the company that they had to let 60 people go. I have no doubt they were very good, highly trained and experienced people, and probably very hard to replace when it comes time that Linc needs them again. By way of comparison, I was also at one time invested in CNX. They just did a deal which they are happy about. When I look at the deal they constructed, I sit back and say to myself, glad I bought LNC. The CNX deal is worth perhaps 10% of the GCL deal. It is a testament of the strength of Linc that they can strike a deal like they have, with GCL.
In coming years, it will be seen that breaking into the UCG business has very high barriers to entry. It is not only highly capital intensive, it also requires a lot of 'hands on' expertise. If the GCL deal is signed, Linc is a part owner of a business that will expand very quickly, once the first enterprise proves itself. Compare that to the CNX deal. What did they get ... 10 mill cash in hand and a royalty stream of 400 mill over 20 years. You can bet that a lot of that income will be weighted towards the back end ...i.e. not very much for the first few years. It is the size of Linc which gives them the ability to write up a good deal. They can back themselves up with 'boots on the ground', good personnel. CNX has to settle for a licensing deal and royalties because they are thinly stretched.
Same goes for the IP of the company. CNX might be applying for patents but when I went looking for them I couldn't find any.
I could bang on about it but I think you get my gist.
LNC Price at posting:
55.5¢ Sentiment: Buy Disclosure: Held
