I guess we all have stocks that to some degree have felt like they've gone into the bottom drawer for awful long periods even if the fundamentals or the risk/reward outlook haven't really deteriorated over that time. A quick look at some of my own portfolio "gems" : PCL (5+ years), WME (5+years), SBS/CHN (5+years), EKM (2+years), UNX (2+years), GGG (2+years)...the list goes on! I was more fortunate in the EXT/KAH/URU story (18months) but there are those who were in that story for an awful long time before it ever truly turned the corner too!
And I guess that's the key, really. Look back at the prices of everything 12 months ago, then 6 months ago, and many of these firms were simply adjudged to be beyond any hope of survival. The charts of any of these stocks will show the wear and tear that one will have gone through emotionally and yet, here today, it is hard to deny that the fundamentals of almost each of these stories has improved be it through either resource upgrade or additional cash or more near-term potential upside from drilling commencement or whatever. So over time one learns that as long as the fundamentals improve and the company doesn't burn too much cash or dilute the existing shareholders to the nth degree in the meantime, there is a fighting chance. Let's face it, holders of any of the stocks I mentioned above are not in it for 20% upside!!
A price of 13c for WME is 2x what it was in March, it has cash on balance sheet to complete drilling, it has a new management team that is focused, it has learned (the hard way) that some strategic investors are not all that they may appear and so we can only hope that any other strategic investor will be of greater value, it is proving up additional resource with higher cut-off grades, it has renewed its licence thereby eliminating any concerns over the relationship between the Namibian Ministry of Mines and previous key shareholders, it may have the potential of some primary resource in its tenements.
A friend helped me to add exposure to GBZ at 2c a few months ago during their rights offering. Prior to that it was another one of those short-term hopefuls that ever so inconveniently slipped into the 90%+ down, long-term bottom drawer candidates! Maybe we get spoiled when the shares subsequently rebound 1200% from those lows in a matter of months. That is dreamworld investing by any stretch of the imagination. The human condition is to have a short memory, and in our frustration with WME, we really should remember where we were 6 months ago. I haven't lost faith and take the view that if a story has good fundamentals it will have its day in the sun.
Sometimes, it just requires patience and the ability to disconnect in the face of wider market pressures that are often hard to understand when compared to the way an individual story is shaping on a micro basis. I struggle to find many shares that have held their gains after terrific announcements in the past 2-3 months. It's not just WME.
All the best, G
Hang in there..
WME Price at posting:
13.0¢ Sentiment: LT Buy Disclosure: Held
