Why they short Senex, I don't understand?, page-17

I usually do not take into consideration the factor of being taken over when I buy a stock. But this time, I can't rule out this possibility. Senex has very low EV/2P. It has written off heavily all high-cost oil assets in the past 2 years. So, its 2P reserves now are all 'clean' and made up of all low cost but productive assets like the cooper basin oil assets, the Atlas gas asset, the Roma North gas asset, and recently, the Gemba gas asset. All its valuable gas assets are 100% self-owned and are linked to the East Coast gas shortage, which means more attractive selling prices. And, most importantly, the main ones, Atlas + Roma North have significantly de-risked and will begin to commercialize as soon as just a few months.

Senex looks like a clean company which does not appear to have any signs of earnings manipulations, and any hidden liabilities or overvalued, obsolete assets in its balance sheet. Its 2P reserves are twice as large as Cooper Energy's, but its market cap is only around $500 mil, compares to Cooper Energy's $850 mil. So, it is a 100% larger 2P reserves but a 70% smaller market cap compares to a company (Cooper Energy) that is not overvalued at current prices and has the support of some strong institutional investors.

So, yes, I agree with you, papabuy! If Senex's price remains in the range of $0.30 ++, the chance of it being taken over in the short term is high. Either the market will have to correct its price to a more reasonable level or someone will have to do that for the market.

But I do not advise investors to buy a stock because of it takeover possibilities. Just continue to keep track of its earning progresses and the stock will take care of itself. In this efficient market today, any undervaluations or overvaluations simply won't last long!