RE: ship watch19 Jul 2021 23:06
I've thought about this a bit Maddog, I think there are a number of reasons i'd point to for why the sp is so far below what i'd say is fair value. If you look at investor behavioural bias I think there are quite a few things that apply to this situation:
1) I think It's partly because this is 100% owned by retail investors, who in general find it very hard to be patient and many tend to "trade" on emotion or hype rather than "invest" on valuations.
If you listen to any serious successful investor they will tell you the number one thing you need is patience.
https://www.thestreet.com/thestreet-fisher-investments-investor-opportunity/patience-the-most-underused-investing-skill
2) I would also say that the volume traded has been very low recently, I think that if anyone was to buy in serious volume we would soon be well in to the 30s.
3) Back to emotions, the longer the delay in signing the deal the more people get worried and fill the silence with bad news rather than good. This is known as "Negative Assumptions" even for example the SP is down 2% or there haven't been many trades. You may identify one or two on this board. The time between updates from management exacerbate this, but I stated earlier why I think this is.
4) Recent gains, Some may have already 2-5x their money and are willing to sell out because they are in profit and want to lock it in and don't consider the future opportunity.
5) People aren't rationally doing the probability calculations of the deal happening and fear of loss is more powerful than the chance of gain aka "loss aversion".
6) Uncertainty/complexity, clearly it's difficult to know precisely how profitable the project will be in future due to a great deal of variables (e.g future Iron and shipping costs), many will be put off by the mere mention of court cases, the effort / cost needed to bring the mine, port and railway to life and financing needs. Investors generally don't like uncertainty/risk and this is priced in.
7) Company History / Charts - The past share price performance has obviously not been great, this puts people off. There is clearly some distrust of management due to this.
All that said management "are highly confident that we will be able to execute a settlement agreement". Assuming this occurs I believe this will be an incredible opportunity for the shareholders willing to bear the risks and uncertainty and we will be handsomely rewarded in the near future. I continue to wait patiently for the good news!
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