Vii, so is there any visibility on these next milestones, e.g. permits, operational start up, etc? Company has gone real quiet since IPO. So was wondering whether I missed anything and checked on their website. But no, under “news & updates” the most recent entry is 4 months old …
Fundamentally looks sound, operators know what they’re doing. But stock price has been no joy. Clearly no institutional support behind the stock. Almost no liquidity to speak of. Feels to me that we need to see the whole project move closer to production and generate some cash. Meanwhile we will see zombie price action.
“Agreed re buybacks and dividends. They should have done buybacks instead of dividends since COVID and concentrated returns for the faithful. No production is hedged currently.”
Not hedged? Again? Some companies never learn their lesson. They had plenty of time to collar Brent in 80s.
SS, inclusion in an MSCI index means nothing except the stock cleared a handful of purely numeric hurdles (free float, market cap, etc). To be included in a small cap index is a particularly low hurdle. No significant due diligence or vetting has taken place. No Morgan Stanley nor any other institutional expert has given his approval to anything. This is very blatant misinformation.
TM, agreed, returns in the regression have to based on total returns and therefore include dividends. However, even then I fear GKP will not outperform its physical underlying, i.e. Brent. I did the numbers quite a while back for 1y and 3y periods. GKP was lagging.
Hi TM,
Was too lazy to do the work since I could guess the outcome. If it is true for a 3-year period that’s pretty telling. Brent-$21 probably makes the negative alpha even more glaring. Another interpretation of a negative alpha intercept in a regression vs Brent is, that GKP management did not really add any value for shareholders because holding the underlying commodity outperformed owning shares in the company.
Well, Brent is back above 70 and yet here we re sub 160p. Just sayin’ …
For the more mathematically inclined, I’d make any bet that if you regress GKP weekly/monthly returns vs corresponding Brent returns, you probably end up with a negative alpha intercept. In other words GKP is risk-adjusted a worse investment than Brent outright. And that is a sad state of affairs. Naturally the compensation committee at GKP clearly doesn’t understand that.
Well, when you have a board and management that doesn’t buy back at these levels we can’t really be surprised by this decline. As I have mentioned countless times before, there are no marginal buyers left for this stock. And a small number of sellers can easily yank the price.
Buy backs now!!
The current board (except CEO & CFO) is a serious waste of shareholder funds. No leadership, no protection of shareholder interests, no ability to solve the problems at hand. What surprises me even more is that the top shareholders have not gone into activist mode by now.
The company can always issue more shares to satisfy LTIP claims. Either way fat cats will get their share. Share buyback beats dividends any day as long as the share trades at deeply discounted level.
As a side note, you guys may want to check out which directors are on the compensation committee and vote them out. Clearly an incompetent bunch. Alas, nobody cares …