Are my sums right? A share that is 83 times below it’s asset value?
I don’t usually buy shares as it’s buy and hold and sometimes you have to wait ages for it to move. I also think that shares are driven by fundamentals and news driven.. you just don’t know what a company may report!
My personality suits daytrading (though I’m not a Greg Coffey or Gordon Gecko) in skill, only ambition!
Anyway, about 2 months ago, I was looking at a share called Tower Resources and there was speculation that there were some large prospects there. I am not usually keen on buying shares for the reasons previously and also because I was one of the mugs who bought Marconi when it fell and fell and became nothing. I also bought some others losers in the dot bomb crash.
Well, I purchased the share at 3 pence and today, they announced that there was oil in their exploration areas and it peaked to 11.25 pence!! I put in just £1000 and at it’s peak today, it was worth just under £4000!!
I personally think there is more upside to come, if you do the maths they announced that they reckon that there could be 10 billion barrels of oil. They have a 15% interest meaning that they have just over a billion barrels for themselves. I’m going to take a billion as you’ll expect costs involved in getting the stuff out of the ground.
The current oil price is around $120 a barrel, we’ll use $100 as a lower end estimation which means that there is $100 billion of dollar signs sitting there.. that’s £50 billion of profits!
I’ve just look through my maths again as I can’t believe this is correct. The company’s current market cap is a mere £60 million (not billion) meaning the assets are 83 times cheaper than they should be!!
Hmm… I still think there is something wrong here as £50 billion sounds a bit too much… but I can’t work it out! Anyone care to see where I’ve gone wrong if I have? If not, then surely this must be the buy of the century?
Anyway, have a look at the chart today and the stonking 266.67% increase today!
