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- Up goes the Gulf again
A few weeks ago I wrote about Gulf Keystone Petroleum (GKP).
Basically, it’s a high beta stock, and when there’s news it moves.
And this week it announced it was doing share buyback.
If you’re subscribed to my main newsletter where you’ll already know that share buybacks can be good and bad.
Good if they’re used to buy back stock that is significantly undervalued.
Bad if they’re used to artificially inflate EPS so management can get their bonuses paid out.
But this RNS makes sense.
The company’s liquidity position has continued to improve. As of 10 May the company’s cash balance was $98 million - up from $86 million on 20 March with the company having no debt.
So a $10 million buyback isn’t huge. But the board says this:
Given GKP’s weak share price, which the Board believes trades at a significant discount to the intrinsic value of the Shaikan Field and does not adequately reflect the near-term cash flow generation potential from local sales, the Board has decided to initiate a share buyback programme of up to $10 million.”
We don’t yet know the details, but it was good news, and an easy buy.
As I mentioned on Twitter, I’ve taken some off and now have a trailing stop.
And if the ITP starts flowing again then I think this stock can more than double - it’s a cash machine.
But punters have been high on hopium waiting for that news.
Me? I’ll just wait and pay higher if I have to. But it removes the downside and potential time wasted waiting around.
Traders need to be efficient with capital. Waiting around is not effective. Especially in markets like this when plenty of stocks are breaking out.
Here’s another thing I spotted..
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