Here is an example of uneconomic selling–the price decline has nothing to do with the underlying operations or the price of the product the firm is selling (precious metals and aggregates). The marginal seller sets the price no matter how unintelligent. Seth Klarman always sought out these types of situations.
If you have an understanding of the company’s fair value, then you perhaps get a gift. I heard from the grapevine that John Doody of The Gold Stock Analyst put out a sell recommendation because Golden Queen would defer paying dividends once the company reached full production so as to explore and expand the existing mine. His newsletter does NOT cover explorers, so he recommended selling. The decision was correct for him, but his subscribers all tried to leave the room through the same exit. GQMNF traded over 6 million shares or about 100 times the normal daily volume of 60,000 shares. There is more selling likely over this week and next.
Correcting on Golden Queen (GQM.to)
“If the massive sell-off today was due to a newsletter writer’s recommendation and you are a subscriber, ask yourself if you really should follow his or her advice on small cap stocks with limited liquidity. You’ll overpay to establish the position and you’ll get crushed when the herd heads for the exit, which may explain the action today.”
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