Hi Lou,
Just wanted to follow up on the MBAC Fertilizer article you wrote. Since then debt will be deferred which I see as a major win. There is some ear marked inbound cash as well. MBC is slated to attend some conferences soon.
Just wondering if your opinion has changed as it looks like the tides are turning. Maybe even a takeover candidate at some point?
Cheers,
Nathan
Hey Nathan,
Thanks for the assignment.
The only other time I undertook a research project centred on the potential for MBAC Fertilizer Corp. (MBC) was on Nov. 3, 2014. Dave wanted me to rate their prospects and identify if it was a good time to buy. The shares were trading for $0.125 and had been grappling with a decline that began in early February of 2013 when they traded for $3.87. A death cross surfaced in April of 2013 which should have been the green light flashing to hit the silk and get off the flight.
It was advised to look for another horse to ride in the fertilizer space as there were too many negatives to make MBC a viable consideration. The established downtrend, resistance along the 50-day moving average and the death cross were all working against this weak player. Retrospectively that was the right call as the stock hit a 52-week low of $0.03 in February of 2015. Hate when that happens.
Another investigation of the charts will help identify how best to proceed with MBC.
The three-year chart is a classic example of value destruction. The ongoing strategic review process that the company has engaged to find solutions to its issues has not translated into a rising stock price. In addition you may have placed too much value on the debt extension and the commitment of $16-million in working capital announced in October of 2014. Yes, it popped on the news but dropped within weeks. There is nothing on this chart to suggest a trend reversal.
The six-month chart is devoid of any signs of hope. Any moves to the upside or the downside are short and brutish making it hard to trade for profits. I reiterate my earlier analysis that MBC is a weak player and investors should only approach it with caution.
Make it a profitable day and happy capitalism!
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