PNP: Making All the Right Decisions

RYAN ROEBUCK, M Partners (09/21/2010)
"At the end of Q2 the company reported an NAVPS of $2.19 and sector exposures of 36.1%, 23.8%, 13.5%, 10.5%, and 5.6% to the Precious Metals, Base Metals, Uranium & Coal, Oil & Gas, and Potash, lithium & rare earths sectors respectively. We view PNP as a very efficient way for investors to gain exposure to junior resource companies without much of the liquidity constraints which sometimes come from playing in this space.

PNP has a long historical track record of effectively allocating capital to segments within the natural resource sector, in addition to picking winners using bottom up analysis. . .When reporting Q210 earnings, the company announced a stock buyback to purchase up to 5M shares between September 1st 2010 and August 31st 2011. This buyback is an immediately accretive course of action to the company and shareholders as, at the end of Q2, PNP shares were trading at a 47.0% discount to its NAV.

Investors should take advantage of PNP shares trading at a discount to NAV in a sector that has seen a lift across the board, as well as having the recently started NCIB as a backstop and insider buying activity. PNP shares are currently trading at a 34.5% discount to our estimated current NAV of $2.79/sh and represent a good investment opportunity for those looking to play the junior resource sector with stronger liquidity."

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