Monday, 25 February 2019

KFG Resources: Insider Buying Ahead of a Share Buyback on a Profitable Oil Company

Disclaimer:

This site is operated by Edward Vranic.


Any articles, tweets, stocktalks or any other form of dissemination in person or online are all the sole product of my personal opinion. I may hold positions in securities I mention and reserve the right to open, close, or modify positions at any time without notice. The information provided herein is strictly for informational purposes only and should not be construed as a recommendation to buy or sell, or as a solicitation of an offer to buy or sell any securities.  I am not a registered investment adviser nor I do not hold any licenses. Individuals are encouraged to consult with their personal financial adviser for financial advice.

There is no guarantee that any estimate, forecast or forward looking statement presented herein will materialize and actual results may vary. Investors are encouraged to do their own research and due diligence before making any investment decision with respect to any securities discussed herein, including, but not limited to, the suitability of any transaction to their risk tolerance and investment objectives.

You agree that by reading my material, you are acting at your own risk. In no event will I be liable for any direct or indirect trading losses caused by any information contained herein or in other dissemination methods. I make no representations, and specifically disclaim all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material contained in this site. I do not guarantee that I am providing all of the information that may be available on any topic written. I recommend that you do your own due diligence and consult a registered financial adviser before buying or selling any security.

Trading in securities involves risk and volatility. Past results are not necessarily indicative of future performance. My conclusions are the result of my personal due diligence and have been wrong in the past and will be wrong again in the future.
-----------------------------------------------------------------------------------------------------------------------------

I'm not big on oil right now, though I'm definitely watching closely as I think there are a lot of cheap deals out there. KFG Resources (KFG.V) is an exception; one that I have to own now. While stocks on my watch list like CPG and BTE are in the gutter, KFG is just a penny off its 52-week high with very little on the ask. I couldn't accumulate a very big position, but have held on for several months.

Why this oil company? Because it is profitable, has cash and is willing to spend cash on growth and a share repurchase plan. Here is a screen capture of the last income statement. This should be pretty self-explanatory.



The balance sheet also looks pretty good for a company with a $3M market cap:


With this kind of financial performance, KFG has flexibility with cash, and it sure is using it. KFG made a purchase of Saskatchewan oil assets last week. But more importantly, announced a normal course issuer bid to the tune of 2.5 million shares (~5%) in January. The company has the intention, though not the obligation, to buy back 2.5 million shares on the open market to January 15, 2020.

Insider transactions show 21,000 shares have already been bought back, and then insiders bought 256,000 more at 5.5 cents last week. Ha, I'll let the readers come to their own opinions over the actions of management buying up shares right before the open market buy back. But from an investment thesis standpoint, it looks pretty bullish either way.








No comments :

Post a Comment