BULLS , BEARS, OSTRICHS & EAGLES
The financial markets have always been termed with being an animal of some kind.
A bull market is when stock prices are climbing strongly and a bear market is when they're languishing. One common myth is that the terms "bull market" and "bear market" are derived from the way those animals attack a foe, because bears attack by swiping their paws downward and bulls toss their horns upward. Another animal name used to label investor sentiment includes the pig. The pig wants it all and often loses all his profit in pursuit of his greed. These three animals can be seen during all market sentiments.
In uncertain markets like the current North American markets, a unique animal often enters the market and market watchers have labeled this animal as being the “OSTRICH”. An OSTRICH is an investor who chooses to bury his head in the sand and prefers not to pay attention at all to their investments during uncertain times in the hopes that when he checks some time in the future “everything will work out”.
Given the amazing correction that is currently being played out in the North American markets, I believe it is time for the EAGLE investor to come to play. The EAGLE would be the investor that swoops into the chaos and casts a wide eye over the market to pick the best values. Today’s markets offer untold number of opportunities where very strong companies have been blindly sold down to ridiculous levels. In my belief that this market is perfectly suited to the EAGLE investor, I have cast a wide eye over the TSX Venture exchange and found a company that has $.49/share in cash yet trades at $.30/share.
In defining these values, I have used the adage “Cash is KING” to identify undervalued stocks. In my search to find such a stock, I came across a TSX-Venture listed company that has a very solid management team and has over $25 million in CASH in the treasury.
This company is IMA Exploration (TSX-V-IMR). From the latest statements and News releases filed on SEDAR I have determined the following about this company.
A) The company has $24,564,146 CASH in bank term deposits. In addition they have $1 million in other liquid assets for a total CASH position of approximately $25, 564,146. There are no liabilities or debt.
B) The company has 52,132,064 shares outstanding. This equates to a CASH position of $.49 PER SHARE IN CASH., yet the stock trades in the .30 cent range. There are no cheap warrants and options overhanging.
C) The Rule Family Trust recently purchased stock to bring the Trust’s current holdings to just over 9 million shares and 17.44% of total stock outstanding. It is rumored the Rule Family Trust is associated to legendary investor Rick Rule.
D) The company is drilling some excellent targets at its Island Copper Project and has adequate capital to acquire large advanced stage projects. I believe the company’s cash position will allow it to acquire a large “company maker” project in the near future (more so with Rick Rule involved).
Given the current credit shortage for junior companies and the vast opportunities for well funded and well managed junior exploration firms, IMA Resources is the most undervalued stock value in today’s market. It trades at a huge discount to cash value but appreciate quickly once the market settles and they acquire a large project. Please conduct your own DD.