- P / B = 0.46 (based on the NAV = $3.46 /sh as of Jun. 30, 2011 & share price of $1.67 on 19-Aug-11)
- PNP is nearing the cyclical low on a share-price to gold-price ratio. (see chart below)
- Avg. SGA Expense (w/o performance bonus comp.) / Assets = 2.2% : So they are like a hedge fund that charges 2% of AUM and performance fee of 10% of gains above high-water-mark.
- Debt of 17% of assets is composed of a convertible debenture & margin debt due to broker. There is no mention of any debt covenants that could cause immediate problems.
- CEO owns 8% of shares
- CEO compensation is: $1m base salary & 10% of gain in book-value over the course of the year or from high water-mark. Since the high water-mark was reached at $4.14 / sh the CEO will probably not be getting a bumper bonus until the share-price goes up 150%. In 2010 he received $32m in bonus.
- Gold itself is breaking-out to new all time highs while the precious metal stocks are being pulled down by the stock-market in general. This is creating a very attractive entry point for taking a position in this intrinsically undervalue stock which in addition also has a tail-wind to propel their underlying investments higher.
- PNP has initiated a share buyback program as announced recently.
- Because Pinetree Capital would be considered a PFIC in the US, one should take this into account if investing in it.
Pinetree Capital is a balance sheet based deep-value investment opportunity that has a good chance of a double or triple. An exit point could be when the share price is P/B~0.8 or based on the indicator of PNP price / Gold price ratio.