The Tao of Abby

Disclaimer: This is not investment advice, nor is it a recommendation to buy or sell shares in the company/companies mentioned.

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The information contained herein is accurate to the best of the author’s knowledge, but the material and interpretations contained herein should be independently verified by any party using this information as part of any research, editorial, or decision making process. Any views expressed here represent the author’s opinion only, and as such readers should do their own research and come to their own conclusions if they are using the opinions contained herein as part of any larger due diligence process. The author may have long or short positions in the companies mentioned and may be buying or selling in the market depending on which way the wind is blowing at any given moment. Opinions are subject to change without notice. Prospective resources, predictions, comparisons, financial projections, and extrapolated metrics are, by their nature, subjective and interpretation dependent. The topics covered are highly speculative and involve a high degree of uncertainty and risk. Speculative companies can and do go to zero. By using this site, you agree that the author(s) and Hydra Capital is/are not responsible for any damages incurred by the use of the presented materials. Anyone reading these blog posts should know that they are the author’s thoughts and opinions, which are not to be confused with or construed as research reports.

Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long TAO.V

I say it all the time, but I do watch a lot of companies… sometimes over very long time periods. One story that I’ve always watched, but have never owned until recently, is Tag Oil (TAO.V, last at $0.20). Until recently, Tag Oil was primarily a New Zealand oil and gas story. I say ‘recently’ because TAO sold its New Zealand assets late in 2019 and subsequently paid a $0.30/share special dividend (return of capital) back to shareholders in April of 2020 (hence the associated drop in the share price on the day the dividend was paid). That essentially left TAO as a cash shell, with ~$15 million in cash as of June 30th, no debt, and a few non-core oil & gas blocks in Australia. Over the years, I’ve seen that cash shells can go either way, or be dormant for a long time… so when I look at cash shells these days I want to see a good management team, with a plan that I like, in a company with a good share structure that isn’t bogged down by infinite selling from a bunch of holders with no unified vision. That unified vision always starts at the top, which has historically set up the “management premium” that gets priced into the market when a new team of note shows up or is brought together. It’s no secret that management is a key driver of success when starting any new venture, so the wise speculator will often look for opportunities to “bet” alongside management if at all possible. That’s why when I saw Abby Badwi join as Executive Chairman of little TAO, while putting in $1 million in at 16 cents (with a couple of his business associates), my radar went up. Since TAO already had $15 million in the bank, the extra million dollars clearly didn’t have to do with TAO needing more money, so it must have meant that Mr. Badwi and his associates wanted to get long an appreciable amount of stock… presumably because they think those shares will be worth more with what he/they are bringing to the table.​

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