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Disclosure: The following represents my opinions only. I am long a lot of TAO.V (Image credit to Tom Podmore on Unsplash)
Sometimes I like to look back on what’s worked for me in the past in order to try to repeat it in the future. Two years ago, I wrote a note on Transglobe Energy in Egypt. At the time, it was apparent to me that the stock would eventually trade materially higher once the market realized the significance of its then-newly renegotiated contract terms, and I was right. I’d followed Transglobe for the better part of fifteen years at the time, so I was uniquely positioned to recognize Transglobe’s potential while it largely flew under the radar of the market due to its sub-$100 million market cap. The stock was $1.14 when I wrote a note like this one about it, and it was as high as $6.50 about 18 months later — eventually being taken out by Vaalco Energy (EGY.US, last at $5.20) for about $5 per share earlier this year. It was a great investment, even if I didn’t hold it until the end. All it took was for me to buy some stock and sit on my hands while the market digested (and appreciated) what Transglobe was saying. While the oil price tailwind didn’t hurt, I was sure about Transglobe’s value in pretty much any reasonable oil tape. I was sure because I knew the assets, I knew what they were worth, and I knew why it was cheap — it just needed some time for the market to realize what it would become.
