Out for a few days
I am currently working on our finals requirements in MBA (deadline June 1) and I won’t be able to post in this blog for a few days but I will post an interesting situation about FGEN.
FGEN made a disclosure that is perceived by the market as very bad:
Well… I agree and 250 MW power of San Lorenzo’s 500 MW power capacity may spell foregone revenues but the decline, in my opinion, is an overreaction. It’s just a temporary event and these situations are opportunities for an investor.
I added our position in FGEN (my client’s account) @ 20.45.
How much is the temporary impact? Below is my calculation:
*I do not know how much is the contract price between MER and FGEN but I assume it to be at P5.
I made this post not as a recommendation to BUY FGEN but I would like to document my thinking in the situation where obvious (in my opinion) opportunity arises for our future reference and as a case study. I may be right or wrong but in any way, we will learn from it.
Thesis: Events that has temporary impact on earnings should not affect a company’s intrinsic value.