Any time an investor is able to pick up a company for literally pennies on the dollar, value investors everywhere sit up and take notice. In the case of Athabasca Oil Corporation (TSX:ATH), a company which traded around the $19 per share level following its initial public offering (IPO) in 2010 has recently dipped below $1 per share, a situation now exists in which investors are able to pick up shares of the company for a mere 40% of the value of the company's assets.
Of course, if you were to ask any sane person if they would trade you $1 for 40 cents, the answer would most certainly be no; picking up "50-cent dollars" has long been the mantra of value investors everywhere - finding such scenarios have become a very rare occurrence in recent years, but they do pop up here and there. Athabasca just happens to be one of those deep value opportunities which requires biting on a towel and gritting one's teeth for a lengthy period of time.
The mouth-watering multiples at which shares of Athabasca trade, for value investors willing to stomach the wait and the potential bankruptcy risk, have become too juicy to ignore for some, with the oil producer trading 40% above its 52-week low (and nearly 25% below its 52-week high).
It seems, however, that the sky may be the limit for this company if pipeline capacity becomes available, oil prices rise, the heavy-light discount abates, and things go back to normal. This might just take some time.
Invest wisely, my friends.
