Follow-up MultiClient Geophysical (OSL:MCG)

A couple of weeks back I did a follow-up on my MCG position since it had then passed the time for my net-net holding period (thirteen months). I concluded that the company no longer passed criteria (1) in the net-net checklist and that I should sell. However, since I hadn’t managed to close my position and that MCG this Friday published their Q3 report I decided to do a new follow-up. This time again MCG didn’t pass criteria (1) in the checklist and I put my position out for sale. I managed to get a close the same day at a price of 0,69 NOK. In relation to my purchase price of 0,77 NOK that translated into a loss of -10,4 %. After brokerage fees and some positive currency effect the loss was -4,9 %. 

Disclosure: The author doesn’t own any shares of OSL:MCG when this is published.

2 thoughts on “Follow-up MultiClient Geophysical (OSL:MCG)

  1. I sold MCG in 2016 too and revisiting my sell decision because of the recent price appreciation. Do you still think it was the right decision? I think they used their cash to buy some kind of database asset which lowered the NCAV virtually to zero. Maybe this is a learning for the future to not sell netnets in similiar cases?
    Best,
    Uncle Fry

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  2. Hi Uncle Fry,

    You are correct regarding the reason behind the big NCAV burn-rate. I think the decision I made was correct given the information I had at that point in time. I follow my checklist without exception and if the company is no longer a net-net, for any reason, I sell. In regards to MCG specifically, improved macroeconomic factors and a buyout offer at 1,20 NOK/share is very hard to forecast, even if I had done an in depth analysis 😉
    http://www.newsweb.no/newsweb/search.do?messageId=416808

    However, what I have thought of in relation to the outcome of MCG post my sale is; if a 13 months holding period before follow-up is to short? For example, Graham recommended to hold net-nets for two years unless the stock appreciated +50 %, the you should sell. Any thoughts on this?

    Thanks for your comment!

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