(Editor's Note: Investors should be mindful of the risks of transacting in illiquid securities such as PCCLF. Phoscan's listing in Toronto, FOS.TO, offers some additional liquidity, although it is minimal as well.)
Phoscan Chemical Corp - NO LONGER A PARTNERSHIP HOLDING
Featured In: July 2013
Partnership Average Cost per Share: $0.29
Exit Price: $0.32
Over the past six months, the Partnership has fully liquidated its position in Phoscan Chemical Corp (OTC:PCCLF). The reasoning was simple: Phoscan has turned into a cash shell making no advancements on any properties. Put simply, I would much rather hold cash myself than own a company where the executives are paying themselves for holding cash.
The Partnership invested in the company anticipating either (1) significant progress on the Martison Phosphate project located in Ontario, Canada or (2) FOS deploying its $40M+ in cash on a promising prospect. Instead the company has shelved the Martison Project and resisted putting any of its "money to work", irrespective of the opportunistic bargains to be had in today's market environment. The company's G&A expenses are also high relative to the amount of work being done.
That being said, when one considers the Partnership's track record and the fact that FOS has been a holding from Day 1, this wasn't a bad investment. This supports my conviction that companies with high working capital positions relative to their market capitalizations are low risk investments. It's a shame that Phoscan wasn't able to capitalize on either Martison or its outsized cash position. However, the liquidation of this position at above full purchase price has allowed me to build up sizeable positions in more promising phosphate plays.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.