Precision Drilling Corp

Buying $1 for 10 cents

Written by: Zack |

Key Points

  • Michael Burry recently bought a $3 million stake in the company, price has not increased since Burry's purchase
  • P/B Ratio of 0.13 (Market Cap 200M / Equity ~1.5b)
  • Cash on Hand: 100M

Buying $1 for 10 cents

Recently Michael Burry took a 3.05 million dollar stake in Precision Drilling Corp (NYSE: PDS). Michael Burry (Scion Asset Management) predicted the housing market crash in 2007, and is known to have an eye for value investments. Precision Drilling Corp has a market cap of ~200M, trading at around 75 cents per share. Amazingly, Precision Drilling has ~100M in liquid cash and has a history of doing profitable business. Based on their last reported balance sheet the canadian drilling firm has approximately 1.5b in equity, resulting in a P/B ratio of 0.13. This extreme undervaluation results in a situation where we can potentially purchase $1 worth of shareholder equity for 13 cents!

On the way to $1

Recently the NYSE sent PDS a letter stating that their share price needs to increase to $1 or they will be removed from the NYSE. In response to this PDS has initiated a share buy-back program that will conclude next year. PDS has a long track record of profitability and even paid dividends as recently as 2015. They have been valued as high as ~45 per share.


Please Note! These are my opinions! and should not be considered financial advice. Please do your own due diligence before investing.

zack says:
2020-10-09 03:17:54
Hi Everyone! let me know what you think!