Regal Assets Analytics

GEO Investing
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Shares of EXETF continue to hit new highs fueled by analyst price target raise to $8.75(from $6.75) and recent announcement it has reached a resolution with the Office of the Inspector General regarding some previous activities by it U.S operations.

Recall we first alerted members and disclosed our long position in EXETF (EXE.TO) when the stock was trading at $6.08 in our 4/29/2014 email:
“We are looking into EXE.TO as a restructuring play due to management’s ongoing efforts to sell underperforming assets.  We believe this could lead to at least a 30% increase in share price.  We have nibbled at shares.”
Our 7/14/2014 call to action stated we were adding to our position:
“We are adding to our position in EXETF based a SumZero article by Zack Buckley where he states the company may be acquired at a significant premium or spin-off its U.S operations which in his opinion will unleash significant value to current price.  Zack recently wrote about VITC being a likely acquisition target, and it was acquired for a 27% premium just a few weeks after his article was published.”

Our 7/28/2014 call to action we stated we were adding once again:

“We are adding to our position.  Recent price action strength coupled with the company’s ability to refinance its debt leads us to believe a resolution is nearing in the company’s strategic review.  EXETF has stated on many occasions its intent sell it’s U.S. operations and even has an interested party.  However, a regulatory hurdle with the Office of the Inspector General (OIG) has held up this process.  The company has also state, that if a resolution with OIG is not resolved it will take steps to separate the U.S and Canadian business thorugh other alternatives discussed by the strategic committee.”

Lastly, our 8/7/2014 call to action stated that due to resolution of regulatory hurdle that we were aggressively adding to our position:

“In its Q2 2014 results the company announced it has reached a resolution with the Office of the Inspector General regarding some previous activities by it U.S operations.  As we stated before, the resolution of this issue was needed to proceed with active negotiations regarding the sale of the U.S operations.  If the sale occurs, we believe it will lead to significant increase in shares.  Company was very specific in earnings press that the sales process will now move much faster.  We will look to aggressively add to our position at current prices.  The risk to the trade is that the sale of the U.S. operations is made at a price much less than our assumptions.”

We are still long our full position in EXETF.