I'm looking for guidance respecting TVE, which I've owned for quite a long time. I feel my investment is basically near dead money, treading water just to stay afloat - but I freely admit I'm not knowledgeable enough about the O&G world to properly analyze future prospects of a company based on amount and location of reserves, BOE/day etc. etc.
I've read your answers to recent past questions about TVE, and know you think it's a takeover candidate, with the acquirer paying around a30% premium.
CIBC has a target price on the stock of $4.50. Morningstar's fair value is $4.89 and CFRA rates it a strong sell with every criterion it applies being negative, except valuation which it pegs at "neutral". National Bank meanwhile rates it an outperformer with a target of $6.50. So it seems those experts are pretty much all over the map. Meanwhile all I know for a fact from my personal involvement is that TVE has done precious little to reward shareholders either in terms of capital appreciation or dividends (compared to others out there like WCP et al) for quite some time. Even having bought and held since April of 2020 hasn't led to much compared to many others in the sector.
After that longwinded preamble my questions are:
- Am I justified in thinking that the likelihood of meaningful capital appreciation and/or dividend returns in the next year or so is quite remote, and
- Based on your experience what would an acquirer pay for outstanding shares? Would it be the 30% premium you mentioned in a previous answer, so about $4.55/share or have I misunderstood you?
My inclination is to sell and be done with it because I don't see any light at the end of the tunnel except the speculative chance of TVE being acquired and there are lots better places to put one's TFSA money.
I would sure appreciate your thoughts.
Thanks,
Peter
TVE raised its dividend by 25% in late 2022, and pays more than $80M annually in dividends. We would not consider this a 'low' return of capital to shareholders. The company also has a buyback in place currently. The average analyst target is $5.32. The stock has been disappointing but it is (at least) up 14% this year so far. That's about triple the sector's return this year. We do consider it a target, but highly doubt management would consider offers unless there was a giant premium (we think more than 30% is what it would take to convince management). The sector has been frustrating, but TVE does produce significant free cash flow. Other sectors are certainly performing better right now but we think it is important to put the sector relative performance in context as well. We think it remains attractive, at least as far as mid-cap energy sector companies go.