First Majestic Silver Has 80% Downside: Kerrisdale’s Latest Short Report
Jayson Derrick, 01 September 2016
First Majestic Silver Corp AG 0.03% , a mining company that focuses on silver production, exploration, and development in Mexico is an “absurdly overvalued”, “heavily promoted” stock that has been driven by a “speculative frenzy,” according to Kerrisdale Capital.
Kerrisdale Capital began its short thesis on First Majestic by pointing out that like all mining companies, First Majestic’s stock price is obviously tied to the commodity it explores. The company’s stock fell 90 percent from the peak of the silver market in 2011 to recent lows. On the other hand, the stock seems to have “gotten a new lease on life” and surged 268 percent since the start of the year, marking an increase eight times larger than the actual gains silver notched.
As such, Kerrisdale estimates the stock is now trading at 5x its net asset value, which marks an “astonishing” premium to its peers and a “gross violation of common sense.”
