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The suspension of trading in shares in Leyshon Resources (LSE:LRL) will continue until Wednesday (rather than today as was first announced). The company wants time to produce a full technical analysis of the drill results from its first gas well in the Ordos basin in China. I do not read anything mysterious into that. You cannot call it good or bad at this point. Indeed it is better that a detailed report is put out than a half cocked one.
As it happens I have been following Leyshon with great interest for a number of months. Back in late August I wrote up what was a compelling investment case after a lunch with Paul Atherley, the CEO
You can read that piece here
But you know what? No-one was interested. Here was a chance to buy into a well run company trading at or around net cash which was maintaining its overheads at such a reasonable level ( Range Resources et al please take note) that the cash pile was not ebbing away faster than you can say boardroom greed but was being preserved. And you got a great China gas play in for free. What could the gas play be worth? Well quite plausibly ten times the current market cap. Or possibly nothing. The reality is that you do not know until we have drill results. All the Bulletin Board chatter is just that.
So the investment case has changed. Until a few weeks ago no-one seemed the slightest bit interested in Leyshon. And that is why I tipped it at 11.5p to buy as my second stock on my new Nifty Fifty website.
You can get details of the Nifty Fifty where THREE new hot tips go live this week here.
Last Thursday I advised my readers to top slice ( sell half) at 24.75p ( the bid price). That means that if the stock goes down to 0p we have still made a 15% gain. But it will not go to 0p. If this is a duster Leyshon still has 11p of cash and the shares will go back to that sort of level. So my readers will be 58% ahead in just under 4 weeks. If there is a big gas find the shares could move higher still, in which case my readers have a free carry on that gain and we will look again at the investment case once we have data to see if the good news ( if there is good news) is in the share price. It is a win win.
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Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings (except for that free share tip) follow him on twitter at @tomwinnifrith
