Hi Master Spock
One of the best theory's in finance is, revision to the mean.
I know as much as the next person about where the price will go. But if fair value (mean) is above 1.75, then at some point the stock will revert from undershooting back to the mean (just as companies that overshoot, revert back to the mean AKA stock correction)
Re: 7.2m loss, 1st qtr. - I've invested in pine radiata in NZ, we the partners payout monies every year to maintain the trees (cash loss), but the natural forest growth gets updated and incorporated into the books each year as biological assets. This then has a discount rate applied to factor in the time to harvest (opportunity cost of money) and inflation. As time to harvest nears, the discount rate falls, thus the value of the asset rises.
Time - A similar thing happens to options. The less theta there is remaining, the lower the chance of big moves in prices, thus the price of the option gets nearer to fair value
The pines in NZ are 2 years from harvest so the discount rate is now 6.5% (7% last year)
Sandalwood has a discount rate of 11-14%
Face it, your a theta farmer and as 2021 approaches, the forests will mature, the discount rate might fall and the price will start to merge with fair value. The value of shares are all the future earnings discounted back to today's dollars and added together. Analysts think that on current sandalwood auction prices, the fair value of TFS is $3. That will rise as 2021 approaches and uncertainty declines, certerus paribus (all things being equal)
It wouldn't surprise me if fair value by 2021 is $4.50 - $5.00
Estimated $3 x 1.11 (discount rate) ^ 5 (to the power of 5, or years)
Once you incorporate an element of overshoot, it could go to $6 - $7 before a pull back.
Hold on, the cards are in your favour, (assuming the world doesn't melt down due to -insert cause here)
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