Nickel business NIC has shown that just because a commodity in which a business operates rallies strongly doesn’t mean the stock is going to follow suit – in the case of NIC one of its largest shareholders was caught short when nickel basically doubled in 1-day last month leading to speculation of imminent forced selling. The drop in the share price has since led to the company cancelling its $US225mn capital raise at $1.37 to fund its stake in Oracle Project (ONI) and actually returning $57mn to shareholders from the intended SPP.
We aren’t keen on the stock around $1.24 however if we see ongoing volatility on the downside we do see deep value closer to the $1 area – over the last year NIC has fallen 20% while the nickel price has rallied well over 50%!
MM is neutral / bearish NIC short-term
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