Q: Trading in the shares of BTO lately has been very contrary to the price of gold and on some heavy volume days. It seems to go down when the price of gold goes up and it was recently a top pick by a fairly reputable mining investor. They seem to have a good relationship with the Mali gov't, but do you think this trading pattern is a warning sign of some nefarious situation only a few know about?
5i Research Answer:
We do not think the trading represents anything unusual. BTO had for quite a while been an underperformer, but did go up 70% in the past year. The valuation of only 8X earnings, plus a 1.79% dividend, we think reflects the geo-political risks. Trading volume has picked up, but there are 18 holders with more than 10 million shares owned, and it seems like normal trading for this time of year to us. That being said, control of the company is in the market, and some view it as a potential takeover target.