July 16, 2023
I first wrote about In-Play Oil (IPOOF) on April 24, 2022 here: https://boolefund.com/case-study-inplay-oil-ipoof/
Since then, the stock has gone from $3.03 to $1.95, a decrease of 35%. IPOOF is clearly cheaper now than it was then, and that’s reflected in the multiples (see below).
OIL PRICES
See here: https://boolefund.com/case-study-update-journey-energy-jrngf/
IN-PLAY OIL (IPOOF)
Here is the company’s most recent investor presentation: https://www.inplayoil.com/sites/2/files/documents/inplay_june_2023_presentation_website_final.pdf
In-Play Oil appears very cheap. Here are the multiples:
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- EV/EBITDA = 1.50
- P/E = 3.17
- P/B = 0.81
- P/CF = 1.40
- P/S = 1.01
The Piotroski F_Score is 8, which is very good.
The market cap is $174 million. The enterprise value (EV) is $199.1 million.
TL/TA is 38.6%, which is good.
Insider ownership is 6.1%. That is worth a bit more than $10.6 million. If the stock at least doubles, insiders can make at least $10.6 million.
ROE is 30.4%, which is very good.
In-Play Oil continues to buy back shares of its stock, which creates significant value because the stock is very undervalued. Also, the current dividend yield is 6.9%, which the company says is sustainable even at an oil price of $55 WTI.
Intrinsic value scenarios:
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- Low case: If there is a bear market or recession, IPOOF could temporarily decline 50%. This would be a major buying opportunity.
- Mid case: The current P/CF (price-to-cash flow), based on normalized cash flow of $53.2 million, is 3.27. But In-Play Oil should eventually be at least 8 x cash flow. That would make the stock worth $4.77, which is 145% higher than today’s $1.95.
- High case: If the oil price averages $90 WTI, then cash flow would increase at least 50%. At 8 x cash flow, IPOOF would be worth $7.16, which is over 265% higher than today’s $1.95.
BOOLE MICROCAP FUND
An equal weighted group of micro caps generally far outperforms an equal weighted (or cap-weighted) group of larger stocks over time. See the historical chart here: https://boolefund.com/best-performers-microcap-stocks/
This outperformance increases significantly by focusing on cheap micro caps. Performance can be further boosted by isolating cheap microcap companies that show improving fundamentals. We rank microcap stocks based on these and similar criteria.
There are roughly 10-20 positions in the portfolio. The size of each position is determined by its rank. Typically the largest position is 15-20% (at cost), while the average position is 8-10% (at cost). Positions are held for 3 to 5 years unless a stock approaches intrinsic value sooner or an error has been discovered.
The mission of the Boole Fund is to outperform the S&P 500 Index by at least 5% per year (net of fees) over 5-year periods. We also aim to outpace the Russell Microcap Index by at least 2% per year (net). The Boole Fund has low fees.
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