Imagine Owning Tartisan Nickel (CNSX:TN) While The Price Tanked 60%

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Even the best stock pickers will make plenty of bad investments. And there’s no doubt that Tartisan Nickel Corp. (CNSX:TN) stock has had a really bad year. To wit the share price is down 60% in that time. At least the damage isn’t so bad if you look at the last three years, since the stock is down 11% in that time. Furthermore, it’s down 43% in about a quarter. That’s not much fun for holders.

See our latest analysis for Tartisan Nickel

Tartisan Nickel hasn’t yet reported any revenue yet, so it’s as much a business idea as an actual business. We can’t help wondering why it’s publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it’s unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that Tartisan Nickel will find or develop a valuable new mine before too long.

We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). It certainly is a dangerous place to invest, as Tartisan Nickel investors might realise.

Tartisan Nickel had net debt of CA$343,894 when it last reported in December 2018, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -60% in the last year, it looks like some investors think it’s time to abandon ship, so to speak. The image below shows how Tartisan Nickel’s balance sheet has changed over time; if you want to see the precise values, simply click on the image.

CNSX:TN Historical Debt, April 29th 2019
CNSX:TN Historical Debt, April 29th 2019

Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I’d like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

The last twelve months weren’t great for Tartisan Nickel shares, which cost holders 60%, while the market was up about 6.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Shareholders have lost 3.8% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. Although Warren Buffett famously said he likes to ‘buy when there is blood on the streets’, he also focusses on high quality stocks with solid prospects. If you would like to research Tartisan Nickel in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.