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I'm new to this forum, so please excuse if my formatting or something is wrong.

Anyways, I had a question regarding stocks. The particular question is regarding PWT.TO; Penn West Petroleum Ltd. on the tsx. It seems weird that today and lately, this stock has been trading at less than 25% of it's book value? How does that make sense?

If I am right, 'book value per share' is the company's (assets - liabilities)/# of shares. so if the price of this share is ~$2.60, how in the world is the book value '~$11.22'. Theoretically, couldn't someone just buy 51% of the company, and immediately liquidate the company to make 400% returns as the stock price is 25% of the book value? Is there some other debt or something that isnt taken into account into book value?

Also why wouldn't people go onto this stock like crazy, since its below its book value so much? There seems to be little risk in investing something thats worth x4 the money you put in.

  • I've seen companies whose market value has fallen below their book value. Normally, those companies have performed so poorly that the market believes they are "worth more dead than alive". – Zenadix Sep 15 '15 at 19:39
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Have you looked at what is in that book value? Are the assets easily liquidated to get that value or could there be trouble getting the fair market value as some assets may not be as easy to sell as you may think.

The Motley Fool a few weeks ago noted a book value of $10 per share. I could wonder what is behind that which could be mispriced as some things may have fallen in value that aren't in updated financials yet. Another point from that link:

After suffering through the last few months of constant cries from naysayers about the company’s impending bankruptcy, shareholders of Penn West Petroleum Ltd. (TSX:PWT)(NYSE:PWE) can finally look toward the future with a little optimism.

Thus, I'd be inclined to double check what is on the company books.

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