I would argue that market forces have confused share price and value in the case of RGX and the news of the completed due diligence reports have served to “wake up” the market to the fact that RGX is a story that can survive and thrive in a very challenging market.
There are, of course, reasons for caution. Huntsman’s (HUN:NYSE) plan to reduce its TiO2 capacity by 13% (about 100,000 tonnes) as a cost saving measure is one. Additionally, DuPont’s (DD:NYSE) comments during its Q4 2014 earnings call aren’t terribly encouraging:
“We delivered volume growth across the portfolio but competitive pressures in TiO2 remain high as soft industry fundamentals especially in Europe contributed to lower prices during the year. We believe industry utilization rates remain essentially unchanged with inventory levels near normal.”
However, as I mentioned previously, these statements mask the fact that RGX has a process that can exist in this dour environment and could actually be complimentary to a TiO2 producer looking to lower costs. With prices falling and margins shrinking, technology which lowers production cost should be at a premium and this is exactly what RGX offers.
The hurdle of financing RGX’s TiO2 plant still remains, but with the due diligence documents in hand, this can now be squarely faced. As I said above, I own shares in RGX and while I absolutely hate “talking my own book”, price and value may not be confused here much longer.
http://www.discoveryinvesting.com/blog/2015/2/18/argex-titanium-an-example-of-markets-confusing-price-and-value