Falcon Oil & Gas Ltd. (CVE:FO) (PINK:FOLGF) recorded a significant increase in trading activity on Tuesday, but the share price failed to move accordingly.
FO had a tremendous trading volume of 1.54 million on Tuesday. The increase in trading activity didn’t do much for the share price action and appears to be rather natural on this volatile stock. The stock remains in the strong trading channel it’s been in since late August.
The share price theoretically cannot go lower because that would bring the market cap significantly below the net tangible worth of Falcon’s business.
Currently, the market cap is $86.8 million and the company had $87.5 million in book value reported for the period ended June 2011. Since the company has $32 million in working capital and is not losing money on business activities, the book value can be considered the lowest possible that the business could hold on the open market as well.
One factor that could get this value to temporarily decline is dilution. The company announced on October 14 they have issued 660.9 thousand common shares as bonus payments to employees. Those shares were valued at 15 cents each. This represented 9.5% of the outstanding stock and theoretically could limit the share price advance in the future.
