Hyperdynamics | Most Volatile Micro-Cap in Challenge History


Investors in Hyperdynamics (HDYN) have likely lost all their hair in the past few weeks. From gut-wrenching single-day 93.85% declines to today’s 310.95% moonshot, this stock has been through the ringer.

 

Small-Cap Oil Stock Redefines Risk and Volatility

Speculation can be a dangerous thing in any business. But, when combined with micro-cap oil exploration stocks that miss big, dangerous or risky doesn’t begin to describe it. In the case of Hyperdynamics, the micro-cap missed and has experienced a disastrous evaporation of value.

Hyperdynamics hit a high of $2.26 on August 29th. Seven trading days later it traded for just $0.06! Sweet Maria, that is a free fall! The news that brought the stock crashing down?

Hyperdynamics Announces Fatala-1 Exploration Well Did Not Encounter Hydrocarbons

 

Below is an excerpt from the September 8th press release,

“Fatala-1 was drilled in 2,897 meters of water and reached a total depth of 5,117 meters below sea level. The well encountered a 75-meter-thick Cenomanian sedimentary channel sequence, but it contained predominantly siltstone and clays with no hydrocarbon shows. The well will be plugged and abandoned.”

 

Certainly, more than a few investors were banking on a discovery, not a complete failure. When small companies have everything riding on one project and little money to continue, bad things happen when that projects goes awry.

Ray Leonard, Hyperdynamics’ President and Chief Executive Officer, stated,

“We are very disappointed at the results of Fatala-1, considering the extremely promising geophysical data on the prospect.”

I’d say “disappointed” might be a bit of an understatement given the absolute free fall. After closing at $1.48 on September 7th, its stock opened at just $0.10. Investors never even had a chance to sell.

 

joeyg48 Enjoys One Day Pop in September Stock Challenge

Long-time member and renowned Champion, ‘joeyg48‘, selected Hyperdynamics for September’s Stock Challenge, but outside of today, his timing was all wrong. The oil exploration company finished August at $1.64 per share. So, it would need to put together a handful of 300% gains to get back to breakeven.

These types of losses are a great reminder to be cautious and should serve as a lesson. What is unique about Hyperdynamics is that the market was pricing in a discovery for a long time. Its shares traded between $1 and $2.50 over the past 12 months. Everyone was expecting a discovery. Rather, more often, retail investors speculate for a few weeks or even months in anticipation of a discovery. In this case, the Hyperdynamics appears to have had an inflated valuation for over one year.

Today’s 300% move captured the Daily Stock Challenge Breakout award. But unless a miracle befalls the company, its shares will not get back to positive territory this month.

With stocks in the Golden Triangle of northern B.C. still flying high, ‘firefly‘ remains in the lead. The long-time member has a combined average return of 58.05% thus far in September.

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