AGORACOM Small-cap Investor Relations Blog

The takeover tidal wave that has hit the markets as of late has been nothing short of exciting for any market bull. If you had the guts to hang in there when the market drop in Q1 had CNBC running nightly hand-holding sessions and turned a handsome profit, then bravo to you.

Unfortunately, I’ve started noticing lately that some “investors” appear to be making gains of the “risk-free” variety. That is, stock activity prior to takeover announcements are clearly indicating insider trading in advance.

For example, on May 3rd, Swedish Steelmaker SSAB announced it would acquire Ipsco for $160/share. All other things being equal, Ipsco is just another boring steel maker – and its trading activity for most of the previous 6 months supports this:

From December to mid-Feb, Ipsco spent most of its’ time in the low $100 range, though it made a couple of unsuccessful attempts to break through $120. It did finally make one short-lived run into the $130 range but that didn’t last long either.
In mid-March, however, the boring steel-maker goes parabolic for no apparent reason. By the time management announced in early April it was in discussions that might lead to a sale, the stock had already hit nearly $160. Ironic that is stopped just short of the eventual acquisition price isn’t it? Was anybody curious as to why a boring steel-maker gained almost 60% from January to April?

EXAMPLE #2 – Dow Jones Takeover Bid

In the case of Dow Jones, Paul Kedrosky points out that there was some big buying pre-announcement of $45-ish calls that were trading below $1. Post-announcement, they soared to $12.

Big option volume on no news >>> takeover bid announced >>> 1,200% gain.

Anybody know a good rocket scientist that can help figure this out? If not, a decent street hustler will do. The big boys are in the know and they are cashing in.

Given the hard time small-cap companies get for minor transgressions, it would be nice to see the same magnifying glass turned on the big boys for some pretty obvious ones.

Best,
George

Bad news out of the Canadian business world today.  Jim O’Conell passed away yesterday after a brief battle with a very aggressive form of colon cancer.

Though he had an incredibly successful career in journalism that went well beyond business journalism – he won 2 Gemini Awards – small-cap investors in Canada know him and respect him particularly well for hosting BNN’s small-cap show every Wednesday morning.

God bless Jim and his family

Regards,
George

 

As many of you know, CON-SPACE (CCB: TSX-V) recently completed an acquisition that will take annual sales to more than $17M, with annual earnings excpected to be in excess of $2.5M. 

To this end, Fundamental Research analyst Brian Tang, CFA, has issued an update on CON-SPACE entitled “SSI Acquisition – Highly Accretive and Growth at a Cheap Price”, and dated April 20, 2007. For securities reasons, I can’t provide you with any details here, so I’ve provided a link to the research report for your review. 

CON-SPACE is an AGORACOM client – but nobody can pay me enough to lie about them. I love this acquisition.

Happy Reading and have a great day.

Regards,
George

One big factor all investors should look for in a new company are big names that have thrown their financial support behind it. Why? They conduct better due diligence than you or I could ever dream of.  As such, if they put their money where their mouth is, who are we to second guess them.

Today I stumbled upon an extraordinary company with some incredible names and ownership stakes backing them – Continuum Resources (CNU: TSXV) .  CNU is not an AGORACOM client but with this kind of ownership I’m going to pick up the phone.  Have a look at the following:

Sprott Asset Management holds 19.9% of Continuum’s outstanding shares, while Agnico-Eagle, the seventh largest mining company in the world, owns over 15%. JF Mackie, Joint Venture partner, Fortuna, and Pinetree Capital hold collectively 20%. Combined, these major shareholders own 60% of outstanding shares.

Hmmmm…Sprott, Agnico-Eagle, Pinetree Capital.  Who are we to argue?

A closer look at their home page provides a link to an inteview with Eric Sprott himself in which he states that Continuum is one of his top 4 picks (he was actually asked for his top 3 but provided 4, including CNU).  Unless, you have a better track record than Eric, CNU deserves a real hard look.  To this end, the front page also proves a link to a research report by Fundamental Research, rating CNU as a speculative buy with a target of $1.60.  CNU is currently trading around $.75, so it appears there is ample room to profit if you like the research and the big amigos that have put their money behind CNU.  I’ve included a chart below for your convenience.

Best,

George

There are many people who called for a bull market in resources such as gold, copper and uranium but only one (that I know of) that continues to call tops and bottoms in this secular bull market – Peter Grandich.  For example, when gold hit $735 several months back, Peter called a top and that gold would fall back to $640.  Recently, Peter correctly called for $540 – and a subsequent rebound. He was right again.  Same thing on the top in copper prices in the mid-$3’s.

The amazing thing is he made all these calls to the chagrin of his resource clients, some of which fired him, which cemented his credibility with me.  Not to mention the criticism thrown at him from invidual investors on discussion forums that were more interested in hearing good news rather than reality.  Ultimately, it turned out to be the best thing for clients smart enough to stay with him because more and more investors continue to register for his newsletter based on his track record.

Well, Peter is at it again in an interview on the Yahoo Finance Small-Cap Show (Expert’s Corner Edition).  Some highlights?

• Gold will break through its current bull market high of $735;
• If the Dow breaks through 13,000 on a strong move, Peter will publish and take a short position to capitalize on a subsequent steep drop;
• Junior resource companies outside of North America are at their greatest risk right now;
• Why Peter is bearish on base metals.

If you want unbiased market intelligence on the resources sector in particular and the equities markets in general, this is well worth your 10-minute investment…even if he is a New York Giants fan :-).

Regards,
George