Rand – Thanks for the kind words and the heads up on NXO.

I generally steer clear of biotech companies, because I have a harder time valuing the intellectual property, trials, approvals, competitive landscape, etc….

There are just as many fly by night companies in Biotech as the Jr miners, but there are also explosive gains/losses and volatility that make them fun to trade for the same reasons. Very few biotech companies end up working out longer term, so most turn into pump & dumps just like the Jr Explorers. Of course, there are always a few quality companies in any sector though, and spotting one early, can reap amazing rewards.

At least with the miners I understand the basics on what good drill results are, or the permitting process, or or quarter over quarter improvements in production numbers, or metals recovery rates improving, etc…

Investing in miners sure isn’t easy though, since there are so many half-truths, ways of grade smearing drill results to inflate resource estimates, ways of massaging the AISC numbers, or companies that change names and commodities like most people change their undergarmets.

To complicate matters there are an endless trove of newsletter writers pandering to the dreams and schemes of get rich quick minded subscribers that don’t want to do any real research on their own. People create small flocks of followers that buy into or exit positions in mass, leaving most as road kill, and sometimes they promote projects that are thrilling narratives but just absolute garbage. It is hard to dissuade the fanatical “believers” that it is just a pump-n-dump until it is too late, and the hate mail starts surfacing from all the mindless bagholders that can’t wait to place blame on this terrible person that “made them buy a stock”. Very few investors take personal responsibility or accountability for their own actions. Nobody makes anybody hit buy or sell – it is ALWAYS an individual choice, so every investor needs to own the decisions they make and learn over time what works for them.

Mining is also a very tough business with endless challenges and hurtles that throw a wrench into the best laid plans. Just when everything looks like a perfect setup….. Kaboom!!

As for being skeptical about Jr miners, I think that is a very wise approach. There are PLENTY of miners I just simply won’t touch at all, and many of them are actually the giant Majors that are too slow and boring and large to have much torque, but they have had crippling levels of debt, terrible acquisitions at the top of the markets where they overpaid, and they are operating massive mines with huge capital requirements that many local citizens will want to stop at every turn. The other names I generally steer clear of are the popular “momentum” names that suddenly come in vogue, have lots of promotion, but little hope of being economic for some time (if ever). Look at (SX) St Georges Eco-Mining the last 2 weeks for example, or New Nadina over the last 2 months. Yikes!!

Most of us on this blog have had our fair share of getting burnt bad, but that teaches valuable lessons about risk management, taking some profits while they are there, vetting management teams, and getting better at understanding the cyclicality of the underlying commodities. I generally trade many companies with one foot always out the door because of my skepticism, but you still got to be in it to win it.

After a while one picks up on the price moves during different stages of a company from exploration to development to production to growth & acquisition. Also by studying prior takeovers it helps hone down which companies may make future acquisition targets or that the big boys may be interested in.

I’m also particularly found of Turn-Around stories where a company has been destroyed in value, but has real assets in a commodity with a future, and a vision of how they can turn their company around into a more economic operation. As a result, most often when I start getting real serious about positioning in a company, most consider it a dog or dead in the water. Sometimes that ends up being the case (like with Primero) and other times they end up being quite epic (like Claude or Americas Silver or Silvercorp).

I’m with you though, most of the Junior markets are garbage, but my perspective is that it also helps not to get too jaded or skeptical or great trades will continue to pass by and opportunities will be lost. There are some commentators that only look for flaws, but that doesn’t make them all “Fatal Flaws”. So often someone will find just 1 issue with a company and then throw the baby out with the bathwater.

On the other side of the equation there are certain prominent investors that only like just 1 or 2 companies in a sector at the exclusion of all else, and they’ll tear down all other companies except their precious pet stock. They are usually wrong about it being the best performer, and sit on these for huge spans of time during a downturn, and miss many of the larger percentage moves in the smaller or mid-tier companies in the meantime because it didn’t have (Mr. Important) as the ceo, or because they weren’t Tier 1 or whatever other garbage they’ve brought into their belief system. If someone is really interested in the percentage returns and making money investing, then going with the best leverage to price increases is far more important than finding the biggest or best deposit, and there is far less competition or eyeballs following the smaller stories, so they are usually not valued correctly. The perception / value arbitrages make it fantastic grounds for picking up out-sized gains.

Yes, there are some companies that botch an asset or make a poor decision, but I like to see their plan on how they will turn things around, and I may give them a chance.

There are no perfect companies in the mining space and they’ve all done dumb things in the past, and many live on to prosper. I don’t expect perfection….. just progress in a reasonable amount of time.

Many times investors spend insane amounts of time doing due diligence on a company and while they are “getting ready to get ready” they miss a 50% or 100% move, and typically jump in right before a corrective move because of a fear of missing out. Often after all this laborious research for huge swaths of time, they still get nailed with something out of left field that nobody was expecting. I think it is important to check out the primary flagship & commodity, the management, the economics, the share structure, the debt, etc…. but not to get analysis paralysis.

I guess if I was only going to invest in one company or 2 companies I’d want to be pretty sure as well, but even then someone can research till the cows come home, call the ceo, go to a million conferences, and subscribe to 1000 newsletters and still be wrong in the end. There is no way to anticipate all the future roadblocks that a company may get hit with, so I’m more interested in a point where the trend may change, or where steady improvement is being made, or resources are expanding, or wise acquisitions, etc… At the end of the day one just needs to be able to buy a stock for a lower cost basis than the sell it for, and it doesn’t have to be perfect – it just has to get more valuable in a set time parameter.

Personally, I’m always searching for companies that may have a short term (1-3 month) catalyst, or a medium term (3 month – 1year) catalyst, and a few longer term plays [like Lithium back in 2015 or Uranium now].

Sorry for this rant as I’m sure it is long and riddled with spelling & grammar errors, but I can only see 4 lines at at time 🙂

Ever Upward!