Are stock prices random? A look at market structure

Just look at the highly manipulated chart below:


NXTH was a pump and dump scam.  I don’t know how insiders did it but the stock price was highly manipulated, as you can see by the chart above.  The idea was probably to sucker investors/gamblers into a stock that constantly goes up in a straight line.

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Tiny Canadian stocks selling below the market value of their assets

The idea behind this is to buy assets for much less than they’re worth.  You try to buy easily valued assets (cash, stocks) at a discount.

I don’t really like this style of investing.  The problem is that many of these companies have terrible management.  The discount can be described as “here today, gone tomorrow”.  Often the companies will do dumb things with their money (or funnel it to insiders) and shareholders won’t make much money.  But here’s a list of them anyways.

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Avoid Technology: How does a company not manage to file its financials?

Sorry, was that a typo?  I meant to say Avid Technology (NASDAQ:AVID).  I’ve written about the company in the past (“How to lose money when you’re the market leader“).  The thing about this company that I don’t understand is why it can’t file its financials in time.  Their excuse doesn’t make sense to me.

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How to bury material information if you’re a junior miner

  1. Bury it in the middle of a press release about something else.
  2. Reveal material information in a quarterly (not annual) MD&A, because most people don’t read ’em.
  3. Simply choose not to release it.  This is probably illegal and may be considered illegal if lawyers sue company insiders.  However, some juniors have directors’ & officers’ insurance that may protect insiders against some of these claims.  NI 43-101 has reduced some of these abuses as companies now have to reveal more technical data about its properties.  The technical reports often contain information about metallurgical problems with a deposit; few companies will mention these metallurgical problems elsewhere so it can be worth reading the technical reports for yourself.  Title issues are often not revealed at all; there is no legal equivalent of a NI 43-101 report.
  4. Announce delays to releasing the information (e.g. lame excuses for why a feasibility study isn’t ready or why the scope has changed) until everybody hopefully forgets about it.  Also, make sure that negative information is released after a private placement.  Private placement investors are supposed to be sophisticated so in a courtroom you can argue that it’s their fault that they didn’t do their due diligence.
  5. Instead of announcing that your deposit is worthless in a material change report or press release, just quietly write the property down to 0 in your quarterly or annual filing.

If you blow up enough shareholder capital, eventually they won’t have anymore capital to give you.  So learn from all those part-time CEOs on the TSX Venture Exchange.  If one of their promotions blow up, they still have a few others that will pay them six-figure salaries.  It’s not like shareholders degenerate gamblers are smart enough to figure out that every unnecessary company comes with six figures worth of unnecessary listing fees, transfer agent fees, legal fees, audit fees, and directors’ salaries.  The part-time CEOs understand that they are in the business of mining… the stock markets.

Pretium: Now the pieces of the puzzle are coming together…!

Read the article “Strathcona Minerals responds to Pretium’s bulk sample result” if you haven’t already.

Originally I thought that there was either (A) fraud or (B) Strathcona screwed up.  In a totally bizarre and unexpected turn of events, Strathcona is right but there is no fraud*.

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