It’s gotten to the point where, honestly, someone needs to create a Frank Giustra ETF.
In the latest example of the growing in popularity investment strategy known as ‘Giusing’, Rouge Resources (ROU.V) announced today that billionaire philanthropist and olive oil enthusiast Frank Giustra and his cohorts have, collectively, taken a 37% stake in the company.
Why? Don’t know.
What’s going to happen with that stake? No idea.
What happened to the stock price? Oh, only up 600%. In one day. From 6c to 36c.
This is just more of the same trend that we saw last month with Golden Secret Ventures (GGS.V), which also multi-bagged on its way from 12c to 60c on no news other than The Juice was in, and Lithium-X (LIX.V) before that which, admittedly had some news and movement on its way from the 15c range to $2+, but mostly traded on big name association, and has driven huge sector gains as a by-product.
If an ETF were in place today based on what Frank Giustra is holding, it might include Catalyst Copper (CCY.V), which was at 12c in mid-February but trades at 47c today, Sky Ridge Resources (SYR.V), which was at 4c mid-2015 and trades at 28c today, Pacific Topaz (PPZ.V), which traded at 8c on January 1 and is at 18c today.
Sandspring Resources (SSP.V), jumped from 12c to 55c since February, which is pretty damn nice, and Endeavour Mining (EDV.T) is straight up filthy, up from $4.50 mid last year to $18 now.
There’s also Klondike Gold (KG.V) – up from 7c mid 2015 to 17c today, and Northern Dynasty Minerals (NDM.T), up from 32c a few months back to 56c, before settling back to a 44c base recently – both relative failures in Giustra terms, though still bringing a nice wedge.
Imagine being in a position where you could guarantee trading profits just by virtue of the fact that you’re trading. That’s the position Giustra is in right now. If he decided to buy a stake in Barkerville, Barkerville would suddenly be worth investing in, just because so many others would follow. He could buy a rusted out ’76 Chevy with three wheels and the bluebook value would jump 400% that day.
This ‘follow the money’ investing strategy isn’t new. Game theory has long been a valuable tool in figuring out what’s likely to rise and fall, and even if you think Giustra is just tossing money about on a Monopoly board, if others think there’s something bigger going on, there basically is.
With social media getting news and rumours out quickly, Google Alerts telling people whenever the name ‘Giustra’ appears in a news release, and the usual array of touts and analysts hitting their lists on the scent of a jump, you simply can’t afford to not be watching the crowd.
Some opinion outliers, the kind who out outrage and click bait ahead of facts, have accused Giustra of being part of an ongoing run of pumping and dumping, which couldn’t be further from the truth, especially as there doesn’t appear to be any dumping happening, anywhere. Those stocks are holding their ground at highs, and the day a billionaire needs to start running four month stock promotion programs on the pennies will be a day when hellfire rains and the dead walk the earth.
I don’t know what’s going into Golden Secret, or even if anything will. There’s a chance that, since people like me spotted the jump in that stock and started buying in, that maybe it was just cheaper to abandon the ticker and start afresh at Rouge. Or maybe a guy like Giustra has the ability to think about more than one property at once, and will keep propelling the mining sector forward by his own sheer force of will.
Yes, there are other groups that can bump a share price up a few hundred percent and will churn paper on the other side of that while the retail investor is still buying. I get pitches from those guys every day and largely ignore them, because a short term promotion strategy is a great way to hurt long term investors, and those are the bread and butter of the business.
If you want the market to be profitable, you have to make it profitable for all. And anyone buying on the back of Giustra’s moves right now has multiplied their money many times.
Go buy some of his olive oil and cook yourself a steak. It sure beats the collective suicide watch that was mining in 2015.
ADDENDUM:
CEO.CA User @Vaughan has done some work on the Giustra numbers here:
#GiustraETF returns based on one year time frame, mkt cap as of today. Obviously this is a flawed science, some corps he is no longer a part of, and other he was not invested a year ago. Also I used rough percentage numbers, though someone can get more precise if desired.
Just for fun:
$G – MktCap – $20.19B – Yr/return – 10%
$EDV – MktCap – $1.57B – Yr/return – 200%
$LIX – MktCap – $96.15M – Yr/return – 2000%
$CCY – MktCap – $16.25M – Yr/return – 130%
$ROU – MktCap – $2.18M – Yr/return – 1000%
$GGS – MktCap – $10.30M – Yr/return – 1666%
$NDM – MktCap – $97.75M – Yr/return – -12%
$KG – MktCap – $6.87M – Yr/return – 18%
$SSP – MktCap – $51.97M – Yr/return – 57%
$SYR.H – MktCap – $1.92M – Yr/return – 130%
$PPZ.H – MktCap – $? – Yr/return – 60%
Jeepers.
–Chris Parry
http://www.twitter.com/chrisparry
FULL DISCLOSURE: I own some Golden Secret.