A few weeks ago, I started a new column for VancouverIsAwesome.com, a BC-based online news and events outfit aimed squarely at two demographics the Vancouver – and greater Canadian – financing scene routinely ignores… millennials and women.
I’ve long considered a good chunk of the misery wrought on the Canadian brokerage houses over the last several years stems from their inability to look at their customer base and identify that it’s dying. Literally dying.
When I worked at the Vancouver Sun, every year we’d get a ‘state of the nation’ chat with upper management where they’d roll through the latest market research and tell us who we were writing for.
The first year I was there, the average reader was 43. The next? 44. The next? 45.
To me, that means you need to start angling younger, because your readership otherwise is being wiped out a year at a time. It’s all well and good to say ‘our audience is seniors’ and write to that audience, but where’s the growth? Where’s the next audience going to come from?
The Canadian brokerage houses are in the same trap, only their audience is just aging, but also occasionally going broke. Run your list into too many crappy deals, and the list is going to creak to a halt.
In the old days, brokers would run finance seminars where they’d show people why they should invest, collect their contact info, and build their list from scratch. Then they’d spend a few years beating that list within an inch of its life.
Today? As one broker bails on the business, the next broker, generally younger and greener and worse paid and more desperate, inherits their list.
And finds it all the harder to finance deals using it.
I’m going in another direction. I’m not writing to people who have the same hair colour as me, though they’re welcome to stick around. I’m not going to tell people where to put their RRSPs, though they can extrapolate anything they like from my research. And I’m not going to walk people into shitty deals that paid me a few sheckels, and litter my writing with endless disclosure statements that warn you that I can’t be trusted and everything is for entertainment only and please don’t sue me.
What I’m doing, instead, is talking directly to the younger adults who have money to spend and no idea how to make that money work for them. People who don’t know how to open a broker account, or buy a stock, or why it makes sense to, but would love to if someone in the business would bother actually talking to them clearly about it.
So with that in mind, the following is a repost of my first Vancouver Is Awesome column, that explains to people who have never invested before, why they should think about buying the company that makes their favourite things, rather than buying the favourite things that company makes.
If you have friends and family who don’t understand what the markets are, maybe flip it to them as a primer.
And if you have a company on the public markets that you think could use one of those ‘three companies to watch’ slots at the bottom of the piece, drop me a note sooner rather than later, as they’re booking fast. No guarantees, because companies mentioned have to hit a certain quality threshold, but let’s talk.
Investing is Awesome: Making money on getting behind local businesses
Let’s face it, kids, unless someone you care about dies early and leaves you a chunk of real estate, you can work as hard as you want, save all you want, be as prudent as possible, but you’re still never buying a house in this city.
So be it. But that leaves a question for all you good little savers out there – what can I do with my money so that it multiplies fast enough to matter?
You could play the ponies, but the racetracks aren’t exactly teeming with well-dressed career bettors. You could hit the casino, but the odds are always with the house, unless you happen to be at the table with six drunk dudes from South Florida at 3am who think the chance of hitting a 9 on the river is a solid mathematical reason to go all in.
You could play daily fantasy sports, but 90% of the prizes in that game go to 3% of the people who run 19 accounts from a series of spreadsheets and algorithms and Swiss bank accounts.
Even people who sell weed for a living are having trouble turning a profit these days. Which is why most young adults in Vancouver tend to spend their money on trips, toys, meals, and cars, rather than putting it into investments.
Fortunately, you folks live in one of the great cities on the planet for new business ventures that you can actually invest in at the early stages, where returns can be large enough that it might have a real impact on your life going forward.
I’m not talking about big tech IPOs where the venture capitalists have already stripped away all the value, or Kickstarter campaigns where you can buy a product but no piece of the company behind it, or Gastown startups where the office chairs cost more than your couch.
I’m talking the stock market, people. Good old fashioned “buy, sell, buy.”
Sure, you may not know any more about the stock market today than you did when you first watched Trading Places (“Looking good, Billy Ray.”). And yes, Wall Street consists largely of a cadre of vicious career criminals that will one day complete their seeming mission of wiping out all worth on the planet in return for a speedboat.
But, while we wait for that to happen, you should probably take advantage of where you live and make some coin – because Vancouver is, just quietly, an epicenter of global stock investment, with literally thousands of companies going public every year through deals put together and financed in Van City.
You had no idea, right? Well, you wouldn’t. As a young adult, you’re not in the stock market demo. But your grandfather knows, because he’s the one getting the calls to invest.
How does this system work? Hordes of stockbrokers and financiers and promoters and lawyers and accountants all over the city find companies toiling away in private, and show them the potential of selling their stock to people like you by getting listed on an exchange.
Yes, you, Billy Ray.
The pros: Companies can reach out to their investors and get financing as they need it by issuing more stock.
The cons: If the stock price drops, shareholders can get antsy and throw management out.
Did you know 75% of all global mining emanates from companies based in Canada, with an even split of those companies being based out of downtown Vancouver and Toronto? Did you know over 30 Canadian companies are legally allowed to grow marijuana? That some of the largest oil, green energy, biotech and technology companies in the world today started out as little enterprises plopping onto the Canadian exchanges, and through Vancouver in particular?
Now, I know what you’re thinking – I don’t have enough money to get into the markets, and even if I did, what do I know?
Hey, you know as much as a lot of the experts, because you know what you use, what you love, what you’re pretty certain other people are loving, and what we all wish to be gone.
For example, you can look at the roads and notice an increasing number of Teslas, Priuses (Prii?), bikes, rideshares and investment in transit, and know that oil might be a dodgy investment for a while. You can do a quick check of your friends and figure out marijuana isn’t going away any time soon, and when it becomes recreationally approved, it’s likely to explode in use. You can look out the window at the nice clean sky and know coal and iron production are dead. You can see your social media feeds complaining about Monsanto destroying the global seed industry and know that’s probably not something to get behind.
You can look at your desk and see the Samsung phone, or the Pokemon Go app, or the clothing line people can’t get enough of, or the organic supermarket that you’d never cheat on with Safeway.
Every day you notice things that would be great investments, and every day you don’t think to invest.
And why would you? That Vancouver network of big money wheeler dealers doesn’t look to you for dollars, they spam-call the recent retirees and dentists and people with three mortgages and figure you younger folk aren’t as easy to sell a piece of a gold mine to because, you know, morals and all that.
Yet, when Pokemon Go launched globally, the value of Nintendo stock tripled in a few days, adding over $10 billion to the worth of the company. That wasn’t the baby boomers buying up all that stock, it was young adults.
When Tesla stock ran from $140 a share to $250 in two months, that wasn’t your grandparents investing their RRSPs, it was people like yourselves realizing, ‘heck, everyone I know wants a Tesla. Maybe I should buy some stock.’
And as for the ‘I don’t have enough money to invest’ theory, most online trading accounts can be started with as little as $1000. I’m not going to say you wouldn’t miss that much cash, but fortunes have been made from less.
In this series, what I’m going to be doing is not telling you what to buy, or how to invest. That’s the job of a professional financial advisor and, hey, I make investing mistakes like anyone else. When someone tells you ‘buy this’, you should probably figure out first what their vested interest is in you following their instruction.
What I am going to do is run the rule over some new companies that are launching on the public markets in Vancouver that you may be interested in. I’m going to give you the broad strokes, the pros and cons, what the company says it will be looking to achieve in the months ahead, and whether I believe in the deal enough to put my own money into it.
That’s right, I’m taking the ride along with you. Money where my mouth is. Live and die right there by your side.
These will often be early stage companies, full of promise (as opposed to certainty), and small enough that, if things go well, you’ll make multiples on your money. Of course, if things go badly, you’ll lose some of that money, maybe all of it. If that’s too risky for you, no harm no foul, but your online poker account has about the same level of risk and relies just as much on you knowing when to double down and when to fold.
My job is to make sure you have all the facts so you can make your own mind up in a way that’s as informed as possible.
And my credentials are solid enough for the job; I’m a journalist who did five years at the Vancouver Sun and picked up a couple of awards for my work before breaking away to immerse myself in the Vancouver business landscape at a series of online news outlets.
Today, I run my own biz news site – www.equity.guru – where you’ll be able to get deeper information on these companies if you need it.
Some of those will be very much worth your attention. Some will be the opposite. I will pull no punches in making sure you know what I think of each.
Full disclosure: I sometimes consult with companies who are looking to get in front of investors, which allows me to get in behind the scenes and be sure I’m armed with the best info available, sometimes better information than small investors are privy to. I don’t work with scumbag companies and, like a coach making his son run extra laps to make the soccer team, any company I’m involved with is held to a higher standard than the rest.
Vancouver is Awesome has asked, and I’ve agreed wholeheartedly, that any conflict of interest be presented up front, and that if a company has paid for consideration to be included in this space (and some will – that’s how V.I.A. keeps the lights on, kids), we’ll let you know clearly.
So with that in mind, let’s kick it off with three companies that I really like, none of which I have any commercial interest in, good Canadian companies all.
Company: INTEGRA GOLD CORP. (http://www.integragold.com)
Value: $376 million
Share cost (at time of writing): $0.93
Share cost at start of 2016: $0.34
Investor return: 173%
What it does: Integra has a gold mine in Quebec.
Why I like it: Integra does everything traditional mining companies don’t. They took a troublesome (therefore cheap) piece of land that two other companies had missed on. They brought on a young, hard working management team with new ideas that other companies had dismissed. They didn’t raise many millions of dollars to poke an unending number of holes in its land to prove out a claim of massive paydirt. Instead, they focused on where they knew a small amount of gold was and moved right to small scale production, reasoning the money they would make would pay for ongoing expansion. They were right. Integra has gone from nothing to $300m in short time.
What’s cool about them: They took a boatload of old mining data recently and, instead of keeping it to themselves, ran a competition where they agreed to give $100,000 to whatever stats geek could go through that data and find the best future drill targets. Open sourcing their private data was ground-breaking, great marketing, and opened a lot of new targets for them. Also, they bought a mill that someone previously paid $700m for.. for just $7m.
What’s not so cool about them: You missed the last year, where the stock ran up 400%. Also, it’s mining which, morally, is often yucky. But these guys are mining in Quebec, not burning shanty towns in Chile, or filling rivers with mercury in Brazil. You could order a pizza from their dig and have it in 20 minutes.
Looking forward: The gold sector is doing great right now, as gold prices keep creeping higher. I don’t expect Integra to have a problem making more money next year than the last.
Any conflicts: I bought some stock in the company because it’s a great team at a great company that are Moneyballing it up.
Value: $28.7 million
Share cost (at time of writing): $0.54
Share cost at start of trading (June 10): $0.15
Investor return: 273%
What it does: Ydreams does interactive displays, exhibitions, buildings, robots, augmented reality, and multimedia installations.
Why I like it: The craze over augmented reality that you’re seeing with Pokemon Go right now? Ydreams has been dealing in augmented reality for a decade, and it just moved from Brazil up to Canada to attack the North American market at the exact time everyone is understanding what’s possible in this field.
What’s cool about them: Clients like Coca Cola, Audi, Inbev, Cisco, L’Oreal, Qualcomm and more have run some 900 projects through the company before it went public. They bring with them to Canada a deep catalogue of interactive, augmented reality and virtual reality products that are already produced and tested, such as apps that you can draw on that make the side of a hotel light up, or mall aquariums where kids can create a fish that they have to return to feed every week, or VR games at the World Cup.
What’s not so cool about them: It took a year to get through the auditing process to get listed in Canada, a drag that took the wind out of investor sails. Initially, many potential investors were adopting a wait and see approach. Now they’re starting to pile on.
Looking forward: Everything now hinges on sales in North America, but I hear rumblings announcements aren’t far off.
Any conflicts: None. I’ve been telling investors about the company for some time, but no commercial connection.
Company: PEEKABOO BEANS (https://www.peekaboobeans.com)
Value: $8 million
Share cost (at time of writing): $1.05
Shares only available to accredited investors at present, listing on markets soon
What it does: Peekaboo Beans is a local children’s play wear company that sells through direct sales parties and events, through a network of around 1,000 representatives.
Why I like it: The company has built itself up privately to a current annual sales of $3m per year, and is growing nicely. Kids’ clothing is big business and moms love a referral from other moms, so the parties work well.
What’s cool about them: Peekaboo Beans builds kids’ playgrounds on the side. Because it takes a village, you know?
What’s not so cool about them: Well, we don’t know much about profitability right now, but we do know some $680,000 of the $2.5m financing they’re doing is coming from people who sell their products, which is an amazing vote of confidence.
Looking forward: I’d expect, with a lot of passionate first time stock buyers in the mix, Peekaboo Beans will hit the market running. It’s a small company, so there’s potential for a nice return on your money if things go well, and with the company outsourcing production and selling sales packages hand over fist, it’s an interesting little deal.
NOTE: Because this is a pre-listing financing, if you want in, you have to be an accredited investor. That means you need to have either a million in liquid funds at hand, or you need to earn $200,000 a year. Or you need to be friends with the founders, or an employee. Just call them and talk about it. Details here. At worst, you can wait for it to go public shortly.
Any conflicts: None.
Thanks for reading. For more, visit www.equity.guru and tell me about companies you like.
Or just make fun of my profile pic. Whichever.
— Chris Parry