The value of shouting: Why some stocks kill it and others wilt

It’s been a good week for Equity.Guru-covered companies. Yesterday, Golden Leaf Holdings (GLH.C) blew through multiple resistance points, hitting $0.51, up from $0.27 just a week earlier (it has slid back into the low $0.40’s since, which is a fair base).

RewardStream (REW.V), the B2B loyalty rewards tracker, has finally gained some traction since we told our VanacouverIsAwesome audience about its existence and covered it again earlier this week. That’s up 14.2% today.

Veritas Pharma (VRT.C) has been a little buzzy on the street of late, and that’s translated to a push through into the mid-$0.30’s, up from $0.27 last Friday. It’s up 13.7% today.

And Nano One Materials (NNO.V), the nanotechnology IP company with technology it says can sub out expensive elements like cobalt in the production of rechargeable batteries, that is making the most serious run. Nano had a weak August where it drifted as low as $0.45, down from the low $0.50’s it had occupied for some time, only to take off in the last week, now hitting $0.62, with a 12.7% jump today.

This is all great news for readers of the site, especially if they’ve put their money in the same places I have.

But not every company is killing it.

One company that is, frankly, flummoxing me is Distinct Infrastructure (DUG.V), an infrastructure outfit doing business with telecommunications companies and municipalities that has a market cap about in line with its quarterly revenues, that is rapidly growing and hiring and pulling down big contracts, and yet is dwarfed on the market by LiteAccess Technologies (LTE.C), which has smaller contracts, fewer product offerings for clients, but knows how to inspire the market.

I’ve had large investors in DUG ask me to look at the stock all year, so I communicated with the exec team, and I really liked what I saw.

But they just don’t do any promotion of the company to the investment community, some of whom have been in the thing long enough to be running low in patience about now, as other investment options (including LTE) move past them.

DUG rolled back the stock 10:1 a few weeks back, which is helpful in the long term, but has killed it in the short. Volume has dropped off, the share price has lost about 25% of its value, and all while LTE has blasted from $1.20 to $1.60, while holding a private placement financing at $1.15 that has been increased from it’s initial $2.5 million target – twice now – to sit at $3.5 million. And no warrants.

Probably not a stretch to assume a lot of that DUG money has shifted to the LTE raise. Which is mindboggling based purely on fundamentals, but a great example of what happens when one competitor promotes itself and the other thinks, ‘nope, that’s okay, people will figure it out eventually…’

Another example of this thinking is happening over at Scientific Metals (STM.V). I like what they’ve got, and their new plans are worth shouting about. So much so that I’m actively trying to shout about them, but have had an article about the company held up in fact checking for over a week now. Meanwhile, the stock slides from $0.09 to $0.08 and, today, $0.075.

I see this sort of thing play out a lot at my desk at Casa Guru. Companies that hire an IR firm to help get people interested in the stock, but don’t want to be seen as ‘one of those Vancouver companies’ by actually telling investors what they’re doing, and therefore leave their IR guys to cash cheques while begging folks to cover them for free.

I cover a lot of companies for free, if I really like the story. I figure you deserve to hear abotu every opportunity, not just the ones that sponsor this site, but sponsoring the site is, in itself, a mark that a company is doing some serious marketing of itself and will likely rise in value.

Nano One is all over my phone whenever I call them, and their stock moved hard from $0.15 earlier this year to the four-bagger it’s at now. It’s a good company, but it knows how to tell people that, rather than sitting there letting short sellers neg the stock and not responding in any way.

Golden Leaf’s pulling its act together, after about six months in which its management team actively held back from talking to the market, allowing shorters to completely control the narrative. I did what I could to correct the record (I was a consultant to the company at the time), but when I couldn’t get my calls answered, I was really up against it and, eventually, had to just cede my ground to the shady types.

IBC Advanced Alloys (IB.V) is one of my favourite opportunities. Military-approved alloy tech that allows them to make beryllium alloy parts for the new jet fighters Lochheed Martin puts out, lighter, stronger than the previous options – military contracts, money in the door – what’s not to love?

Well, the fact that you’ve probably never heard about it, for one. I put a podcast out for them earlier in the year and the stock ran the following day. Then I never heard from them again. I would say this isn’t rocket science, but at IBC, it literally could be.

A lot of the companies I talk about at EG are client companies – they’re putting money into being seen by as many potential investors as possible, and when I say nice things about them (I don’t always, as seen above), that’s not me selling out. An active market awareness program is an imperative when you want to be noticed by investors who are looking at 6,000 other options besides yours when thinking about where to put their money.

If you run a program through this site, that’s a sign you’re serious about getting the word out. If you don’t run a program through me, but you do through a bunch of other outlets, that’s also a positive sign. Kudos to LTE – I wrote about them back when they didn’t have a pot to piss in, and as they rocketed away, I often suggested they’d gone too far to the other side. But they’ve turned that elevated market cap into market share, which is how it should be done, and they deserve every multiple they’ve climbed over the last year.

Promotion is often seen as a dirty word in this country. It conjures images of sharp-suited, pomade-slicked, boiler room-running rounders who’ll push any company, no matter how dogshit, to any old lady who has a freshly cashed life insurance cheque from her old man. And, trust me, I get a lot of calls from those guys. Sometimes, in the absence of Very Serious People reaching out, the pomade crowd get my attention, because they’re putting out news and VerySeriousPeople Inc is telling people to wait for the quarterlies.

Every industry has its sharks, and the finance world has no shortage. But the reason those sharks do so well is because the straight shooters, the companies that are trying to actually build something, so frequently do so in silence. They wear their refusal to compete as a badge of honour, rather than realizing what they’re doing is akin to opening a car dealership and refusing to advertise it in the newspaper.

I talked to a guy about a mining deal this week. It was a fine enough opportunity I guess. We spoke for an hour about it. I asked him what he was going to do to get the word out, and he said, “Oh, we don’t have a budget for that.”

That wasn’t my question, but it kind of answered it. They’re going to do nothing to get the word out. In competition with 6,000 other resource stocks, they’re going to just toss it out there and hope it catches on.

Or, as I call it, the ‘I Put Out A News Release, What More Do You Want’ plan.

Last week, I had talks with over a dozen companies who REALLY want to get in front of you guys, who believe they have a great story to tell, and who feel like it’s an important part of their company plan to bring you in. And I got phone calls from a dozen more who have a press release they tossed out and wondered if I got it and if I had a chance would I maybe share it with NO GO AWAY I’M BUSY.

If I look at the companies that have done well in the last week, the ones on my radar, it’s the guys who are actively working with media to share their tale, and do so again and again, and think about how they can tell their story better, and invest in hitting new audiences often, that are building big companies.

It’s the LTE’s.

It’s not the DUG’s.

And the fact that DUG has superior fundamentals and genuinely big upside, yet is being slaughtered on the markets, tells you that a large part of the Canadian investor audience is grading ‘are you doing promo’ with similar weight as it is ‘how much money is in your bank account’ or ‘what grade are you pulling out of the ground’ or ‘do you make revenue.’

— Chris Parry

Leave a Reply

1 Comment on "The value of shouting: Why some stocks kill it and others wilt"

Notify of
Sort by:   newest | oldest | most voted

Comments about recent GLH financing? Naysayers back in full force after this deal… any hope for current shareholders still underwater? Was hoping things were finally turning around. Want to support them but not sure what to think anymore. Seem to be the real deal and one of the good ones yet tide lifting all boats to incredible/crazy valuations but theirs. Disappointing that huge potential has not been realized to date.