Getting a few calls asking about a company I’ve been talking about for a few days.

I’m not sure if you saw what I wrote yesterday about info-sec company Plurilock (PLUR.V), which has been rocketing the last few weeks but here’s the coles notes:

Look, I don’t know, it could all turn the other way in a week and folks who’ve doubled their money already could start piling out and we’ll be back to the usual junior markets jiggery-fuckery merry-go-round, but also maybe not.

Today, after a week of doubling and smooth upward runs, the stock smoothed out. Lower volume, slight drop. [..] The next several days are going to be super-important, because they’ll tell you whether this has legs, or the legs came and went. Is it a pump or is it a re-valuation?

So here’s today.

That’s a crazy climb on not a lot of volume. A bananas rise that is starting to get people taking notice.

Why the big jump?

Well, the company rolled back 10:1 earlier in the year, so there’s only 43 million shares out. It really doesn’t take a lot of trading to move the stock right now as a result of that, and a lot of stock isn’t free trading yet due to earlier financings.

That all equals a gravity-light scenario where a little action on the buying side can equate to an outsized upward movement.

To be clear THAT’S DANGEROUS. If it doesn’t take much buying to lift a stock, it also won’t take much to make it drop.

But here’s the trading action from the last week:

No sell-offs. No profit taking. Just chewing through the resistance points like they’re nothing.

BUT HOLD ON A MINUTE:

Of course, nothing ever goes up and stays up. There’s BOUND to be someone who breaks ranks and takes what is, for some people, a triple as things stand, and the temptation to do that is only going to be stronger, the longer that rise continues.

That big green number on everyone’s portfolio is going to be tempting, but YESTERDAY was also tempting. The day before was tempting.

And yet the rise stood.

Either these early buyers are of the belief that they’re getting a straight deal as things stand and have no reason to profit-take because this company is still radically undervalued (I’m of that belief), or this is the most disciplined buying group I’ve seen in some time.

Let’s jump to full disclosure here: I already owned PLUR before this run, have bought more during the run, and they were a client some years ago. I’m VERY conflicted because I like the company, I like management, I’m making money as it rises, and I’ve been saying for a long time that the only thing holding the company share price down was perception that they may run out of money at some point.

Well they took that off the table by bringing in $5.5 million in financing a few months back, and the warrants on those financings are well in the money, which should see another $5 million roll in to the business if those warrants are exercised.

The ‘we need financing at any cost‘ risk, so prevalent with PLUR in previous years, is currently off the table.

But I like to keep things straight with my audience and run through all the perceived negatives, so let’s look at those financings:

• 22,500,000 units at $0.20 for $4.5 Million. Each unit being comprised of a share and a two-year warrant exercisable at $0.25 in the first year and $0.40 in the second year.
• 4,444,443 units at $0.225 for $1 Million. Each unit being comprised of a share and a two-year warrant exercisable for two years at $0.30.

That’s almost 27 million shares bought at around $0.20 that will be free trading in mid-August, with the same number again potentially in the warrants.

Let’s keep things one fifty here.

• Chances are good, buyers in those earlier private placements will be tempted to sell their stock position and use it to exercise those warrants, if they remain vastly in the money to that point.
• Chances are also good that the usual big money d-bags will be tempted to short the stock in advance of that date, figuring it’ll plunge when those sale trades happen so they’ll make more money on the way down.
• It’s not often that large investors on the junior markets have the discipline (or inclination) to resist early exits, even if they agree to take part in a voluntary lock-up (which would be an amazing sign to the market)

Knowing these facts doesn’t mean there’s nothing of merit with PLUR, it simply brings an understanding that life is cyclical and there will likely be a date where gravity will kick in, and though individual companies may kick off into something much bigger, they can also – sometimes – not.

What happens -now- is going to be very important.

In the coming week, this company will either be shown to be:

• A pump, in which case you’re still likely to see more buying til early August, so keep your head on a pivot for when that stops and looks to turn
• Not a pump, in which case early August will hold the line and reveal this company’s true identity by continuing to surge, and then we’re really involved in something

I’m not that guy who’ll tell you ‘to the moon, baby, billion dollar this, trillion dollar that‘.. That’s just never been my bag.

Call me a pumper and I’ll legit fight you. I’ve built a reputation and a career by playing things straight, sometimes at my own expense. I’m usually last one in, and last one out.

I do think this is a revaluation and long overdue. I think the underlying business is good, if margin-unfriendly (something they’re working on), hard for the layman to understand (something I’ve worked on), and beset by The Fear that any junior company going on this much of a rip is destined to bottle out, because we’ve seen that play out so often.

But that’s me. You’ve got to make your own call.

I believe there are three likely scenarios in August:

1. If the company has some opportunities up its sleeve, and can maybe come up with a great acquisition target or new products or a bonkers new sales contract with its newfound share equity and cash, we might see investors blow through the August date and keep fueling the boom. If that happens, we going boat shopping.
2. Alternately, those early stage players may be well-financed strong hands who have no need to tank the stock in the short term for a quick profit at the expense of bigger long term profits, and can exercise those warrants WITHOUT killing the underlying share price or even resist exercising them for another year or so.
3. Lastly, maybe some folks break ranks and take profits, PLUR comes down the other side, and the hyenas move on to the next spot on the savannah to decimate whatever gazelles are left standing.

I’m going to say, most of the time that last option is how it works, and that SUCKS for everyone – including, over the long term, the hyenas.

Sure, the deal guys can make an extra digit on their trades by savaging a company mid-rise and surprising holders, but they also end up destroying the ecosystem they live off in the process.

So by all means, take down a gazelle, take down three, but don’t take down ALL the fucking gazelles, because that leaves you hungry going forward.

Indeed, the devastation of junior markets by scummy deal guys and ruthless marketeers is why we’re all kind of struggling for good deals right now. Everyone is hurting.

Private company owners know not to dip into the dark waters of the markets because they’ve heard the stories or had the experiences, retail investors have been burned too many times to keep going back, and the regulators think it’ll all be fixed if I send them a PIF and struggle to get into SEDAR for the next six months.

BOTTOM LINE:

I think there’s a business here that’s worth far more than the current market cap.

Indeed, it’d have to get to $1.40, or a double from here, to hit the 52-week pre-rollback high, so clearly a lot of people thought this business was worth that much, even less than a year ago, when the business wasn’t in nearly as good shape.

I’m buying, and I’m not buying many things these days. Whether I stay locked in through the danger zone will depend on what I see from the business in the next month, and if the next month sees steady (read: not stupid) rises.

• I will not be the last one out.
• I will also not be the first one out.

To those who hold all the marbles, there’s a decision to make: Run this thing to the end and be covered in glory for your next ten deals you’re involved in, or step off at the next station and forever be branded just another Vancouver deal guy.

For right now anyway, ALL ABOARD. MIND THE GAP.

— Chris Parry

FULL DISCLOSURE: As stated previously, not a client. I own stock. I like management. Buying.