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Message: Why We Are Trading At This Level

Hello All,

 

Been several years since I've used this site. I was an investor in Probe the last go around and am in it to win it again this time. I won't repeat all of the same reasons you all have (Dave, Val D'Or, Healthy Treasury, Connected Board, etc...) but I am commited to the end.

So, I have a few theories about why we are trading where we are in a gold bull market, spectacular property in a ready to go and friendly mining juristiction, and cream of the crop management team.

Lets establish a few premises that are factual and irrefutable.

First, Illiquidity. There are 110.65 mio shares outstanding before warrants and dilution. The average trading volume is 21.9 thousand shares. I can't even do that math on my calculator as it returns a bunch of zeros with an E at the end but it is a VERY LOW trading volume.

Second, the majority of the outstanding shares are in the hands of a relatively small group of institutional, strategic, and individual investors. I apologize but I don't have firm stats on who the reportable larger investors are and their respective ownership stakes but you get the picture and know who those guys are. On the non-reportable side, I am aware of several of us that hold decent size positions (a poster on this baord recently said 1.1 mio shares). So, its safe to say that this is a closely held stock.

So here's what I think is going on. There is a Cap on the stock price to keep it low.

Lets say a major or two are committed to buy Probe at a point in the near future. Maybe they are buying back their own shares to create currency for transactions or they are waiting on a few more findings to justify it to their board. Who knows exactly but this is a pattern of the past in the junior acquisition chess game. If a major has a target in mind, they can wait for it to stumble an deplete its treasury and then scoop it up for nothing. This isn't happening because Dave wn't allow it to.

So their other tool is to depress the stock price by short selling. Think about it this way. If you think the target is a good deal at $5 and you can keep a morphine drip short selling attack with a million shares committed to the short, every $1 you depress the share price is worth 110.65 million dollars off of the acquisition price. If you are wrong, it costs you only $1 mio for every dollar the price appreciates.

This has been happening in the M&A universe ever since short selling became allowable. The acquiring company can also capitalize the losses associated with the short selling as part of the cost basis for the deal therby reducing the tax burden.

I could be way off base here but thats what I think is happening.

Somone mentioned here or another board that If Probe gets acquired for only a 150% premium from current levels, that it was a waste of an investment versus other opportunities. This may be true but there is a caveat. I believe that the comparitive risk of Probe versus other investments needs to be taken into account. Probe has a PROVEN resource. The manipulation desribed above will undoubtedly reduce the full value acievable to us investors but, there is a much higher probability that it will come to fruition versus other possible investment candidates. This "expected value" is what I am banking on.

Thanks and Good Luck all!

 

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