This is a re-visit of an old, yet timeless, article on stock warrants. Nothing has changed with warrants and the opportunities are endless as we now have warrants trading in all industries and sectors including resources, marijuana/cannabis, pharmaceuticals, biotechnology, etc., some with expiration dates of 5 years or more.
My contact info which was on Futures Magazine in the original article has changed, but otherwise, all is correct.
Read the entire article on Futures Magazine or below:
Many traders are familiar with call options and have spent many years and study hours learning strategies to employ them in the markets. Warrants, however, are still a little known and little-understood investment vehicle, even after 80 years of availability. In 1949, Sidney Fried wrote “The Speculative Merits of Common Stock Warrants.” In it, he captures the profit potential of these instruments.
“Common stock warrants turn in the most spectacular performance of any group of securities…. The speculative potentialities of common stock warrants are enormous…. With potential profits and potential losses so great it is a source of wonder that so little understanding of the nature of common stock warrants exists not only among the investing public who might be forgiven this sin, but even among the many professionals of the business upon whom the public depends for information and guidance.”
Sidney Fried’s observation in 1949 remains relevant today. Most investors and analysts do not take the time to understand the potential leverage — and the consequences — that warrants can bring to a portfolio.
Here, we’ll take a closer look at warrants from the trader’s perspective, compare them to call options and discuss when call options or warrants would be the most appropriate investment vehicle to accomplish a particular objective.
WARRANTS VS. OPTIONS
A warrant is a security issued by a company giving the holder the right, but not the obligation, to acquire the underlying company’s shares at a specific price. That right expires on a specific date in the future. Generally, warrants are issued in connection with a stock or a bond offering. Frequently, they are done so in the context of an “equity kicker” or “sweetener.” The reason a company will issue a warrant is simple; think of it as additional incentive to get the deal done.
There is an obvious similarity to call options. The two instruments are closely related. The major difference is that a call option is created in the marketplace by investors and not issued by a company. Typically, options trade on designated options exchanges, such as the Chicago Board Options Exchange. Warrants will trade on a traditional stock exchange, such as the New York Stock Exchange or the Toronto Stock Exchange, just like their common shares.
Warrants first came about in the 1920s. At one time, even AT&T had warrants trading, as well as some of the big company names of the past and present: Tenneco, Avco, Holiday Inn, International Tel & Tel, Lowes, General Tire & Rubber, Mack Trucks and many more.
Fast forward to today, and you will discover that many warrants are issued on the shares of natural resource companies, an area in which many traders have a special interest because of the commodity boom. Many companies that offer warrants trading are involved in the extraction and processing of gold, silver, oil and gas, uranium, coal, zinc and copper.
To name a few, you will find Goldcorp, Kinross and Silver Wheaton with warrants trading, as well as call options.
The first step in warrant trading is selecting the right underlying company. This is of utmost importance because if the company does not execute on its business plan and the common shares do not rise, holders of either call options or warrants will not make money. Each investor must perform his or her own due diligence on companies that are attractive for investment.
The next consideration is time horizon. Once a viable company is selected, the decision to purchase a warrant or a call option will depend on the timeframe of the trader’s goals. While traditional call options generally have a life of between 30 days and one year, warrants often are issued with five years or more until expiration. Thus, short-term traders may see more opportunity in call options, while longer-term investors may be more comfortable with the several years until expiration that warrants provide. This additional time can be a great asset in the volatile markets we have experienced over the last two years.
Whether the investor is considering call options or warrants, the underlying reason is basically the same: increased leverage. Both warrants and options offer additional leverage over purchasing a stock outright. Of course, as with all forms of leverage, the leverage afforded by warrants cuts both ways.
When it comes to warrants, traders can expect to achieve at least a two-to-one leverage over purchasing the common shares; this is reasonable with most of the warrants currently trading. What this means is if you believe the common shares will rise 100%, then the warrants have the potential to increase by at least 200%.
One stock that has attracted a lot of attention in the mining sector is Agnico-Eagle Mines. Focused on gold, with operations in Canada, Finland and Mexico — and additional development activities in the United States — Agnico-Eagle Mines benefits from significant international exposure. Its LaRonde Mine in Quebec is Canada’s largest operating gold mine, measured by reserves. Not surprisingly, the company’s stock has risen significantly along with the price of gold, and its warrants have been similarly popular.
The company trades under the symbol AEM on the NYSE, as well as the TSX. For several years, AEM had a long-term warrant trading, but it was overlooked by most investors and analysts. The warrant traded under the symbol AEMLW in the OTC market.
To see how the leverage of this particular warrant can amplify returns, go back to 2006-07. Each warrant entitled the owner to purchase one share of Agnico-Eagle common stock at $19 until Nov. 14, 2007. By then, the warrant had been trading for several years.
From the stock’s low on June 13, 2006, to the close on Oct. 12, 2007, it rose from $26.02 to $54.68, a rise of 110%. The warrant rose from $10.86 to $35.75, for an increase of 329%, providing the warrant trader with three-to-one leverage over owning the common stock. Investors privy to the warrants trading on Agnico-Eagle made an incredible gain on these warrants in a rather short period of time. Of course, if an investor had purchased call options during this period of time, they also would have made a significant profit.
A few other examples of warrants with great leverage returns in the last few years are Kimber Resources (6.1-to-1 leverage), Peru Copper (10.4-to-1 leverage) and Blue Pearl Mining (2.8-to-1 leverage).
Sometimes, it’s argued that warrants have a dilutive affect on the company’s capital structure and that investors should avoid them. From an accounting standpoint, the warrant is already issued. It is already trading on the market, and its effects are already in place. Interested investors are only taking advantage (if they desire to do so) of the leverage opportunities that the warrant furnishes.
In addition to speculative opportunities, warrants also provide hedging benefits. When combined with both put and call options, warrants also can be used to construct some rather interesting, sophisticated and potentially profitable trading strategies.
February 6, 2019 Chris Vermeulen The Technical Traders Ltd. research team has been on top of nearly every move in the metals markets over the past 12+ months. On February 1, we posted this article: Get Ready For The Next Big Upside Leg In Metals/Miners. In this post, we suggested that the recent peak in Gold, near $1330, would likely end and prompt a downside price rotation over the next 45+ days. Subsequently, on January 28, we posted this article: 45 Days Until A Multi-Year Breakout For Precious Metals. In that post, we highlighted our predictive modeling systems support of a sideways price correction in the precious metals markets that would align with US stock market strength and US Dollar strength. Today, the price is moving in favor to confirm that our modeling systems and research is correct again. Gold has recently broken lower, below $1315, and appears to be … Continue reading
January 28, 2019 Chris Vermeulen Today is the day we want to warn our followers that we expect the precious metals to continue to base with a fairly narrow price range for about 45 to 65 more days before upside pricing pressures start to take hold of the markets. There has been quite a bit of chatter about Gold breaking above $1300 recently. Many people have been expecting it to move much higher fairly quickly. We don’t believe that will be the case – but expect it have another significant rally in April, May or June. Monthly Gold Forecast Chart – Posted October 2018 Back in early October 2018, we shared this chart with all of our followers suggesting that Gold and precious metals would rally to above $1300 near December/January using our Adaptive Dynamic Learning predictive modeling system. We’ve been suggesting to our followers for … Continue reading
February 2, 2019
Justin’s note: Today, we hand the reins to Casey Research’s in-house commodities expert, David Forest, who says commodities are primed for an explosive bull run.
In fact, as you’ll see, this could be their biggest rally in 50 years… and now is the time to take advantage.
Read on to get all the details, including a “one-click” way to get exposure today.
By David Forest, editor, International Speculator
It’s the most important chart in the resource space today…
And it’s telling us that commodities are primed for their biggest rally of the last 50 years.
Why is this the best setup for commodities in half a century?
• Take a look below…
The chart I’m referring to tracks the S&P GSCI – which tracks prices for 24 commonly traded commodities – relative to the S&P 500. We’ve labeled a few important events on it…
When the blue line on the chart is rising, commodities are getting more expensive relative to the S&P 500 – a good proxy for the U.S. stock market. When the line is falling, commodities are getting cheaper relative to stocks.
As you can see, when commodities are at historic lows relative to stocks [green circles on the chart], it’s been a great time to buy.
For instance, two entry points for investors in the past were in 1971 – after we went off the gold standard – and in 1999, at the peak of the dot-com bubble. Between 1971 and 1974, the S&P GSCI rocketed 371% higher. And from 1999 to 2008, it shot up 454%.
• The opposite is true, too…
History shows you don’t want to be loading up on commodities when they’re expensive relative to stocks.
For instance, the S&P GSCI was at an extreme high relative to stocks [red circles on the chart] in 1990, at the peak of the Gulf Crisis, when Saddam Hussein’s army was rolling into neighboring Kuwait. That was a terrible time to be a commodities buyer. The S&P GSCI plunged 70% from the end of September 1990 to December 1998.
Another peak for commodities relative to stocks was in 2008, at the start of the global financial crisis. And again, that was a terrible time to buy commodities. From July 2008 to February 2009, the S&P GSCI experienced a 65% peak-to-trough fall.
• If past is prologue, that means commodities are primed for another explosive bull run…
Today, the ratio of the S&P GSCI to the S&P 500 is 0.91. The average ratio going back to 1970 is 3.9.
In other words, the commodities sector is currently 77% below its average price relationship with stocks over the past half-century. And it’s lower, on a relative basis, than it was ahead of the big commodities rallies in the early 1970s and the early 2000s.
There are lots of other considerations when it comes to buying natural resources.
But if you filter out the noise… and just buy when commodities are historically cheap relative to stocks… you’ll do very well indeed.
An easy, “one-click” way to get exposure today is to buy the Invesco DB Commodity Index Tracking Fund (DBC).
It gives you exposure to the 14 most heavily traded commodities.
You only need to invest a little bit of money to take advantage of this historic setup.
Editor, International Speculator
Note from Dudley Pierce Baker:
We are pleased to share this news release as Equinox Gold shares and warrants
are one of my top personal positions. Things are looking good……
Equinox Gold Reports 2018 Highlights and 2019 Guidance
JANUARY 8, 2019
All dollar amounts are expressed in US$
Equinox Gold Corp. (TSX-V: EQX, OTC: EQXFF) (“Equinox Gold” or the “Company”) today announced its 2018 highlights and 2019 guidance. Equinox Gold produced approximately 26,000 ounces (“oz”) of gold in 2018 from its recently acquired Mesquite Mine in California, and expects to produce 230,000 to 265,000 oz of gold in 2019 from Mesquite and its Aurizona Mine in Brazil at all-in-sustaining costs1 (“AISC”) of $900/oz to $950/oz.
“Equinox Gold has achieved tremendous growth over the last year and will soon become a multi-mine gold producer,” said Christian Milau, CEO of Equinox Gold. “This momentum will continue in 2019 as we plan for construction at our Castle Mountain Mine, capitalize on growth opportunities at our existing assets and continue to assess accretive acquisition opportunities.”
- Acquired Mesquite Gold Mine and produced approximately 26,000 oz of gold from October 30 to December 31, 2018 (full-year 2018 production of approximately 140,000 oz)
- Advanced Aurizona construction for commercial production around the end of Q1-2019
- Completed Castle Mountain prefeasibility study outlining a long-life, low-cost gold mine producing 200,000 oz/year
- 480% increase in proven and probable reserves to 5.7 million oz of gold
- 350% increase in measured and indicated resources to 8.3 million oz of gold (inclusive of reserves)
- New gold discoveries at Aurizona and Castle Mountain
- Completed spin-out of Solaris Copper to Equinox Gold shareholders and sale of the Koricancha Mill
- Cash balance (unrestricted) at December 31, 2018 of approximately $60 million (unaudited) with an additional $10 million available to draw under the Aurizona construction facility
The 2018 production and cash figures are preliminary and are subject to change when the Company releases its Q4 and annual audited 2018 financial results in March.
Equinox Gold’s 2019 production and cost guidance provided below is based on information available at January 8, 2019. The Company may revise guidance during the year to reflect actual and anticipated results. Key assumptions used to forecast 2019 total AISC include a gold price of $1,250/oz and an exchange rate of BRL3.6 to USD1.
|Mesquite||145,000 – 160,000||$950 – $1,000||$11 M||$4 M|
|Aurizona||85,000 – 105,000||$800 – $875||$16 M||$31 M|
|Total||230,000 – 265,000||$900 – $950||$27 M||$35 M|
1 AISC is a non-GAAP measure. See All-in Sustaining Costs in Cautionary Notes.
The 2019 production guidance includes gold ounces produced at the Aurizona Mine prior to the commencement of commercial production, which is expected around the end of Q1-2019. Combined gold production is expected to increase substantially in Q2-2019 with Aurizona in commercial production.
Equinox Gold has budgeted a total capital spend of $62 million at the Mesquite and Aurizona mines during 2019. At Aurizona, the Company expects to spend $31 million to complete construction and commissioning during Q1-2019 and an additional $16 million of sustaining capex over the year that includes completion of the second tailings storage facility lift. At Mesquite, the Company expects to spend $11 million in sustaining capital primarily related to capitalized waste stripping within the open pit as well as $4 million in non-sustaining costs primarily related to drilling mineralized waste dumps and leach pads that are expected to be classified as ore.
Mesquite Gold Mine
Mesquite is an operating open-pit heap leach gold mine in southern California that Equinox Gold acquired during Q4-2018. Activities at Mesquite during 2019 will focus on:
- Executing on opportunities to increase production and reduce costs
- Completing a $4 million drill program focused on mine life extension, including targets in and peripheral to the existing open pit as well as mineralized waste dumps and leach pads on site
- Applying for permits to explore and drill new concessions
Aurizona Gold Mine
Aurizona is an open-pit gold mine in northeastern Brazil where the Company commenced full-scale construction in January 2018. Activities at Aurizona during 2019 will focus on:
- Completing construction and commissioning the plant during Q1-2019 to achieve commercial production around the end of Q1-2019
- Completing construction of the next tailings storage facility lift
- Completing preliminary assessment of the potential for an underground mine at Aurizona
- Updating the resource based on near-mine drilling completed during 2017 and 2018
- Exploration at Tatajuba and other targets in the second half of 2019 to extend the open-pit mine life
Castle Mountain Mine
Castle Mountain is a past-producing open-pit heap leach gold mine located approximately 200 miles north of Mesquite in California. Based on the July 2018 prefeasibility study, Castle Mountain is expected to produce 45,000 oz of gold per year during Phase 1 (years 1-3) and more than 200,000 oz of gold per year during Phase 2 (years 4-16). Activities at Castle Mountain during 2019 will focus on:
- Completing engineering and final permitting for Phase 1 and arranging financing in order to commence Phase 1 construction around mid-year at a capital cost of approximately $50 million, with the objective to achieve first gold production in the first half of 2020
- Advancing permitting and development of water wells for the Phase 2 expansion, and completing the Phase 2 feasibility study by year-end 2019
- Executing on infrastructure, equipment and administrative synergies between Mesquite and Castle Mountain
James (Jim) Currie, P.Eng., Equinox Gold’s Chief Operating Officer, and Scott Heffernan, MSc, P.Geo., Equinox Gold’s EVP Exploration, are the Qualified Persons under National Instrument 43-101 for Equinox Gold and have reviewed, approved and verified the technical content of this news release.
About Equinox Gold
Equinox Gold is a Canadian mining company with a multi-million-ounce gold reserve base, gold production from its Mesquite Gold Mine in California, and near-term production growth from two past-producing mines in Brazil and California. Construction is well advanced at the Company’s Aurizona Gold Mine in Brazil and on schedule to achieve commercial production around the end of Q1-2019, and the Company is advancing its Castle Mountain Gold Mine in California with the objective of achieving Phase 1 production in the first half of 2020. Further information about Equinox Gold’s portfolio of assets and long-term growth strategy is available at www.equinoxgold.com or by email at email@example.com.
Equinox Gold Contacts
Christian Milau, CEO
Rhylin Bailie, Vice President Investor Relations
Tel: +1 604-558-0560
Cautionary Notes and Forward-Looking Statements
Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation and may include future-oriented financial information. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements or information in this news release relate to, among other things: future financial or operational performance, including estimated production of gold and estimated mine site AISC in 2019; the ability of the Company to successfully complete construction activities and the planned restart of production at Aurizona; to operate Mesquite, including with respect to production; development and timing of anticipated production at Castle Mountain; and the growth potential of the Company. Forward-looking statements or information generally identified by the use of the words “will”, “advancing”, “strategy”, “plans”, “budget”, “anticipated”, “expected”, “estimated” and similar expressions and phrases or statements that certain actions, events or results “may”, “could”, “should”, “will be taken” or “be achieved”, or the negative connotation of such terms, are intended to identify forward-looking statements and information. Although the Company believes that the expectations reflected in such forward-looking statements and information are reasonable, undue reliance should not be placed on forward-looking statements since the Company can give no assurance that such expectations will prove to be correct. The Company has based these forward-looking statements and information on the Company’s current expectations and projections about future events and these assumptions include: tonnage of ore to be mined and processed; ore grades and recoveries; prices for gold remaining as estimated; the construction and planned production at Aurizona and Castle Mountain being completed and performed in accordance with current expectations; currency exchange rates remaining as estimated; availability of funds for the Company’s projects and future cash requirements; capital, decommissioning and reclamation estimates; the Company’s mineral reserve and resource estimates and the assumptions on which they are based; prices for energy inputs, labour, materials, supplies and services; no labour-related disruptions and no unplanned delays or interruptions in scheduled development and production; all necessary permits, licenses and regulatory approvals are received in a timely manner; and the Company’s ability to comply with environmental, health and safety laws. While the Company considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. Accordingly, readers are cautioned not to put undue reliance on the forward-looking statements or information contained in this news release.
The Company cautions that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements or information contained in this news release and the Company has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: fluctuations in gold prices; fluctuations in prices for energy inputs, labour, materials, supplies and services; fluctuations in currency markets; operational risks and hazards inherent with the business of mining (including environmental accidents and hazards, industrial accidents, equipment breakdown, usual or unexpected geological or structural formations, cave-ins, flooding and severe weather); inadequate insurance, or inability to obtain insurance to cover these risks and hazards; employee relations; relationships with, and claims by, local communities and indigenous populations; the Company’s ability to obtain all necessary permits, licenses and regulatory approvals in a timely manner; changes in laws, regulations and government practices, including environmental, export and import laws and regulations; legal restrictions relating to mining; risks relating to expropriation; increased competition in the mining industry; and those factors identified in the Company’s management information circular dated June 20, 2018 and in its MD&A dated October 30, 2018, which are available on SEDAR at www.sedar.com. Forward-looking statements and information are designed to help readers understand management’s views as of that time with respect to future events and speak only as of the date they are made. Except as required by applicable law, the Company assumes no obligation and does not intend to update or to publicly announce the results of any change to any forward-looking statement or information contained or incorporated by reference to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting the forward-looking statements and information. If the Company updates any one or more forward-looking statements, no inference should be drawn that the Company will make additional updates with respect to those or other forward-looking statements. All forward-looking statements and information contained in this news release are expressly qualified in their entirety by this cautionary statement.
This news release refers to expected AISC per ounce which is a non-GAAP (generally accepted accounting principles) measure. This measurement has no standardized meaning under International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other companies. This measurement is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Cash costs include mine site operating costs, but are exclusive of amortization, reclamation, capital and exploration costs and net of by-product sales and then divided by ounces sold to arrive at cash costs per ounce. AISC per ounce starts with total cash costs and adds net capital expenditures that are sustaining in nature, mine site general and administrative costs, capitalized and expensed exploration that is sustaining in nature and environmental reclamation costs, all divided by ounces sold to arrive at AISC per ounce. Management believes AISC is a measure commonly used in the gold mining industry and is useful for monitoring the performance of operations and the ability of mines to generate positive cashflow.
Reserve and Resource Estimates
Equinox Gold’s proven and probable reserves total 5.7 million ounces of gold at 0.62 g/t gold, with 150.7 million tonnes of proven reserves at 0.63 g/t gold for 3.0 million ounces, and 131.9 million tonnes of probable reserves at 0.62 g/t gold for 2.6 million ounces. The Company’s measured and indicated resources, inclusive of reserves, total 8.3 million ounces of gold at 0.62 g/t gold, with 174.1 million tonnes of measured resources at 0.63 g/t gold for 3.5 million ounces, and 177.3 million tonnes of indicated resources at 0.63 g/t gold for 3.6 million ounces. Mesquite resources and reserves have been summed for the purposes of this news release as they are typically reported exclusive of each other. Reserves and resources for Aurizona were disclosed in the “Feasibility Study on the Aurizona Gold Mine Project” prepared by Lycopodium Minerals Canada Ltd. with an effective date of July 10, 2017. Reserves and resources for Castle Mountain were disclosed in the “NI 43-101 Technical Report on the Preliminary Feasibility Study for the Castle Mountain Project” prepared by Kappes, Cassiday and Associates with an effective date of July 16, 2018. All technical information related to Mesquite is based on the “Technical Report on the Mesquite Mine, Imperial County, California, U.S.A.” prepared by Rosco Postle Associates Inc. for New Gold Inc. dated February 28, 2014. To the best of the Company’s knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of Mesquite mineral reserves misleading. The Company will release a new technical report for the Mesquite Mine in March 2019. All of the technical reports are available for download on the Company’s website at www.equinoxgold.com and on SEDAR at www.sedar.com.
Information regarding reserve and resource estimates has been prepared in accordance with Canadian standards under applicable Canadian securities laws and may not be comparable to similar information for United States companies. The terms “Mineral Resource”, “Measured Mineral Resource” and “Indicated Mineral Resource” used in this news release are Canadian mining terms as defined in accordance with NI 43-101 under guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council on May 10, 2014. While the terms “Mineral Resource”, “Measured Mineral Resource” and “Indicated Mineral Resource” are recognized and required by Canadian regulations, they are not defined terms under standards of the United States Securities and Exchange Commission. Under United States standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve calculation is made. As such, certain information contained in this news release concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the United States Securities and Exchange Commission. Readers are cautioned not to assume that all or any part of Measured or Indicated Resources will ever be converted into Mineral Reserves. In addition, the definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” under CIM standards differ in certain respects from the standards of the United States Securities and Exchange Commission.
Dudley Baker of Junior Mining News Recommends Kootenay Silver (TSX-V:KTN/OTC:KOOYF)
Dudley Baker of Junior Mining News Recommends Kootenay Silver (TSX-V:KTN/OTC:KOOYF) In full disclosure, Dudley currently owns shares and warrants of Kootenay Silver as it is one of his top 10 holdings. In this segment of The Ellis Martin Report, Dudley Baker opines opportunities in the precious metals sector including Kootenay Silver and more! .Click on Video Above or Listen Here: … Continue reading
Note from Dudley Pierce Baker
I have maintained a subscription to INKResearch.com for many years allowing me to track insider trading in Canada and the U.S. markets. This is a general market comment from INK and I thought worthy of sharing with you.
Yesterday, we highlighted insider selling at Canadian National Railway (Cloudy; CNR) and said that it did not give us any comfort regarding the potential for railway stocks to avoid getting hit by economic slowdown fears. Today, we visit Canadian Pacific Railway where CEO activity gives us the outright chills about the outlook for the stock.
On October 17th, Canadian Pacific Railway (CP) announced its intention to launch a share repurchase program. In the accompanying press release, CEO Keith Creel said, “With the new share repurchase program, we are renewing our commitment to return cash to shareholders in a disciplined, opportunistic manner”. The TSX accepted the company’s notice for the buyback program two days later. In the following month, Mr. Creel sold $16.5 million in company shares after exercising options.
Generally, we have a hard time with the idea that it is in the best interest of shareholders to use cash to buyback shares when the stock is soaring near all-time highs and debt lingers on the balance sheet. When such buybacks are accompanied by insider selling, we view it as a negative sign. When one of those insiders selling is also a board member, it is a bigger negative. This is the type of behavior and attitudes we tend to see in frothy and toppy environments. Sometimes those tops take a long time to form. In this case, we will stick our necks out and suggest the top for CP stock is probably in for a long time.
|Buys (000’s)||Sells (000’s)|
|SEDI Market Volume (Last 10 Days)||2,000||0|
|Quoted Market Value||$34,649,478,339|
|Holdings % of QMV||0.04%|
On November 8th, Canadian Pacific Railways (CP) CEO Keith Creel exercised 60,000 Options at an exercise price of $115.78 and sold the same number of Common Shares in the public market at an average price of $275.23. The CEO currently holds 88 Common Shares on a direct holdings basis, and 2,322 Common Shares on an indirect holdings basis.
Also on November 8th, the company repurchased 40,000 Common Shares at $275.01. Since October 19th, Canadian Pacific Railway has reported repurchasing 1,222,200 Common Shares at an average price of $268.12.
The stock currently holds a cloudy INK Edge outlook on the equally weighted V.I.P. criteria of valuations, insider commitment and price momentum which places it in the bottom 30% of all stocks ranked. INK outlook categories are designed to identify groups of stocks that have the potential to out- or under-perform the market. However, any individual stock could surprise on the up or downside. As such, outlook categories are not meant to be stock-specific recommendations.
|Number of TSX Companies with Sell/Buy Filings|
|Number of Venture Companies with Marker Trades|
|Last Trading Day’s TSX Most Active (January 2, 2019)|
|ProMetic Life Sciences||PLI||6,808||Buying|
|Last Trading Day’s Venture Most Active (January 2, 2019)|
|Auxly Cannabis Group||XLY||2,948||N/A|
|HIVE Blockchain Tech||HIVE||1,733||N/A|
|Last Trading Day’s TSX Price Gainers (January 2, 2019)|
|Issuer Name||Symbol||D/D Gain||Insiders|
|Fairfax Financial Holding||FFH||$3.06||Buying|
|Bausch Health Companies||BHC||$2.22||Selling|
|Last Trading Day’s Venture Price Gainers (January 2, 2019)|
|Issuer Name||Symbol||D/D Gain||Insiders|
|Cobalt 27 Capital||KBLT||$0.50||Buying|
|Galaxy Digital Holdings||GLXY||$0.40||Buying|
|Emerald Health Therapeuti||EMH||$0.27||N/A|
|Last Trading Day’s TSX Price Losers (January 2, 2019)|
|Issuer Name||Symbol||D/D Loss||Insiders|
|Boyd Group Income Fund||BYD.UN||3.05||Selling|
|Restaurant Brands Intl LP||QSP.UN||2.23||N/A|
|Restaurant Brands Intl||QSR||1.56||Buying|
|Last Trading Day’s Venture Price Losers (January 2, 2019)|
|Issuer Name||Symbol||D/D Loss||Insiders|
|Pacific Booker Minerals||BKM||0.10||Selling|
|Eastwood Bio-Medical Ca||EBM||0.10||N/A|
|Last Trading Day’s TSX Percentage Gainers (January 2, 2019)|
|Issuer Name||Symbol||D/D %Gain||Insiders|
|First Mining Gold||FF||42.86%||Buying|
|ProMetic Life Sciences||PLI||37.25%||Buying|
|Faircourt Split Trust||FCS.UN||21.53%||N/A|
|Last Trading Day’s Venture Percentage Gainers (January 2, 2019)|
|Issuer Name||Symbol||D/D %Gain||Insiders|
|Volcanic Gold Mines||VG||50.00%||Buying|
|Galaxy Digital Holdings||GLXY||40.00%||Buying|
|Pure Energy Minerals||PE||33.33%||N/A|
|Last Trading Day’s TSX Percentage Losers (January 2, 2019)|
|Issuer Name||Symbol||D/D %Loss||Insiders|
|Brompton Oil Split||OSP||-10.46%||Buying|
|Scandium Int’l Mining||SCY||-9.52%||N/A|
|Last Trading Day’s Venture Percentage Losers (January 2, 2019)|
|Issuer Name||Symbol||D/D %Loss||Insiders|
|True North Gems||TGX||-60.00%||N/A|
|Strategic Oil & Gas||SOG||-25.00%||N/A|
|High Mountain Capital||BUZD.P||-23.53%||N/A|
Copyright © 2019 INK Research Corp. All rights reserved. It is a violation of copyright laws to reproduce all or part of this publication or service by email, or any other means without the permission of INK Research Corp. You should not attribute in any other publication, disseminate, or distribute information contained herein without the written consent of INK Research Corp. INK Edge® and INK Research® are registered trade-marks owned by INK Research Corp. SEDI ® is a registered trade-mark owned by the Alberta Securities Commission.
INK provides general information. INK is not an investment advisory service, a financial planner, an investment advisor nor a securities advisor. INK does not purport to tell people, or suggest to people, what they should buy or sell for themselves. Opinions and recommendations contained herein should not be construed as investment advice. Do not assume that any recommendations, insights, charts, theories, or philosophies will ensure profitable investment. Users should always consult with and obtain advice from their professional licensed financial advisor, including their tax advisor, to determine the suitability of any investment. INK recommends that anyone making an investment or trading securities do so with caution. Users should perform full due diligence and investigate any security fully before making an investment or before the execution of a security trade based upon information learned through INK. Investors should obtain annual reports and other company information to complete their own due diligence in any investment. Neither INK nor anyone affiliated with INK is responsible for any investment decision made. INK has made all reasonable efforts to ensure that all information provided is accurate at the time of inclusion; however, there may be inadvertent and occasional errors. INK makes no guarantee of accuracy or completeness. All information and opinion expressed herein is subject to change without notice. INK employees may have an ownership or investment interest in any stock mentioned in this service or on this website. There may be links on this site to third-party sites or pages, the contents of which are not verified, maintained, controlled or supervised by INK. INK is not responsible for and assumes no liability for the accuracy, completeness or timeliness of the information or contents of any linked sites or pages. The inclusion of any link by us does not imply that INK recommends, approves or endorses the linked site or pages.
Comments from Dudley Pierce Baker, I would expect to see many more consolidations of the small exploration companies in 2019. I look forward to visiting with Defiance Silver at the Mexico Mining Conference (April 2 – 4) in Mazatlan, Mexico From our friends at Mining.com Vancouver-based juniors Defiance Silver Corp. (TSXV: DEF) and ValOro Resources Inc. (TSXV: VRO) stocks soared today, following yesterday’s friendly merger announcement. The merger will be completed effective 11:59 pm on Monday, Dec. 31, 2018 and will create an advanced portfolio of Mexico-based silver and gold projects, the companies said in a joint release. The combined company will continue under the name Defiance Silver Corp. and trading symbol DEF. It will have 120m common shares outstanding, of which shareholders of Defiance will own 86.07% and the former shareholders of ValOro will own approximately 13.92%. “We are pleased to complete the merger with ValOro and look forward … Continue reading