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Jim Letourneau's Blog

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Kaiser Quotes

One of the many benefits of writing a newsletter is getting access to the comments from other analysts. One of my favorites is John Kaiser. He uses strong language to illustrate the shaky foundations of many companies trading on the TSX Venture Exchange. His latest update points out the underlying risks associated with a large number of financings done at sub $0.10 prices. Here are a few quotes from his latest update...

There appears to be a direct correlation between the degree that promoters bray about fiat currencies and engage in dilutionary financings. The chart above reveals that TSXV listings have been steadily ramping up the production of cheap paper since September 2008, achieving record levels in November 2009 that December failed to supersede only because lawyers and accountants insisted on a holiday break. What disturbs me is the clear pattern of low average private placement price while private placement activity is soaring.

As we head into 2010 the TSXV financing activity chart seems to emanate vitality, but, unfortunately, it reeks of the decay created by millions of maggots chowing down on rotting corpses.

...macroeconomic and math intensive nature of this game left retail investors on the sidelines, but was welcome grist for the mills of fund managers that the education system had churned out on the premise that a self-serving elite would ultimately benefit society as a whole. Because this crowd had inherited a "heads I win tails you lose" compensation formula, it happily ploughed other people's capital into the advanced projects that the junior resource sector generated in response to the emerging secular bull market in commodities.

Check out his site here. The site is data intensive but well organized so it is well worth checking out.