Keir Reynolds, 29
Investor relations consultant
Ventana Gold Corp., Rock Energy Inc., Oroco Resource Corp., Rockgate Capital Corp., Wildcat Silver Corp., Medoro Resources Ltd., Resverlogix Corp., Andover Ventures Inc., West Timmins Mining Inc.
Strategy: Vancouver-based investor relations consultant Keir Reynolds focuses on small caps that have a chance of doubling in 12 months or less. He tries to uncover smaller companies that are making the transition from a retail to an institutional story. "When institutions come in, institutions tend to follow what other institutions are buying," he says, "And that can mean price appreciation quite quickly because institutions need to get a certain position."
Where he looks:
Mr. Keir feels that the biggest opportunities are in companies with a market capitalization of less than $100-million. He looks for companies with a product, service or project that is going to be important enough to win the critical attention of institutions. "We don't want insider information, but want to know what kind of catalysts we can expect. Are they completing a clinical trial? Starting a big drill program? Launching a new service?"
Why management is so important:
"Eighty per cent of management groups out there are quite inept, and will not generally have good success," he says. "So following management teams that have done it before and are liked by institutions is very important."
How he assesses management:
"I go out and meet them and talk to them," he says. "People don't realize you can just call up a lot of these companies." His questions don't just give him facts, but help him get a feel for the management team.
He listens for a lack of confidence, or a sense that the answers may be rehearsed. "If they use a lot of general or overpromotional language that sends up a bit of a red flag," he says. "I like people to be confident, but I don't want them to gloss over things." Any facts he does glean he'll try to get independently confirmed. "Senior managers in small companies are usually there because they can tell a good story, but it's important you back that up by multiple and independent sources."
His investment club:
To more efficiently gather - and share - information, Mr. Keir founded an investment club in the winter of 2008. Unlike other clubs, the members don't pool their money, but invest on their own through their individual accounts. "The biggest way to make a lot of money in small-cap stocks is through trading ideas."
Ventana Gold Corp. only went public last November, and Mr. Keir bought into the stock at under $1 in early 2009. He liked the management, saying it had a track record of being successful in the sector. In addition, "they had drill holes from when the company was private that were high grade." And while the fact that the company was operating in Colombia had put a lot of investors off, Mr. Keir saw an opportunity in "the discrepancy between where the share price was and the potential of the project."
Last summer, Mr. Keir invested in Calgary-based Ember Resources Inc., which is involved in producing natural gas from coal, known as a coal bed methane. "There was a lot of debt they assumed through an acquisition, and what they paid was a little high because it was based on near-record high gas prices," he says. "But the acquisition was right before the economic world came apart, and any company that had significant debt was hurt." Mr. Keir paid between $1.91 and $2 in June, 2008. He sold the stock in September,
"Be very leery of projections. They can be the death of a company. If they aren't exceeded, management is setting itself up for failure."
Special to The Globe and Mail
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