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Pastimes : Mr. Forthright's fictitious portfolio
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To: Mr. Forthright who wrote (54)8/4/1999 7:32:00 PM
From: Mr. Forthright  Read Replies (1) of 94
 
I now have a few minutes. Another crazy day.

So, why BND? Very simple. BND is a JCP. I have found over the years that the JCP program offers excellent opportunities to make a few bucks. What is a JCP you may ask? A JCP is a Junior Capital Pool, a public company set up under the rules of the Junior Capital Pool Program of the Alberta Stock Exchange and the Alberta Securities Commission.

JCP are basically blind pools. The can raise a maximum of $500,000 - through a combination of private placement and public money - they must list on the ASE and their business is basically to look for a business to acquire, referred to as a Major Transaction. Usually the JCP's are used as vehicles by private companies which want to go public through a reverse take-over. The main reason they would use such a vehicle is that the IPO markets is not open to them because of size or lack of financial history.

I find that a lot of private companies which go public through a JCP are small and have very little upside. But there is the odd exception. For example. Jordan Petroleum started out as a JCP at $0.10 in 1996. It got sold for $435 million 10 years later. Not bad.

I have found that the best way to make money trading these things is to buy them early and sit on them until they announce their Major Transaction. So expect a few of those in the ol' fictitious portfolio in the future.

BND is a bit of an exception to this rule: I added it to the ol' fictitious portfolio after they announced that they were in negotiations to acquire a business or in other words to do a Major Transaction. Why did I add it? Because I believe there is still upside if and when they do a deal.

But remember this is real risky business as the deal is not done. In fact they announced two deals in the last year which didn't close. But you have to believe that they won't screw up three times in a row.
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