Kaisers latest thoughts
Jordex Resources Inc (JDX-T: $1.39) broke out last week to a high of $1.39 on
1,078,585 shares on November 11 before succumbing to a wave of selling
through one brokerage firm. There is no fresh news to explain the surge of
interest in Jordex, which began to build in late October around the time that
the current wave of Internet mania began to gain momentum. The Jordex thread
at Silicon Investor has taken on a life of its own thanks to the coddling of
Keith Massey, an investor who has bought enough stock at bottom-fish prices
to draw him into the role of threadmaster for this cash rich Canadian junior
whose high powered board has been looking for a story all year. Massey and
friends have been drawing nourishment from a US $1 million investment Jordex
made last June in Medsite.com, a business to business e-commerce site for
medical professionals that has an IPO in the works. Jordex has not disclosed
how much Medsite stock it will end up with, nor what percentage it would
represent. The investment opportunity was presented as a "gift" courtesy of
the large goodwill bank Bill Staudt apparently possesses. Medsite has
received positive media coverage and recently closed a US $36 million
institutional financing. Jordex has become a substitute investment vehicle
for people interested in the Medsite IPO, which would include the army of
physicians already familiar with the site. The problem Jordex is running into
is that its $20 million warchest is a mere piggybank in the American arena
where multi-billion market caps are becoming the after-market norm for hot
IPO's. The prospect that Jordex could actually use its $20 million to acquire
a majority stake in an advanced technology or Internet project has virtually
vanished. The company is now in a predicament where it must invest in an
advanced project because the technology/Internet market cycle is maturing,
but only early stage projects like Meteor's Thoughtshare are available on
reasonable terms. The talk on the SI thread is now suggesting that Jordex
will embrace the incubator venture capital model of entities such as CMGI and
Internet Capital Group, an Internet holding company that just announced IPO
plans. In other words, Jordex is set to become a merchant bank that invests
in technology/Internet ventures planning to go public. The prospect that
Jordex will go head to head with all the other venture capital outfits in the
United States is not an encouraging thought. More interesting is the
possibility that Jordex might steer its American audience into the cash
starved Canadian venture capital arena. An article in this Saturday's New
York Times describes a strange phenomenon where Canadians are rushing south
of the border to invest in over-priced American assets while Americans are
rushing north to buy cheap Canadian assets. The lead-in for the story was the
recent takeover bid by Weyerhaeuser for MacMillan Bloedel, which down the
road will probably look like a super bargain when commodity prices soar amid
a global economic expansion. Canadians are just as good as Americans when it
comes to technology ideas, but they are burdened by a loser mentality where
Canadians don't recognize their own genius until confirmed by American
dollars. A cross-border disparity now exists which allows American venture
capitalists to scoop wonderful projects right from under the noses of
lily-livered Canadian venture capitalists. Jordex is in a special position
because it is a Canadian listed company run by Americans who know a good deal
when they see it. Jordex management, of course, is not saying where its
corporate strategy is leading, but there is enough material between the lines
to suggest that Bill Staudt and Brian Hinchcliffe are not going to content
themselves with the dust of the American beaten path. Jordex is starting to
develop something of a cult following, and if management soon makes clear an
open-ended corporate strategy that makes economic sense, last week's rally to
$1.39 will be a mere taste of the market action to come. Jordex Tel #: (800)
625-1749.
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