Hello, Randy. I agree that a dramatic appreciation in RDX price is unlikely and that the small float is a part of the problem. However, IMO there are several reasons to expect a steady price appreciation over the next 12 months and beyond.
1. The float is growing as new shares and warrants are issued.
2. Management is well aware of the liquidity problem. That is why the provision was made for small investors to get a piece of the IPO action. When did you last hear of a retail investor being offered a share/warrant purchase with a minimum of a $5000 investment? More small investors will likely result in more buying and selling. That was management's motivation in not giving the entire issue to the money managers who, I understand, would have been happy to scoop up all the units. Although working with small investors in an IPO can be a pain for the issuer, we don't sit on large numbers of shares or sell off large positions in a short period of time the way fund managers often do. No offence to money managers!!
3. The units include an immediate share purchase at $1.60 (no great bargain!!) and a 12 month, $2.00 warrant. The warrant has to be the motivation for many unit subscribers. It certainly was for me. Thus, our 12 month target for the stock is well above the $2.00 exercise price and IMO the price very likely will reach $2.00 by the time Q4 results are issued. That gives us two full quarterly earnings announcements after the one we can expect probably by early November. Sticking my neck out a bit?? I don't think so. If I didn't have this confidence, I wouldn't participate in the IPO.
4. The need to increase production capacity can be addressed with the current financing. This has longer term benefits.
5. The growth in unit production, revenue and profit is impressive.
There are the usual risks of investing in a small cap, rapidly growing company. To address my questions and concerns, I spoke to Grant at Equity-Link several times and I drove to Kamloops to meet with him and to assess the Equity-Link, CanStock operation. Obviously, I'm in.
To all, don't take my word or opinion at face value, do you own research.
Profitable Investing,
Ed |
