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Gold/Mining/Energy : T.ITE: iTech Capital (TSE) -- Ignore unavailable to you. Want to Upgrade?

To: keith massey who wrote (744)	7/25/1999 5:38:00 PM
From: keith massey	Read Replies (1) \| Respond to of 5053

A little dated (June 1) but the full version has not been posted Kaiser Bottom-Fish Tracker 99-006 Jordex: investors jumping at cash rich non-resource shells Synopsis: Jordex Resources Inc (JDX-T: $0.94) broke out into new territory Monday on heavy volume of 533,700 shares as speculators, very likely taking their cue from Oro Nevada Resources Inc (ONV-C: $1.25), jumped onto cash rich shells known to be negotiating for non-resource related projects. The stock should be held for much higher prices, both before and after a new venture is acquired. With the Dow Jones Industrial Average closing above 10,000, a video game war underway in Serbia, and Internet IPO fever blazing, the market mood is shifting into the sort of orgiastic frenzy that precedes the crack of dawn and the awakening of some truly ugly realities. But never mind that. These cash rich juniors just breaking out from bottom-fish levels do not have much to fall if the stock market gets blindsided. As evidence of this fearlessness, consider that Oro Nevada, despite word from management that a deal on a new venture was not close enough to be described as "imminent", traded 945,900 shares to close down $0.05 at $1.25, well above this shell's cash breakup value of $0.43 per share. Jordex has been under accumulation since early September when the stock's long downtrend reversed itself. The company has just published its 1998 annual report, in which it makes it clear that it is abandoning the resource sector. The last time I talked to management late last year it was looking at an acquisition in the energy sector, but like the Y2K project Jordex investigated in early 1998, this plan has fallen by the wayside. The new search is being spearheaded by Bill Staudt of Hamilton Group LLC, an investment banker whose track record includes finding a new life for a cash rich NASDAQ shell that eventually turned into a major success story. The market's hopes that Jordex might acquire some Internet nonsense appear to be shot down by Jordex's criteria, which include "a high growth business with high gross margins". Unless Jordex is referring to negative gross margins, this would rule out any project involving the Internet. The good news is that any proposed acquisition will likely survive a sudden collapse of market enthusiasm for Internet stocks. I talked to Jim Graham of Jordex on Monday, and he indicated that the deal flow has improved significantly since Hamilton Group took on the job of finding a new project in January, but that no project had yet reached the stage of serious negotiations (( Note: this is now out dated by almost 2 months)). Based on these comments I interpret the market action as more a function of investor anticipation than inside information of an imminent deal. Bill Staudt took down a private placement of 800,000 shares at $0.48 when Jordex signed up Hamilton, a sure sign that Staudt is not going to go for any deal that does not promise to make him a lot of money, and by implication the minority shareholders of Jordex. Carlo Civelli, a Swiss investment banker who has been involved with many Canadian high flyers, including some such as Intl Cablecasting and Novadigm that turned into big American promotions, returned to Jordex as a director this year and took down a private placement of 500,000 shares at $0.60. It is no coincidence that John Tognetti's Haywood Securities has been a heavy net buyer of Jordex during the past six months. (((( Note: until now I couldn't figure out who these crosses to Haywood were for 11/03/98 - 172,000 at .48 11/03/98 - 280,000 at .47 11/03/98 - 179,000 at .50 12/07/98 - 208,500 at .49 12/07/98 - 478,500 at .50 and why Haywood has been a net buyer 5 out of the last 6 months (net 53,000 this month and net 270,000 in the past 6 months at an average price around .84)...now it makes sense...he is Mr. Civelli's buddy. I will now keep a close eye on Haywood since he will be getting the inside scoop from Mr. C))) Both Jordex and Oro Nevada have been Top Priority Bottom-Fish Buys since last September, based mainly on the fact that they were trading below cash breakup value and had management with a history of big market plays. Both stocks were very liquid at bottom-fish prices, and both are now trending up as the sellers evaporate. In the January-February issue I warned that this would eventually happen. For those bottom-fishers who did accumulate Jordex, congratulations, you have applied the bottom-fishing strategy well. I suggest that you now hold the stock until at least we find out what the company is getting into. If I am right about my analysis of the market's sudden penchant for cash rich shells abandoning the resource sector and signaling a shift into a technology related sector, we will see speculation drive Jordex much higher before a deal is announced. Best Regards KEITH