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Gold/Mining/Energy : First Majestic Silver -- Ignore unavailable to you. Want to Upgrade?

To: canucklehead80 who wrote (1)	2/12/2013 5:04:25 AM
From: TheSlowLane	Respond to of 10

Nice job on the interview. I liked KN's comments on the arbitrage action in the stock. I used the opportunity to get my kids in at $17.02. RW: Can you comment on the recent changes in your share valuation? KN: The stock has come under pressure due to the Orko transaction. It’s a very common occurrence. It happened when we bought Silvermex in April 2012. What happens is you get these arbitrage funds that short your stock and go long on the company you’re acquiring. That difference between the spread, they call it the arbitrage trade, between the two stocks is their profit. It’s a for-sure profit, unless for some reason the transaction doesn’t occur, but they’re on top of that. In most cases, these transactions do finalize, and these institutions walk away with their profits. Unfortunately, what happens is it puts an enormous amount of pressure on the buyer’s stock, particularly in an environment like now. The Orko acquisition was announced in December, and there are very trading volumes at the end of any year. So you get this arbitrage trade being taken on in a very low-volume environment, and the attitude towards equities has been quite poor as well. Many mine stocks have been quite weak over the last several weeks. But over the last week or so, we’re seeing some stability in the mine sector, which is nice to see. We’re seeing some stability return to First Majestic’s stock, but I don’t think you’ll see it return to its normal levels until the Orko transaction is completed. But this does create a buying opportunity for new investors looking to buy a company which is basically on sale.