A Year in Review

It’s tough to look back over this year and not wish it was 2010 for me. I know where I was and what my outlook was for the future. The winners seemed to be abundant and the new rising stars were everywhere I looked. Then as 2011 stared the largest shining star to ever hit the TSX-V had to be Intertainment Media Inc IMHO. I am glad to be a part of the story.  But sadly there were not a lot of other runners like that on any exchange. Then we got hit with the news that Japan had a massive Tsunami sparked by an earthquake. This was just part of the endless stream of events from natural disasters to civil wars in the Middle East to protests for change. Each event in itself would add to the worries of a global meltdown and have far reaching effects not first seen. Uranium demand came to almost a standstill. Oil Sands projects are labelled dirty fuel in Europe, Libya engages the UN in a bloody battle to oust their old regime.  The list goes on and on.

I started asking myself if this were a college course would I be passing right now? Do the big boys get scared and run and ride. Well it seems this year some of them did just that. I saw so many fund managers interviewed and stating they were 70-80% cash. That’s amazing in itself that they would fear a meltdown on such a large scale. The never ending insult seemed to be a crisis in Greece. The population seems too small to matter and most would think it would be easier to have let them default long ago and let the chips fall where they may. The only problem being some large government analysts see Greece as the last crucial corner stone in a fragile European economy that if it fails the effects would be so far reaching as to change the daily lives of everyone on the planet and possible set us back 100 years.

I sit back and watch and try to calculate what would be recession proof. What would prosper in a bad economy?

Were watching gold start another run I think. My prediction for $2000 an ounce gold prices by the end of the year could happen. It would be a safer bet to find a producer or near term producer rather than a junior explorer who always has his hand out for more money to go poke more holes in the ground. Junior explorers are fun but they are unpredictable and only as good as their last hole. I watched a company interviewed in the field when their stock was flying at an all-time high and in the interview the company was asked about their time line to production. Well their answer started a sell-off IMHO. Within days the stock was down and in reality the company only spoke the truth that a junior explorer just hitting good grades today could be an open pit mine in 8 years if all goes well. They need a lot of money to prove what they are sitting on. At the end of the day they have zero infrastructure and they need a lot more cash to get close to their goal. I think most just hope to be bought out along the road by a much larger company that can use the asset.

My thinking has adjusted with the time I think and I have decided to spread into a broader approach of 5 specific sectors with 5 undervalued companies in those sectors. As long as the companies have cash, the share structure is under control and the management team is strong then I think they can weather any future storms. Sometimes we watch companies starting a run and look at the chart and see that the stock was recently at an all time low and now I want to be in 5 of those stories heading into next year.

The first company I have mentioned in a previous article Mahdia Gold Corp. They are currently on the CNSX and advancing towards full scale production at the historical Omai Mine in Guyana.  They have cash in the bank and are working to show some preliminary resource estimates to attract some larger investors I think. As well the previous occupant at the mine set up approximately $100 million in infrastructure so the company appears to be in the home stretch. I think the biggest thing holding it back is the exchange it’s on. The CNSX is a regulated Canadian exchange but its tough to get real time data and some banks want to charge you much larger fees to deal on that exchange. A listing on the TSX is where a gold producer belongs and it’s exciting to imagine where the share price will be in 4-6 months.

The second company is Verisante Technology.  They have developed a skin cancer screening device and recently received Health Canada approval. There is a relatively small float and they are taking the next step in being approved for sale in the UK through a CE Mark. This will open up the European Union and several other countries that recognize the CE Mark. Recently Mela received the CE Mark and their stock has seen a nice run on its share price and some analysts saying this could have yet another massive run from here since it is the only one in this arena since Verisante has not yet received its approval in Europe or the FDA in the USA. The company has a good cash position and expects to tick off some more milestones by year’s end.

The other companies I am still working on and will try to present an objective approach for their long term growth and business plan. I may or may not invest in any of the 5 picks I will feature but at this time I am invested in Mahdia Gold and Verisante Technology.

The markets can be a very risky place to make money and you should always conduct your own due diligence. The comments posted here are my own opinion and I have taken into consideration several material facts that may or may not fit your investment risk. You have to investigate and verify every fact yourself or consult an investment advisor before investing.

Watch for more profiled companies coming soon.