Interview with Jamie Keech, Co-Founder of ‘Resource Insider.’
A mining engineer, investor and writer, Keech’s job is to look at private mining deals. His company, Resource Insider, is a “deal-flow service.” The focus is on allocating capital to early-stage mining deals and private placements. All members are accredited investors. Keech spends most of his time searching for private placements to invest his own money in. Investors/subscribers are then given the opportunity to get in on the deal with their own capital at the same price, on the same terms. Resource Insider doesn’t take any kickback fees from companies; instead, the company is bankrolled via an annual subscription fee from each investor to fund the research and due diligence process. We were keen to hear his insights into how global markets are recovering from COVID-19, in addition to exploring numerous other retail-oriented themes.
Matthew Gordon talks to Jamie Keech, 17th June 2020
The Vancouver junior mining sector has been going “ballistic” over the last 6-8 weeks. In terms of private mining deals and private placements, there has been a real abundance in the market recently. Life is gradually getting back to normal, and while it is far from the ‘business as usual’ approach in some Australiasian countries, Canada is a little ahead of parts of Europe.
What are the key red flags for retail investors to look out for when considering investing in a company?
Remuneration and Timing
Watch out for management teams, company insiders and directors who are making “boatloads” of money paying themselves well, while their company isn’t driving share price growth for investors; this includes investors who have entered at any time period, from IPO, all the way to the present day. Investors should never be ripped off by timing.
A poorly structured company can suck every ounce of value out of an investment for a retail investor. Investors need to closely check a company’s history, especially when it comes to share transactions, before taking the plunge. The game is so often stacked against retail investors, and moves like “friends & cronies” getting in for a “fraction of a penny” during “seed round financings” can mean they get masses of shares at an incredibly discounted price, compared to the amount acquirable and cost attainable of shares for retail investors in the next round of financing. By getting in before retail investors have access, these early starters are able to obtain a 100X lift on their initial investment for zero work, and there hasn’t even been an IPO yet.
Investors want to search for teams that are genuinely working in their favour and have align interests; these are becoming increasingly rare. Just a few weeks ago, an undisclosed management team gave themselves 12M shares for just US$9. This is remarkable behaviour, and it serves as further evidence for why retail investors struggle so heavily. The brutal reality is that this “Ponzi scheme” is simply the name of the game. If retail investors want to call, they’ll need to make sure they’re playing a good hand.
How can retail investors level the playing field? Watch to our CRUX-Club.com videos to find out.
Getting In Early
Retail investors need to seek out the appropriate resources to get in as early as possible. Companies like Resource Insider seek to provide this opportunity.
Look At What Management Got In At
This will give investors a pretty good idea of how exactly the management is aligning themselves with the interests of shareholders.
Find Companies That Have Been “Beaten Down”
Look for companies that are well-funded with a good team behind them and have a depressed share price. However, the caveat to this is that it is getting harder and harder each day. There is currently a lot of capital available in the junior mining space that companies with absolutely nothing are fully-subscribing their public offerings. The euphoric sentiment is inflating the stock market enormously.
Retail investors need to recognise their limitations. They do not have the budget, capacity and resources to spend months carrying out incredibly extensive and technical due diligence. Retail investors need to know what they don’t know and compare that to their desired risk profile. It is very unlikely they will ever know everything.
We discuss more ideas and Red Flags with Keech in our extended version which you can find at CRUX-Club.com.
What did you make of Jamie Keech? Comment below and we will respond.
Company Website: https://resource-insider.com/
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