RE: ADA now getting exposureJust thought I'd post the Reuters article, not sure if anyone already has...
Bay Street Week Ahead - Small-cap market makes big gains
Fri Apr 27, 2007 5:50 PM EDT
By Jennifer Kwan
TORONTO, April 27 (Reuters) - The commodity boom and a wave of takeovers are helping the small-cap TSX Venture Exchange grab a bit of the limelight usually trained on its big brother, the Toronto Stock Exchange.
Like the bigger board's main index, the TSX Venture Exchange's composite index <.SPCDNX> has climbed steadily since the fall, hitting a record high of 3,371.57 earlier this week.
The Venture market, home to many small resource companies, has risen about 10.4 percent so far this year. Toronto's S&P/TSX composite index <.GSPTSE>, by comparison, is up 5.6 percent.
"The Venture Exchange is definitely attracting a lot more attention and we see that every day by watching the volume," said Jeremy Link, an analyst with Northern Securities Inc.
In 2002, the average daily volume of shares traded on the Venture market was less than 50 million shares a day. Now it is consistently above 200 million, Link said.
The market is home to more than 2,000 companies. The about 500 that are listed on its composite index have market caps ranging from C$3 million to around C$1 billion, according to the Toronto Stock Exchange.
Both the Venture Exchange and the Toronto Stock Exchange are owned by TSX Group (X.TO: Quote).
As of March, total capitalization on the TSX Venture Exchange was C$62.9 billion.
Venture stock movements can be spectacular. The metal molybdenum, for instance, is in vogue, which has helped to cast attention on Roca Mines Inc. (ROK.V: Quote) and Adanac Molybdenum Corp. (AUA.V: Quote), whose shares have risen 77 percent and 85 percent respectively so far this year.
Zinc and gold producer Acadian Gold Corp. (ADA.V: Quote) and Blue Note Mining Inc. (BN.V: Quote) are other examples of small companies creeping into the spotlight, Link said.
As soon as the small Venture miners show promise, they can show up on radar of their bigger cousins on the Toronto market.
"If you're a big-cap miner you have all this cash on hand and you're looking for other opportunities," Link said. "You have a choice of putting money into your own development projects or buying companies that have development projects."
Takeovers are also claiming more of the big players on the Toronto market, which puts more investment focus on the small caps.
The Canadian government's decision to tax income trusts could also be an opportunity for some Venture companies to beef up their profiles, especially in the oil and gas sector, said Rob Moss, oil and gas analyst at Acumen Capital Partners in Calgary, Alberta.
Most of the energy trusts are not expected to survive the transition without changing their corporate structures or being taken over.
"What can happen is if the trusts disappear or morph into non-trading entities then there would be a motivation for the juniors to merge and get bigger," Moss said.
"There would be a graduation of these junior entities into the TSX leaving the Venture Exchange for some of the start-up companies."
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