MysteriesA few posts ago I showed that Vertex One has done very very poorly at with almost all of it's mutual funds. And why is that important? Well, Vertex is very much in bed with Titan, and has been since the start of Titan's attempted merger with Core, and much as we wish otherwise, Titan is still very much in our faces, in a dead dog in the street sort of way.
Which is my intro to my dead dog story. A very long time ago (50 years) I was visiting a couple friends in a far off, tropical Asian , third world country (as they were then called) . They lived in a small village, that was , let's see, not primitive , but definitely back woodsy, or back jungley. You know: thatched roofs, very few cars, I think there was electricity. So we were doing what 20 year olds do, and were pretty out of it, but then we did notice that there was a dead dog in the street outside of my friends house. The next day, it hadn't moved, or been moved; it seemed the locals weren't going to take care of it, perhaps having some taboo about touching dead stuff. And it was. well, starting to get in our faces, if you know what I mean. My friends were city folk and quite squeamish about the whole thing, but I grew up on a mixed farm ,long ago, and dead animals were practically a daily occurrence, and I was directly responsible for many animals deaths : mostly gophers. So I had no taboos, and before the smell got too overpowering , I just went out and dragged it away.
So that is how I see Titan. It is like a dead dog in the street. And the smell is getting pretty strong. Someone needs to drag it away.
Ok, back to Vertex. There have been a large number of mysteries in this whole Titan merger blah , blah, blah. And being of inquisitive mind I would like to solve at least some of them. One has been Vertex's role, which as we know, was ,with Washer's, what let the merger blah, blah, blah, vote go to the Yes side. Without Vertex and Washer they would have barely got 50%. So in that post a few days ago, I showed that a number of Vertex's Funds (they sell mutual funds) had lost 40% yr. to date. And I asked how that is possible when most North American indexes are up close to 20%. Which means that if they picked a company that went up just that average 20%, the next company they picked would need to go down 100% to get a 40% average down ( +20% + -100% = -80% divided by 2 = -40% average.) Very hard to find that many companies, and then pick them, that went to zero. And then it dawned on me that they could have got the 40% down if they had shorted the market for all of 2019. And I figured wow. Very gutsy. And I totally agree with them that the only way to be in 'the market' right now is to be short. I have felt that way quite awhile , as the bubble has built, but haven't been brave enough to get in as a short. Too risky for me; those bubbles can build way beyond what you think is structurally possible. So I just am in gold companies, which will benefit when the price of gold goes up when the bubble deflates,explodes, or whatever. But if Vertex has been shorting, then hats off to them, and I take back all the insults, knowing me, I am sure I sent their way.
But unfortunately for Vertex , the stock markets haven't crashed on time for them.. And they seem to be in big trouble. In fact I read that Pender Fund and Picton Mahoney seem to be buying up most of Vertex's Funds. They don't use this language, but does that mean Vertex is going out of business? This does seem to explain the mystery of Vertex's actions. When you go out of business, if this is in fact what is happening, then cash is king and now. So they make a deal with Titan that if they support the merger Titan will buy the Core debt, and give Vertex something for their Core shares. Vertex can't just dump their 10 million shares on the market as it would take along time to sell them, Core is mostly not liquid, and it would totally drive the price down. And when the merger failed, then the deal that Titan made with Vertex needed to proceed (maybe there was honour among thieves , which since it was Titan I doubt, or Vertex has some kind of leverage to force the deal- like their silence?). So Core BOD sweetened the deal for Titan by lowering the conversion rate, and someone (Vertex?) sold enough shares to lower Core's share price enough to make the new conversion seem less preposterous (remember Titan's shares in Core are pledged to the debt they got to buy the shares so they can't sell them), but the Canadian regulators stopped the whole thing .... My what a twisted and tangled web of deceit has been spun.
But it looks like Vertex did get it's $3.5 million out for their Core debt, and it seems quite possible that they are the ones who are selling off their 10 million shares now, and keeping the 25 cent ceiling that there seems to be. And so it looks like the Vertex story , perhaps totally, but as regards Core anyway , is over. And there could be an announcement ,or not, that they no longer hold any shares in Core.
Mysteries sort of solved.
And the other possibility for why the share price is stuck at 25 cents would be Washer. Haven't heard about him for awhile. He has been an active seller of his shares since 2016. Being a big part of holding down any nice appreciation that might have been. I remember someone saying once that his personal cash burn rate is $25,000 per month, something about failed relationships that still had financial obligations. And it appears his only source of cash is his Core's shares. Would be totally realistic to think he would start selling again with the prices mid 20s. Especially since he now has a bunch of new shares. The shares courtesy of the deal he made with Titan/Core BOD: Core shares for his approx. $1 million? in consulting fees ???, and in return his vote for the merger. Consulting fees- really. Just hope that they weren't for consulting on how to properly run a company and if they were Core ignored them. Mr. Piggott, correctly I would say, put his bill on the bottom of the pile, but then it must be said, it did cost him Washer's vote in the much later merger blah, blah,blah. On thing about it was that Core BOD did very promptly make good on the promise they had made to Washer, even as the merger failed, so again their was some honour amount thieves, or Washer also had something that was best kept quiet. One mystery I haven't solved is why Washer would have thought that getting more Core Shares, that would then become Titan shares if the merger happened , was a good idea. Surely he knew Titan shares would be diluted to nothing. And I don't think he would have had a 'back door deal'. Too complicated. (I also now don't think Vertex had a back door deal, and with their going out of business? , it now makes sense why they would deal with Titan with out one.)
So my possible answers to Washer's actions are: a) the rumoured dementia , b) that he is in fact a genius and knew the merger would get voted yes but then the judge would rule against it, and then Core BOD would be forced to do a fair and honest deal, which without the whole merger fiasco the BOD would be less likely to do, given, you know, who they are. Can't think of a c), and very much like b). But it is a pretty big range of mystery solving: from dementia to genius.