What makes for the best news release?As we await FDR news, I try to imagine how things look through management’s eyes. Before the recent financing became free-trading, I figured the company might race to get out results of the first hole or two, assuming the grades were good, to help absorb any selling. But that might not be the best approach.
I am not cynical or even merely critical. You can’t really apply any detailed regulation to the question, nor should you. I think companies rightly have some flexibility in how they define material information, and in the number of drill holes they can reasonably combine into a single press release. Maybe we see quite a lot of data released at once.
Good news, if and when it comes, faces an interesting psychological hurdle. In almost all cases, no matter how much gold is in the core, investors’ dreams have already gotten ahead of reality. If this were not so, how could any explorer ever raise money?
So, hypothetically, if I were a CEO seeking to maximum news impact on my share price to minimize dilution on the next financing, I might not try to directly fight selling from holders of newly free-trading paper. Because how can most news compete with the perfection of the vision possibly growing in the minds of the established/settled longs?
Let the selling run its course, and maybe it becomes a bullish indicator. Depending on how flexible most private placement investors are, millions of shares might quietly become longer-term holds if anticipation of good news builds. As an optimistic long myself, I think this may be presently occurring given that the volume of selling these last few days is low compared to FDR’s now much larger float.
And when the first drill results day arrives, a trading halt first, if realistically warranted, could even be requested. Or not. Either way, fun times ahead.