RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Argonaut’s Missteps: Scapegoating Magino The point I was making actually went right over your head.
I’ll attempt to clarify it in simpler terms.
Lifexprt is suggesting that GMT Capital Corp, a strategic and profitable hedge fund, acquired a long position at C$2.00 at some point between 2020 and 2021.
By December 2021, the stock price had reached C$4.00. This would have resulted in a 100% increase in the hedge fund’s long position.
In the same month, the company revealed substantial cost overruns at their Magino mine, hinting at the need for additional capital. Investors, including GMT, were already aware after the stock price rebounded from C$4.00 in December 2021 that the company would need a significant amount of funding to complete Magino.
GMT openly recognized the cost overruns, as evidenced by the company’s NR detailing the overruns and reports from various other sources.
As the stock started to decline from its December 2021 high of C$4.00 (the same peak it reached in 2016 before plummeting to C$.78), GMT chose not to cash in on a 100% profit. Instead, they continued to hold approximately 66 million shares with an average of C$2.00. As the stock price began to drop towards their average following Argonaut Gold’s release of the NR related to cost overruns (reported by multiple sources), and after the stock gapped down about C$.40 following the cost overrun announcement, GMT Capital Corp decided to maintain a long position of approximately C$120 million and observe the stock price while it began to tumble down towards their average.
As the stock price dropped to their average, the hedge fund chose to hold on, even when the stock rebounded to C$2.7. Instead of cashing in on a approximate 30% profit, they waited for the stock price to crash again, allowed it to fall to their average, and continued to hold even when the stock price dropped below their average, resulting in an unrealized loss
Moreover, after the cost overrun announcement, GMT likely knew that the company was planning an equity raise in June 2022, as the hedge fund bought 144 million shares from the equity raise.
It’s highly probable that GMT Capital Corp had prior knowledge about the equity raise in December 2021. I find it hard to believe that they maintained a C$120 million long position, saw a 100% increase at one point, chose not to cash in on their profits, waited for the market to crash by approximately 90%, and then bought more.
This is completely illogical.