FDR and the Monday newsFor a company that has not yet reported its impending assay results, FDR sure gave us lot to talk about today. Before market-open we saw a non-assay news release, including a mouth-watering new updated map of Antino auger samples. But stealing the attention for the moment was the 2nd paragraph, where Founders let us know it was management who sold the stock to facilitate the big block trades last week.
First things first. Can we all agree FDR is about as far from a pump and dump as you can be while still remaining a gold explorer? Yes? Good.
Was the second paragraph a smart place to put the insider selling news? I don’t know where else it could have gone to provoke less anxiety. It didn’t deserve to be the headline, nor should it have gone at the end of the release. And a totally separate news report doesn’t seem like the answer either.
In any case, I’ve previously written on the topic of management compensation and why, if you want the best people, you had better pay up. But today’s reports require some elaboration on my argument. In an ideal world, government taxation policy would not impact the timing of people’s investment decisions. While I do think we can one day get to that world, it is not where we presently live.
If our management were all independently wealthy, none of them would need to sell FDR stock to pay taxes. But if they were *already* rich, would they be working as hard to build value for us? Relative incentive power matters.
Still angry? Try this hypothesis on for size. Forget the tax angle for a moment. Suppose institutions / HNW folks who couldn’t get in on past financings pestered our management vociferously for stock. Eventually our team became comfortable these shareholder-wannabes would also contribute additional buying in the market. So much buying, management’s own remaining FDR shares would end up just as valuable - in total - at buyout time as if they had never sold any to the new entrants.
If so, we’ve got a win-win, lowering the uncertainty involved with getting to a $15 or $20 take-out price.
Now, back to the really big news from today. Our route of march is getting clearer: Buese (results pending), Lower Antino next, followed by the Upper Antino-Buese trend gap, then on to Lawa. And just in time, more drills to be put into action “in the coming months”. Meaning by year-end?
I had taken at face value Founders’ management’s outlook from a year ago: a single long trend running from Upper Antino to Buese. I assumed a lower grade for the substantial gap zone thereby created, but I made sure it was represented in my valuation model.
Looks like this management appraisal of one super-trend is coming true. Grab samples vary in reliability depending on the collection procedure, but a 57 gpt “hit” on surface sure is promising. Meanwhile, Lawa seems already host to a very large potential target list all by itself.
As some of the content of the chatter on the bull boards suggests, the FDR stock-price lull might be just about over. The mere *fact* of the increased volume of chatter definitely points to this.