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Buzz on the Bullboards: What Goes Up…


Omri Wallach Omri Wallach, Stockhouse
0 Comments| January 30, 2020

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The markets might be up in the new year so far, but the sentiment has been far from universal. 2020 has been a great year for some and a terrible start for others.

If a stock that goes up must come down, will the reverse end up being true as well? That’s what the Stockhouse Bullboards were all about last week as some of the companies with the biggest followings saw shares drop to start the year.

This week we put the spotlight on three companies leading their sector Bullboards in discussion with very similar price patterns. They went up to end the year, they came down to start it. Will they recover?

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After closing out 2019 as one of the top performing small cap stocks in metals, Wallbridge Mining Co Ltd. (TSX:WM, Forum) has started out 2020 on the wrong foot, and the metals and mining Bullboards have been paying attention. Shares of WM sat at $0.90 to start the year on Jan. 2 before steadily declining to $0.74 on Jan. 28. Yesterday, however, that drop was almost entirely erased.

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How did Wallbridge climb up to $0.88 so quickly? The mining company announced high-grade gold intersections almost a kilometre away from its currently known gold system, indicating the size could be bigger than expected, but that release came at the end of Jan. 27 a full trading day before the bounce.

So what’s the cause? Half of the WM Bullboard was celebrating the rise while the other half was trying to figure it out. One popular post highlighted that the morning’s Globe and Mail contained a snippet that investment firm Eight Capital initiated coverage of Wallbridge at a $1.05 buy target. Another far more speculative angle came from Stockhouse Member samdruker: Kirkland Lake was buying up stocks and getting ready for another takeover.

I see this in business all the time, in the leadup to a takeover. [Kirkland CEO and Wallbridge Board member] Makuch is getting a lay of the land, of the company, of its operations, of its personnel. He has been welcomed in to get an insiders perspective, because he is trusted to make a fair evaluation of the company, of its claim, of its worth; and then make a fair offer for everything.

You mark my words, it’s written in stone, Kirkland will purchase Wallbridge this year, sooner rather than later.

(Po​st: Why u think Makuch was appointed to Wallbridge board?)

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January on the healthcare Bullboards has been the month of Theralase Technologies Inc. (TSX-V:TLT, Forum). The cancer-fighting pharmaceutical company had a stellar lead-in to the new year, with TLT shares climbing from $0.23 on Dec. 2 to $0.375 on Jan 2. Since then, however, it has reversed course down to $0.295 on Jan. 28.

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The main focus for Theralase and its investors has been on the R&D of light activated Photo Dynamic Compounds as a cancer destroyer, but news on the development front was absent from the company’s news releases over the last few months. That is, until Jan. 27 this week when Theralase announced it was granted a US patent for photodynamic therapy.

But shares didn’t budge, and the TLT Bullboard barely paid it attention. In fact, the general lack of news hasn’t been met with the outrage or incredulousness one might expect, because it seems that the TLT Bullboard is a knowledgeable bunch. As Stockhouse Member Longholder99 explained, most expect shares to stay flat until after some warrants expire in March.

“[Frost] negotiated a boatload of warrants including what I believe are somewhere in the neighborhood of another 20M+ at $0.54 that expire Mar 3. The hunch on some of the delays we are seeing and the lack of promotion is that they may be holding back to let the SP languish so those warrants expire. They don’t need cash right now and nobody wants another dilution at this point...
(Po​st: RE:Frost clarification)

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If you thought the last two companies had an up-and-down new year, you haven’t been paying attention the energy sector. The dramatic rise and fall of crude prices from December to January brought companies like Baytex Energy Corp. (TSX:BTE, Forum) along for the ride, and the energy Bullboards have been active trying to find normalcy.

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BTE shares climbed from $1.36 on Dec. 3 to $2.09 on Jan 6 before falling back down to $1.47 on Jan. 27. During the decline, the Canadian oil producer announced its preliminary year end financial results and reserves on Jan. 20, and followed it up with a next-day announcement for a proposed US $500 million private placement to pay off expiring notes. The overall image for Baytex was one of positive cash flow but lots of debt, and the release of pricing details on Jan. 22 didn’t make for a prettier picture.

The company’s private placement issues notes at an interest rate of 8.75%, significantly higher than the outstanding notes that the offering will help pay off, splitting the BTE Bullboard into two distinct camps. One camp believed this was a brilliant move after oil prices dropped to capitalize on the “inevitable” future bounce-back, while others saw the high interest rate as a sign of desperation. As Stockhouse Member mrmomo pointed out, the truth is somewhere in the middle. Baytex had some options, but not many.

…They basically had two options: Keep the current debt as is OR take the best available. Since the basic main goal of ANY competent, logical and pragmatic person or business looking to refinance is to LOWER interest payments/interest rate and not increase them, what happened? Easy, nobody in their right mind, banker or financier was going to give them a rate lower than 5.25% in the current environment...

…With the debt coming due in 2021 they went to plan B, .try to extend the pending doom as far out as possible with the best available rate currently on the table, and hope the O&G situation improves before then.

…Did they have other options besides refinancing? Yes, in my opinion they could have put some Canadian assets on the block. Even if the prices being offered for those assets were lowballed, it might have been better than doing what they did. But in their minds they probably thought or are thinking the sector will most likely recover in 5 years time...

(Po​st: Some confusion here.....)

While resource stocks have been heading every which way to start the year, the sentiment towards metals and mining so far has only gone up. Over the last few weeks we’ve asked Stockhouse users which metals they expect to have the best 2020 and the results track largely with expert opinion: Gold, Silver, and Palladium on top.

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No matter what happens in the markets, it always seems like external pressures carry more weight. Our latest Investor Pulse Poll takes a look at the biggest political event that chould shake Wall Street, the ongoing US Senate Impeachment Trial of President Donald Trump. Do you think the outcome will have an effect on the markets? Head to the hompeage or click the image below to cast your vote.


(Click image to go to the poll)

Next week we head into February with slightly more than our usual uncertainty, but as Bullboard users have shown, plenty of small cap opportunities to get excited about as well. For previous editions of Buzz on the Bullboards: click here.


FULL DISCLOSURE: Theralase Technologies Inc. is a client of Stockhouse Publishing.


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