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  • "The market can remain irrational longer than you can remain solvent" - John Maynard Keynes

    Monday, April 14, 2003

    Gabriel Resources listed on the Toronto stock exchange (Quote) announced that four of their senior managers were all resigning for personal reasons Link. Clearly no four senior managers concurrently decide to resign for personal reasons. This company seemed to have reasonable prospects and with gold above $300usd they should be trading around $4 or so.

    Right now they are down to $2.15! With these resignations and the Romanian opposition complaining about the environmental factors I'd be really worried. Having been $6 in June $4 in March and now $2.15, it really seems like there could be problems. I haven’t invested in them but know some people who have. To invest here you ought to know about Romanian mining law (and how mining leases are allocated), Canadian securities law and the backgrounds of the senior management team. In addition a sound knowledge of the commodity market in gold is crucial to valuing the gold reserves in Romania. There were previously issues about some senior management (c-level) having had a heroin conviction, leading to some concerns about the honesty of management. It reminds me of Actrade now trading at $0.50; I started looking at them when they were in their $30's.

    They had this great business, effectively factoring receivables but with a decent technology component. Based on their (now apparently fraudulent) SEC filings they were greatly undervalued. I very nearly invested but this Amos guy had previously gone Bankrupt in Israel and some Israeli investors were still perusing him. He was the president of the company at that time, additionally half of the companies business was based offshore and therefore extremely susceptible to fraud. Well in the end it seems like Amos sent a load of money to company accounts offshore and then it was cashed out and disappeared, in addition it seems that money had been lent to their friends and was never repaid. When you invest in a company with suspect management and they are operating offshore, you get what's coming to you. ACLN is another good example.

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    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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