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kadootje voor liefhebbers van junior mining stocks

1. [verwijderd] 5 juni 2009 20:22

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   How To Go Down The "PIPE" Into The Junior Mining Stock Rat Hole
   
   June 05 2009 By: Jim Sinclair
   
   The investment world has always been made up of three categories:
   1. Builders of enterprises.
   2. Destroyers of enterprises and all they touch.
   3. Shufflers of paper.
   
   From 1945 to 1985 there were more builders than destroyers with the same number of paper shufflers
   
   Today the population is primarily if not almost totally made up of:
   1. Destroyers.
   2. Paper shufflers who are also destroyers (OTC derivative manufacturers and distributors).
   
   Who out there is really dedicated to building an enterprise? The answer is very few, and when they are they have to beat their way past the Destroyers and Paper Shufflers.
   
   -----
   
   For gold shares the paper shufflers and destroyers work via a mechanism called a PIPE.
   When a recourse company hears the word PIPE they should not walk away, they should run away as fast as they can.
   
   An important characteristic about a PIPE is that it provides money in tranches only.
   Generally the tranches are the total required divided by the time to complete the project being financed.
   
   Pipes work this way.
   The Hedge fund agrees with the company to provide lets say $25,000,000 over one or two years.
   Please note that the financing entity has the right to walk away at any time.
   The financing entity insists on getting shares that are immediately saleable.
   
   Upon agreement the financing entity initiates a short position because the price of the shares delivered will be the price of the shares as it is trading on the day of the company’s request for money, less 15%.
   They generally are short more than the monthly delivery tranche.
   This device specializes in raping small caps.
   
   A PIPE arrangement via its mechanism and the financier’s short position guarantees the short (financing entity) a profit of 15% or more if you can batter the price down, which of course the financing entity does.
   
   To accept a PIPE financing is to offer up your shareholders as sacrificial lambs which many companies find irresistible in hard times.
   It puts the company into the hands of Jabba the Hut, PIPE financiers who will pull the money plug at some critical moment leaving the dumb company to fold.
   
   In knowledge that they have tanked the company, the Jabba the Hut PIPE financiers of course pummels the share values into oblivion without risk.
   This is how a company goes down a PIPE into a Rat Hole.
   
   A PIPE financing is the ultimate set up that hunts, as a top predictor, for the weak and stupid small cap anything.
   Investors and companies BEWARE!
   
   You should warn your investment management not to participate in this type of financing, or at least understand what has happened so you can get out of Dodge before the PIPE financing entity kills the company.