I learned that for every 100%, 200%, and 1000% gain I made when I picked right... Those who were participating in private placements were amplifying those gains by helping finance these companies.
The financings often came with a lucrative — especially in bull markets — sweetener in the form of a warrant, which is simply the option, but not the obligation, to buy more shares at a predetermined price for a predefined period of time.
In one case a C$0.10 stock went to $1.50. We did well with that pick. But the people who helped finance that C$0.10 stock had also received the option of buying another share at C$0.15 for every share they had purchased at C$0.10.
That’s right. If I had simply participated in the private placement at the C$0.10 level and allocated C$10,000 to buy 100,000 shares...
I would not only now have C$150,000 from the share appreciation… But I would also have had the opportunity to buy another 100,000 shares worth C$150,0000 for C$15,000.
Instead of making $150,000 on a $10,000 investment… by participating in the private placement I could have leveraged that into a $300,000 win on $25,000 spent.
The problem was I wasn’t allowed to play in the sandbox yet.
I didn't meet the definition of an accredited investor that’s required in order to participate in these types of deals.
That was years ago. And the years of research and deal flow has allowed me the opportunity and access to deals across the entire commodity space. These range from private to public companies.