Frank Giustra’s “Ceased to be Insider” Trick
We prefer to focus on real companies with genuine discovery and development potential, such as Minaurum Gold (TSXV: MGG), whose flagship Alamos Silver Project we believe carries far higher odds of long-term success than Argenta Silver (TSXV: AGAG) and its El Quevar property. That said, we’re not suggesting AGAG can’t continue moving higher — the silver sector is still in the early innings of a major bull market, and MGG itself only began to break out this past Friday.
What investors must understand, however, is Frank Giustra’s well-known “ceased to be insider” trick. On SEDI, it often appears that in 95% of the companies he backs, Giustra is only buying and never selling. In reality, the moment he files that he has ceased to be an insider, he can freely sell down his position without any public disclosure.
For companies with real, economically viable projects, Giustra may remain involved for the long haul, sometimes leading to high-premium takeovers. But with more promotional ventures like AGAG, investors should pay close attention to newly announced private placements. At present, Giustra owns more than 10% of AGAG and has so far only reported purchases. Our expectation is that at some point, AGAG will complete another financing in which Giustra does not participate. That financing would dilute his stake below 10% — perhaps to 9.99% — allowing him to file that he has ceased to be an insider. That is the moment he would most likely begin unloading shares, as he would no longer be required to report any sales.
We encourage everybody to keep track of the long-term performance of Minaurum Gold (TSXV: MGG) vs. Argenta Silver (TSXV: AGAG) and which of their silver projects eventually goes into production.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. NIA has received compensation from MGG of US$30,000 cash for a three-month marketing contract and previously received US$30,000 cash for a three-month marketing contract which has since expired. This message is meant for informational and educational purposes only and does not provide investment advice.
