Erik Wetterling – The Importance Of Share Structure When Investing In Junior Mining Stocks
Erik Wetterling, Founder and Editor of The Hedgeless Horseman website, joins us to reflect on the importance of share structure when investing in junior gold and silver mining stocks. He makes the point that has to roll the dice more on assay risk with companies with tight share structures, as they could move up substantially on a good drill results, whereas one can wait until after assays are released on companies with more bloated share structures, where the good news may not move the needle quite so much.
Erik mentioned that with larger share structure in Gold79 Mines (AUU) (AUSVF) that he was happy positioning after the positive drill results, as the shares didn’t move much and yet the risk/reward set up on the exploration improved substantially. In contrast, Erik mentioned he is positioned in Irving Resources (IRV) (IRVRF) ahead or more assays being released because not only does he like the prospectivity of hitting, but they have a tighter share structure, and thus could move up more on positive results.*
We wrap up by discussing how he views the importance of the amount of outstanding warrants in a junior mining stock, what their strike price is, and if this factors into where pricing could get stalled out even on good news. Ultimately he feels like this just frustrates shorter-duration traders, but actually subsidizes longer-term value investors with more time to accumulate an under-valued fundamental picture unfolding over time.
*In full disclosure, the companies mentioned by Erik in this interview, are positions held in his personal portfolio, and are also site sponsors of The Hedgeless Horseman website.