Earlier this year, I had a big fat chunk of Red Eagle Mining (RD.V) and Helius Medical (HSM.T).
I’d come back from Fabrice Taylor’s investment conference in the Bahamas with both companies front and centre in my thoughts, RD for its smart gold play in Nevada, and Helius for its breakthrough tech that, at some stage, will make people richer than Croesus.
Both sat and sputtered. They went up, went down, and I went elsewhere.
Of course, that propensity towards chasing shiny lights has cost me, as I missed the run on both stocks recently, a run that doubled Red Eagle in a month, and that took Helius up 70% before settling.
Both companies remain strong opportunities, though I’m not affiliated with either, nor do I own stock as of the time of writing.
But Red Eagle just had a chat with regulators who are wanting to know why the thing is running like a rabbit that just wandered into a greyhound kennel.
The stock is up 16% today, to $0.79, but it existed in a long time funk of $0.25-$0.35 for several years before slapping the ignition button over the last few months.
I mean, look at that thing. That’s parabolic.
Now factor in the fact that the company had a financing just 12 days ago for $11 million, with $7.6 million of that going to Liberty Metals, at a price of $0.38! That’s less than half what the stock is today, and the thing is trading so hard the feds are looking for reassurances.
This is generally the point where high risk, high reward shorters sometimes come in and start looking to beat a company up, reasoning that such a hard and fast spike will be followed with a quick fall.
I don’t know. Red Eagle was a good play to begin with, and with $11m tossed into the war chest and serious buying happening outside of the fat raise, it almost feels like they found lithium at the bottom of their drill cores.
Certainly Lithium-X (LIX.V) followed a similar trajectory recently and went far further than red Eagle’s current pre-dollar level so maybe there’s still a double in this thing yet.
One thing is for certain – if the stock drops like it has risen, it’ll be toxic going forward. A fat blip on a stock chart can haunt a company for years unless it establishes a new base. Future lifts will always be compared to ‘the great hype spike of 2016’..
In a market like this, it’s often more important to know what stocks are being promoted and prepared for something big, more than what stocks are generating nice balance sheets, and as one of Fabrice Taylor’s long time favourites, and one that had a lot of investors circling in Nassau, you’ve got to think Red Eagle is building up to institutional love.
If it gets through a buck, hang on. If it wavers..
–Chris Parry
http://www.twitter.com/chrisparry