Investing in company’s on Toronto’s TSX Venture Exchange is no doubt an exciting way to considerable upside potential to any portfolio.
Looking for 10-20 baggers (1000%-2000% returns or more) on the TSX Venture Exchange comes part and parcel with the territory. High risk, high reward. Speculative investing at it’s best.
Most investors however are missing from their portfolio the genre of company that is vastly overlooked, even by the most seasoned traders.
I’m referring to publicly listed shell companies.
Shell companies exist to to match seasoned business professionals that have cash and investment-generating abilities, with private companies that may or may not be junior (but likely are), that would like to be listed on an exchange in order to reap the benefits of going public.
Like any investment, finding the right shell requires a fair amount of research, a good gut feel and even personal connections within the industry.
My checklist to find a target shell investment:
1. Most shell packagers have several companies on the go – you must be aware of the priority of the shell within their queue.
2. Is management capable of properly structuring, financing and marketing the publicly listed vehicle in preparation for an RTO?
3. What industry is being targeted?
At Microcap Stockwire we closely follow the cream of the crop in the shell packaging industry, paying attention to heavy hitting deal makers and shakers.
A recent example of a shell deal we were closely monitoring:
Dr. John Veltheer and Francesco Aquilini’s first capital pool shell, J55 Capital Corp. (TSX-V: FIVE, currently halted), is in the process of acquiring, through Aquilini GameCo Inc., Luminosity Gaming Inc – Luminosity was founded in 2015 in Toronto and manages professional e-sports players and teams.
The shell co has successfully raised $25 million at 0.30/share and has on their board of directors as a 9% shareholder Francesco Aquilini, owner of the Vancouver Canucks.
FIVE is now halted pending deal consummation and approval. If you happened to catch this stock pre-deal you would have landed shares at roughly the same price as insiders.
The upside potential here is significant, given the popularity of e-sports and the stature and ability of management to execute.
What about shell company’s that are still in the hunt for a deal and currently trading?
We’re looking at Brigadier Gold Ltd (BRG.H : TSX Venture Exchange) as a potential high roller.
Starting late last year, the company began the process of stocking the board of directors and raised $500,000 in short order.
On April 24th Brigadier (BRG.H : TSX-V) announced that it has received an additional $315,000 from warrant exercise by insiders – a sure sign that process of securing a deal is being accelerated.
On January 14th, and again on April 24th, the company announced it’s intention that it’s “primarily focused on business opportunities in the cannabis sector.”
What we’re looking at is a shell company that is well capitalized, tightly held by insiders with under 30 million shares outstanding and no debt or liabilities on the book – and in the late stages of evaluating businesses in one of the hottest sectors on the planet; cannabis.
Brigadier (BRG.H : TSX-V) is currently being navigated by a veteran capital markets team who have overseen the successful transition of over a dozen TSX Venture listed deals.
We’re excited about the prospects of this investment, given its excellent structure, intention to pursue a cannabis-related business, a veteran management team and a closely held share structure.
If you are looking to add a potential 10-bagger shell company to your portfolio, we suggest taking a closer look at Brigadier Gold Ltd (BRG.H : TSX-Venture).
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