Are you ready to buy on the Dips?
Like I told you after the Calgary Resource Conference about 2 weeks ago, 2 central themes that most writers were expressing were: "take some money off the table" and "buy on the dips".
In hindsight, it would have been pretty smart to take 20-30% of your more speculative positions off the table eh? Hindsight is always 20/20 but nonetheless it's always interesting to look back at what we could have done differently.
Now the next tip was buy on the dips. I am looking at the Silvercorp share price right now and it stands at $17.20. That is about 10% cheaper than the financing that just closed.
Sprott Securities Inc. and GMP Securities L.P. as co-leader managers and co-book runners, together with a syndicate of other dealers including, CIBC World Markets Inc., MGI Securities Inc., Salman Partners Inc. and BMO Nesbitt Burns Inc. (the “Underwriters”) , collectively bought 2,501,250 units from the Company (“Units”)at a price of $19.10 per Unit. Each Unit is comprised of one common share of the Company and one half share purchase warrant. Each whole warrant is exercisable for a period of eighteen months from the closing date at a strike price of $24 per common share.
Do you think the big boys there want to have the share price this low much longer? I don't think so! They need to get it up over $24 at the bare minimum and I think that is what they plan on doing.
So is today a good day to buy Silvercorp? Well I just bought some shares back that I sold about a week ago at around $19. I don't like too much portfolio turnover but I do it sometimes.
Now let me quickly mention Capstone. If you got in before the close Tuesday, you (like me) are sitting on a 25% loss because of the dividend. But I really think that Capstone will return to about $2.50 by the time of the dividend distribution in 2 weeks so our Silverstone shares and warrants should look like they were free.
I read some people saying they were only wanting the Silverstone shares but I don't think that's the right approach. I myself mostly wanted the Capstone shares because there is a very high chance that they will continue to go up because production will commence shortly.
I think of the Silverstone as a bonus. As a gamble. If I get them for free, even better. In the best case scenario, Capstone continues to nudge higher consistently with Silverstone getting some great drill results.
Remember Connacher's spin off of Petrolifera? That's what I'm thinking could happen with Silverstone. Of course that is best case but you never know...