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What I Learned at the Calgary Resource Investment Conference – 2011

I love speaking at investment conferences.  I learn so much from the subscribers and investors that I meet there.

One of my subscribers is a landman from Wyoming, a former professional rodeo rider who flew up to see me at the Calgary Resource Investment Conference last weekend.  I sat wide eyed across the table as he regaled me with stories of what happens during a highly competitive land rush in a new shale play.  When the Big City Money comes into Small Town Oilville, people get creative – but always above board.

These conferences are a treasure trove of information and contacts.  I’m surprised more people don’t show up – especially the dedicated investors who play the junior markets, either energy or metals.  I’m always trying to educate investors about how the game is played in junior stocks and one thing I can say with certainty after attending these things for 20 years is this:

If you want to be included in the cheap rounds of financing, the non-brokered financings, you have to develop those relationships with the management teams of the companies face-to-face.  It’s very difficult to create that rapport over the phone.

This is much more true of junior mining stocks than oil and gas stocks – mining companies issue a lot more early-round financings to that next ring of investors – let’s call them semi-professional retail investors — than energy management teams do.  (One of the main reasons there aren’t many oil and gas newsletters ;0)).

I love being the only oil and gas guy at these conferences, which are 97% junior mining stocks.  And my message to the (packed) crowd listening to me is two-fold:

1. Investing in junior energy stocks is very similar to that of junior mining stocks—invest with the teams that have a track record in finding big deposits, and don’t have a billion shares out (believe it or not, a couple of them do…)

2. We can now get oil and gas out of rock – shale in particular — for the very first time ever.  Well, it has been happening now since the Barnett Shale in Texas was developed in the late 1990s, but it’s still recent.  And this is creating many new discoveries every year that are making speculators and investors alike very wealthy.

The informal subscribers-only session was the highlight for me.  I never know what will come up in these half-hour sessions, as they control the agenda – they can ask me whatever they want.

One thing I realized is that a lot of people didn’t understand the opportunity that comes along to buy these junior stocks at cheap prices on a regular basis – when they finance, or issue shares to raise money.  Junior companies always have to raise money, to either buy new assets or drill faster to keep the market happy.

When the institutional crowd says ‘yes, we’ll give you money Mr. Oil Company President,’ they generally get to set the price. It’s a dance, or tug-of-war, that brokerage firms do with the management teams to decide on the price at which they issue stock – but almost always, the broker wins. And the market often sells down a stock they think is about to raise money. Even if retail investors are not allowed to buy the stock on the financing, those times and prices are often very good entry points on the stock chart.

Until last Christmas, almost 40% of my subscribers were from the oilpatch – drillers, roughnecks, lawyers and engineers who knew their slice of the energy pie, but didn’t know the market… and didn’t have time to research the juniors.

These people have been a wealth of information for me, and this is the only place I really get to meet them, hear their stories and get some personal feedback. (It’s clear that most people are more apt to give me any negative feedback in an email.) Many of them are very active investors and call up the management teams of the companies in my portfolio, and share their own take on things.

The conferences have turned out to be the most fun part of my business.  Other than these highly interactive days, it’s just me and my laptop and phone (and a small hardworking team) so I LOVE these shows. (Not only that, I discovered that ham is my middle name and that I really enjoy a crowd.)  I will be posting my upcoming conference schedule to the website in the next couple days – and I have three next month in May alone – so I hope you’ll come by and share.

P.S. We’ll be hosting another workshop for OGIB paid subscribers at one or more of these upcoming conferences, so stay tuned for your exclusive invitation.



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