Globe digs into the Uranium money tree
I wasn’t surprised to see that Globe and Mail has picked up on the, ummm, interesting role that newsletter writer Jim Dines plays in covering certain mining firms. Here’s our post from a few months ago (“Hedge Fund regulation part 2”, February 27-07).
The Globe story from Saturday, May 19th had this excerpt:
“There’s nothing better than having someone influential recommending your stock to retail investors. Take James Dines, the man behind The Dines Letter – a stock-picking report with a sizable following. Mr. Dines used to call himself “the original gold bug.” These days, he is the “original uranium bug,” and is touting a company called Mega Uranium Ltd. (as well as Pinetree Capital Ltd., which holds a big stake in Mega and shares the same chairman and CEO – Sheldon Inwentash). When the company revealed last year that regulators were investigating Mr. Inwentash for possible insider trading and stock manipulation, Pinetree shares plunged as much as 30 per cent. Enter Mr. Dines. He published a special edition of his newsletter, counselling readers to “back up the truck” and buy Pinetree shares. The stock rebounded, and finished the day up 4.2 per cent. Why does Mr. Dines like Mega Uranium and Pinetree so much? He didn’t respond to requests for an interview, but he received 150,000 shares of a company called Maple Minerals Corp., in July 2005, for selling the rights to the name “Mega Uranium Ltd.” Maple Minerals of course, soon morphed into Mega Uranium and the share price has climbed from around $1 since Mr. Dines received his stock to over $6.”
Another interesting topic the Globe touched on in the piece was a question is for the provincial securities regulators. Didn’t the much maligned practice of investment bankers, research analysts and institutional salespeople buying nickel/share stock for their P.A., then raising funds at a 15x higher price a few months later from public investors get essentially banned in 2001? Well, not banned, but certainly frowned upon in the absence of bright, bold lettering in one of the front sections of a prospectus / financing statement (such as the one filed on SEDAR on April 2, 2007) under the heading of Conflicts of Interests, Prior Share Sales, etc.?
Guess not. As the Globe put it, “it’s all [still] perfectlly legal”.