Peterson Capital Update – December
2009
Hi [firstname,fallback=]
Here is a quick update on four items of potential interest to you:
- European roadshow schedule for 2010
- Mark Mullins market
commentary and forecast
- Alan Cook and Richard Ketchen profiles
- Peterson Capital client udpates
1. Europe 2010 Institutional and Family Wealth Manager Visits
Peterson Capital has developed strong relationships with a
number of institutional fund managers and family wealth advisors
in Paris, Geneva, Monaco and Milan as a result of working
with these European investors over the past 20 years.
These investors appreciate working with us and our
clients since we’ve developed a track record of bringing
over strong companies that provide milestones in their business
that can be met and tracked, are efficient in follow-up and information
flow, and are in sectors of interest.
In the second half of 2009,
European interest in Canadian companies has increased considerably,
as a rising Canadian dollar and energy prices together make Canada
an attractive place to invest for European fund managers. As
a result, we will be introducing a number of new companies to
our European clients in 2010. Here is what the schedule looks
like:
- January: Alterative Energy (solar, wind, biomass)
- March: Life Sciences (diagnostics, pharma)
- May: Resources
(mining, oil & gas)
- September: Technology
- November:
Special Situations
Each roadshow will be comprised of three companies in the
same sector to reduce costs for each company and increase exposure
among European investors focused in these sectors. Each company
should expect a total of 50 new contacts, as well as a follow-up
report and feedback from each city.
This is a great opportunity
for emerging public companies in these sectors to expand their
reach into Europe, and at the same time possibly work with
our network of more than 300 Investment Advisors and fund managers
across Canada.
Please contact me directly for further details. e-mail
Rick Peterson
2. Mark Mullins One-Year Market Forecast: “Stocks up
20%, Bonds down a bit, and Gold back to $1,000 by end of 2010” Mark
Mullins is the former Chief Economist at Midland Walwyn Capital
and contributes economic and market commentary to CBC’s
The National. As CEO of the financial consulting firm Veras
Inc., Mark offers market views and commentary to Peterson Capital
clients. Last spring he called the market bottom, and in our
September update he continued his bullish views. Here is where
he stands today:
“Financial markets appear to be in a
holding pattern at present, possibly marking a moment of decision
for this initial stage of recovery from last year’s financial
crisis.
“World stock markets have been essentially unchanged
since mid-September, even while going to new highs in the US,
and bond yields are little changed since July. The likeliest
reason for this choppy but flat market is a tradeoff between
better than expected corporate earnings and slightly diminishing
confidence in the economic recovery. The earnings have mainly
improved through cost-cutting and productivity increases, but
this is not enough to spark interest by investors who are looking
for a more normal economic expansion with stronger top line
growth.
There is an interesting story developing in
the bond market and it has to do with inflation expectations.
With US ten year yields remaining near three and a quarter
percent, but with a drop in real return bond yields to almost
one percent, there has been a small uptick in implicit inflation
expectations in the past few weeks. This has been accompanied
by a continuing rally in gold prices and a drop in the US dollar,
all of which point to the key risk factor in markets: fear
of a negative policy response by the US government, either
in terms of debt repudiation or future inflation.
“Though
investors are right to fear the market consequences of a sharp
drop in the dollar, perhaps caused by a momentum trade that
causes the currency to undershoot on the downside, there is
little reason to pin the blame on future inflation. It is true
that the Fed and other central banks have injected massive
liquidity into the finance sector, and equally the case that
increases in money supply eventually leak into general inflation;
however, this is a controllable situation and is well understood
by the authorities. Central bankers can literally drain funds
at will (and will do so when required) and the current state
of the global output gap, with low utilization rates and high
unemployment, will keep inflation pressures at bay until at
least 2011. For now, easy money and a low US dollar are the
medicine to heal the patient, not a sign of impending illness.
Generally
then, it appears that stocks have had their initial rally from
the March lows, bonds are treading water, the economy is picking
up (but only modestly), and currency markets are pricing some
policy uncertainty. The major commodities reflect this situation,
with oil and gas prices in a broad trading range since May
and industrial metals like copper only slightly higher than
their summer levels. The bullishness of gold, as discussed
above, is a story related to currency depreciation and low
real rates of interest.
It is therefore a moment for
reassessment and there are two possible courses: a continuing
recovery in the economy and markets, though at a slower pace
than the first half of the year, or another negative shock,
likely prompted by a dollar collapse that brings down global
confidence and this recovery. Given that the economy is coming
off such a low base, and that pessimistic investor sentiment
is priced into the foreign exchange market already, I believe
that the best odds favor the first scenario.
A pocket
forecast would therefore ultimately see another twenty percent
or so gain in stock prices by next summer and a gentle rise
in both real and nominal bond yields. Even stabilization in
the US dollar could take the edge off the gold rally, which
right now is moving mostly on a momentum trade as the most
popular asset of choice.
Now is not the time to stand
in front of a gold train going higher, but a reasonable bet
is that prices are back near $1,000 a year from now. In any
case, markets move by the minute and by the day, and so the
risk of an uncontrollably sinking US dollar can be monitored
in real time and responded to accordingly.
For now,
the highest odds are on a weakish but positive continuing recovery
in the economy and markets – be patient.”
3. Corporate Communications: Meet Two of Canada’s Best Professionals
I wanted to pass along the names of two colleagues who, in my view, are simply
among the best you’ll find in Canada when it comes to helping public
companies effectively communicate with their stakeholders.
Over the past six
years, I’ve worked closed with Alan Cook of Emerge
Interactive Inc. in Vancouver as he’s designed websites, Fact Sheets and email campaigns
for public company clients of Peterson Capital as well as a wide range of charities
and political groups that I’ve been also been involved with. He works
well under pressure, on time and within budget. Check out some of his work
on both his website as well as on mine, and you’ll see what I mean. You’ll
be hard pressed to find someone better than him in this field.
Richard Ketchen is a good friend and a North Vancouver-based corporate/business writer who,
for the past 15 years, has written annual reports, white papers, corporate
brochures, websites and other material for a very impressive list of clients
that you can see on www.richardketchen.com. Richard is a CGA as well as a professional
writer. This background sets him apart from most others in his business, and
is no doubt is one of the reasons for his success. He also possesses a very
refined sense of humor, which always helps in this business, especially at
this stage of the market cycle.
Peterson Capital Client Update: This last quarter has seen significant accomplishments for Peterson
Capital corporate clients. You can see profiles of each of them
on our website: In a nutshell, here’s what’s happened:
- Med BioGene Inc (
MBI-V) announced on October 15th positive results from the current
validation study of LungExpress Dx™ - a molecular diagnostic
test for lung cancer patients - undertaken by MBI and its collaborators
at the University Health Network (Princess Margaret Hospital)
in Toronto. CEO Erinn Broshko was featured on BNN Television
that same day. On November 16th the company announced that it
has engaged Rodman & Renshaw LLC to act as lead underwriter
in connection with MBI's proposed initial public offering (IPO)
of common shares in the United States and concurrent listing
of its common shares on the Nasdaq Stock Market to take place
early in 2010. As well, the company announced an interim non-brokered
private placement, available to Canadian investors only, for
a total of $2.5 million.
- Avalon Aircraft Corp.
is a rapidly growing Richmond, BC-based private company that
services, sells and leases utility aircraft to fleet operators
in northern Canada and Alaska that serve resource industry, government
and other private sector clients. The company has continued to
expand its leasing, aircraft sale and fleet consulting operations
in the past quarter.
- Faircourt Asset
Management Inc. is a Toronto-based asset management firm
that syndicates a wide range of tax-driven and high yielding
structured products in the financial and resource sectors,
including Canada’s leading publicly listed closed-end
gold fund, Faircourt Gold Income Corp. (FGX-TSX). Faircourt’s
Gold Income Corp. (FGX-T), denominated in Canadian dollars,
continues to perform very well in the strong gold market vis-à-vis
gold bullion and other gold equities.
- Columbia Yukon Explorations (CYU-V)
continues to advance its Storie molybdenum deposit located near
the historic mining camp of Cassiar, BC. In a December 2 news
releasy CYU announced discovery of new molybdenum mineralization
that the company believes significantly increases the exploration
potential for the Storie deposit.
- Dejour Enterprises Ltd.(DEJ – NYSE,
AMEX, TSX) is an oil & gas production and exploration company
with significant assets in the US Rocky Mountains on the Colorado-Utah
border and in the Peace River Arch of NE British Columbia and
NW Alberta. On November 9th the company announced it had raised
$1.6 million in a flow-through share offering. On December 2nd
the company announced it had successfully acquired over 2,000
acres of leasehold in northeast British Columbia adjacent to
Dejour's existing leasehold at Woodrush and on trend with the
Halfway oil pool discovered by Dejour in early 2008.
I’d like to
close by offering you sincere Best Wishes for a Merry Christmas
and a Happy and Healthy New Year for you and your family.
