79% of TSX-V stocks now 10 cents or below

Danny Deadlock Danny Deadlock, TickerTrax
15 Comments| December 6, 2013

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The resource heavy TSX has significantly underperformed the NYSE and NASDAQ this past year but (for the most part) still generated a positive return. The TSX Composite Index is up approx. 8% for the year.
 

The same cannot be said for the TSX Venture Exchange (TSX-V) where another year of big losses was recorded. The TSX-V Composite Index (the best of breed) is down almost 25%
 

 
The Misery on the TSX-V is now approaching three years where the Composite Index is down 60% from the Q1/11 high.
 

 
Recent statistics on the TSX Venture Exchange reflect the depth of the misery:
 
Almost 80% of the 2,152 listings were trading at or below 10 cents

Almost 50% of the listings were trading at or below 5 cents
 
Penny (micro cap) stocks are the black sheep of the investing world and while they can generate remarkable returns, they also have a very large “negative” stigma attached to them.
 
Both the TSX and TSX Venture have worked hard to have their Exchange viewed as “world class”. Yet it is very difficult to take that seriously when 80% of the listings are barely worth a dime.
 
A couple weeks ago I did a report suggesting the exchange needs to work harder to help companies interested in a change of business.
 
http://www.stockhouse.com/opinion/ticker-trax/insights/2013/11/22/will-tsx-tsx-v-delays-kill-junior-tech-rto-hopes
 
This means speeding up a ridiculously slow approval process (six to nine months on average) and cutting back on the burden of heavy accounting and legal fees. I recently received a change of business package in the mail for a 14 cent stock and it was literally two inches thick. You would think it was a multi-billion dollar merger or acquisition.  I have little doubt the huge majority of shareholders just toss it in the garbage and shake their head in dismay.
 
The 2014 outlook for the resource sector is similar to 2013. Without more diversification on the TSX and TSX Venture we are going to experience another year where companies disappear, dilute their share structure, and/or roll their stock back and grossly dilute shareholder value.
 
As the following graphic illustrates (sourced from LXV.V) the weighting to technology in Canada is very low - yet the sector’s outlook continues to reflect strong growth.

 

 
Diversification to technology is not going to be the cure and will not work for a large majority of companies who won’t have the ability to put together a skilled management team. But whatever the sector solution is, public companies need to have confidence that the exchange is going to try and work with them, and not against them.
 
If the company suffers then hundreds (or sometimes thousands) of small retail shareholders also suffer who are grossly underwater on their investment. If the shareholder is already in a huge loss position, does he really want further “excessive” regulation that means his money is tied up even longer?
 
There is a line between regulation and doing something to help people recover their losses. When you have a world class stock exchange where 80% of the stocks are trading near or below 10 cents, SOMETHING needs to be done sooner than later.
 
The TSX and TSX Venture Exchange are owned and controlled by Canada’s largest financial institutions. One only needs to look at their recent earnings to know they have the financial resources to help try and turn this disaster around.
 
Sitting around waiting for commodity prices to save the day is not the answer. .
 


Tags: GOLD

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vicky56
One flying under the radar, and has just signed an agreement to sell ONE of it's properties to New Gold...is Troymet (V.TYE)! Currently trading at less than cash, and Dr. Kieran Downes (CEO & PRES) is also VP of Exploration for Zadar (ZAD)Athabascan Basin trending NE, Alpha Fission JV
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December 7, 2013
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jove
p
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December 9, 2013
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arctan2x
On those difficult Time for the TSXV companies, im almost only trading business That trade with a huge discount compare to the cash They got IN Their bank account like ARL.TO, BTC.V , PBG.TO And many more (keep up the good work with your list Danny) I also got a look on growing small cie That are already earning profits or close like VFX.V, PHO.V, GRE.TO. GLTA
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December 7, 2013
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JR12
All the resource and non profit generating TSXV stocks are pretty much toast, except for the odd one with a good deposit. However, any junior that's able to make a profit will survive this downturn and comeback strong. NCI, PHO, IWG all experienced this over the last few months. KFG, IVI, SYL and a few others that have had back to back growth will likely experience the same type of share appreciation in 2014.
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December 7, 2013
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Johnny881
XME will soon be leaving that 79% when they become the second company to discover a hydrothermal graphite diatreme. http://www.stockhouse.com/blogs/top-pick/december-2013/zen-i-zen-2
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December 6, 2013
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manfrommars
Kind of tells you resource stocks are deadsville
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December 8, 2013
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Schmid
It is what it is, winners Just Do It. Haters gonna Hate on the boards that sit idle with everyone considered either a basher or a pumper, because nothing is happening and everyone is edgy. Thanks Danny, you have good timing with your topics.
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December 7, 2013
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Schmid
In the long haul this trend will be healthy for the Venture. It will remove the "Dead Wood" Mgmt teams, that only mine investors, so you could also look at it like culling a herd.
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December 7, 2013
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Kherson
Actually Danny, there is a lot more to the story than you have revealed. Most investors have now learned that there is no enforcement mechanisms in place to protect them against corrupt companies listed on the TSX or TSXV. It has now been proven time and time again that regulatory agencies such as the BCSC and even the OSC are not doing their jobs. The BCSC is now even corrupt and it's management are too busy padding their paychecks instead of prosecuting the criminals. Sadly, even the le...
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December 7, 2013
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wintersun10
for starters, i counted 8 exchanges to trade FCU today, how did that happen. why do we need 8 exchanges? except for to obscure the market place? second, the 43-101 program to calculate a resource puts a wet blanket on any report as you can only show what you drilled. and it costs a fortune to drill, esp if you have a big resource. i know it was set up with the best of intentions, but it looks like it is back firing today...
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December 6, 2013
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