Nick Hodge,
Publisher
March 17, 2021
This morning I wired funds to a private Canadian company.
The company has acquired a past-producing silver-gold mine in Idaho. It will list via a shell in the near-term, and begin trading.
This wasn’t a “crowdsourcing” deal. Or a Reg D or Reg A.
This was a good ol’ fashioned private placement.
And it’s how I have secured my family’s financial future. Many of my subscribers have used it to do the same.
In our current culture of vast wealth equality and oversensitivity, I sometimes shy away from overtly espousing this type of investing.
After all, you need to have US$1 million in net assets, make at least US$200,000 per year ($300,000 if you’re married), or otherwise meet the definition of an accredited investor to participate in them.
That’s a shame. And it’s also paradoxical. Because one of the fastest ways to becoming an accredited investor I’ve seen is to participate in private placements.
The Art of the Private Deal
Instead of raising capital in the public market via an offering of common shares, a company can choose to do a private placement, which exempts it from registration and prospectus requirements.
This avoids long delays and higher costs, and allows the company to raise money faster. So for the investor, it’s more like a venture or risk capital deal.
As such, the returns can be extremely outsized. But because there is no prospectus, and especially if the company is young or not generating revenue (as is the case with many early stage biotech, mining, and cannabis companies), there is more risk.
That’s why these private placements are often conducted at a discount to market price.
And in addition to just shares, many private placements also come with warrants that give the investor additional leverage for taking on increased risk. Warrants are like options in that they allow you to buy more stock in the future at a specified price but without the risk of being obligated to do so.
How Lucrative?
Just how lucrative can buying this stock be?
It’s best to list a few examples of deals I’ve been involved in.
I helped finance a private lithium company — Lithium X — in 2015 at 15-cents that went on to list and got taken out at $2.61 per share by a Chinese firm called Nextview New Energy. That’s a 1,640% gain. And it happened around four months after the company started trading. That turns $15,000 into over a quarter million dollars.
The next year, I financed a company that is now called ImmunoPrecise Antibodies (NASDAQ: IPA)(TSX: IPA) at $0.30 ($1.50 post-consolidation) right as it began trading. Those shares have gone on to trade as high as $26.25. That’s a gain of 1,650%.
More recently, my readers and I have successfully financed several gold companies.
We participated in a private placement in Rupert Resources (TSX-v: RUP)(OTC: RUPRF) at $0.85. That was ahead of new gold discoveries at its Pahtavaara mine in Finland, after which shares climbed as high as $6.20 — or 629% higher.
Last summer, as gold ran to record prices per ounce, we participated in a hard-to-access placement in Artemis Gold (TSX-V: ARTG)(OTC: ARGTF) at $2.70. Those shares doubled in a matter of months. We got access because I knew Artemis leader Steven Dean from his previously successful role at Atlantic Gold, which I had readers in when it was taken out, but that’s a story for another day.
Last fall, we participated in a $0.20 financing for Kutcho Copper ahead of copper prices running to decade highs. Kucho shares have run as high as $0.82, putting us up 310% in a matter of months. And we also had warrants at $0.30 that were 173% in the money.
A $15,000 investment in each of those deals would see you with over $700,000 today.
That’s four deals. I’ve doubled our money or better in more than two dozen deals.
They say the rich get richer. And private placements are one reason that’s true.
What you hear less is that it’s possible to get rich with private placements.
I’ve not only seen it happen to others. I’ve lived it.
I now offer access to the private placements I’m looking at via the Hodge Family Office.
Check it out if you’re interested in this type of investing.
Call it like you see it,
Nick Hodge
Editor, Daily Profit Cycle
Nick Hodge is the co-owner and publisher of Daily Profit Cycle and Resource Stock Digest. He's also the founder of Hodge Family Office, the umbrella organization for his three premium services: Hodge Family Office, Family Office Advantage, and Foundational Profits. He specializes in private placements and speculations in early stage ventures, and has raised tens of millions of dollars of investment capital for resource, energy, cannabis, and medical technology companies. Co-author of two best-selling investment books, including Energy Investing for Dummies, his insights have been shared on news programs and in magazines and newspapers around the world.
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