As a retail investor, a financing is a good trigger point to decide if you want to start following a company. You know there is money in the bank, you can start to gauge your risk, and you can quickly separate viable projects from non-viable projects.
The reason why financings matter to retail is a financed company has significantly fewer risks than a non-financed company. You know several things:
· The company has cash to do what they have or need to do next.
· Drill results will probably, maybe, hopefully come out soon.
· Some major investor was willing to take a risk.
· Some banker thought it was a good idea (and of course bankers are never wrong).
The fact is retail investors get sloppy seconds. The nice thing about sloppy seconds is sometimes they’re worth eating and sometimes they’re not. But the retail investor is not forced to eat it, unlike the institution that bought into the offering.
When a financing takes place, the company is either hyped or dumped depending on market support (broker support). However, post-financing, companies routinely trade for similar valuations to the financing price. What is really nice about that is the retail investor with small size can traditionally get better pricing than the institution from the market.
If all you want is five or ten thousand shares, you can choose your entry and exit into the stock. If you run a $100 million fund or a $1 billion fund, you have to buy from the company because if you buy in the market, you drive the price up, and if you sell in the market, you drive the price down.
As a retail investor, watch the offerings, pick the companies you like, and target an entry point below the offering price. Then wait for the drill results and break out either the bubbly or the lithium salts.