start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

7/3/08

Mansfield Minerals (MDR.v) is an interesting case study right now

Ok, so I've taken a bath on the short term price, but that's not the point (and as mentioned many times previously, there is no farm betting going on with short term trades over here).

Let's have a look at the chart for the last few days...........

MDR.v 10 day chart (click to enlarge)

..........and we can see that the company has dropped like a stone, but volume has been very thin. To be more accurate and to give context to the situation, Mansfield has 44.1m shares out, which means on June 25th (price $2.80) its market cap was $123.5m, but at the $1.65 printed this morning the market cap was $72.8m. Or in other words, $50.7m has been wiped off the value* of the company by a total of just 141,000 traded shares (i.e.not even $400,000 worth) in the last 6 sessions.

OK, it's a weird situation at first sight but it's also the reality, so the question here is "why"? I think it's a combination of:

1) a junior mining company run by geologists and rock-type people that doesn't care two hoots about the short-term price fluctuations and general strange shit that goes on in the Canadian Wild West Venture exchange

2) mucho mucho nervous people in the world of trading right now. Under normal circumstances any large holder or broker would step up to the plate and defend the stock by buying up the ask price, but today it didn't happen. I mean, some guy wanted the stock down so he sold a measly 1,200 shares at $1.65, then another 300 went thru at the same price...then the ask stayed at $2.05 for the longest time and nobody came forward to defend MDR.v. So the ask drops to its current $1.86, the next trade goes thru at $1.76 and it's game over....mister shorty wins.

The moral to this case study: Nobody wants to risk even a couple of thousand on a junior miner right now. So my advice to you, dearest reader, is "be very careful....there be dragons."


*see that Warren Buffett quote underneath