start here

start here

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

I say things on Twitter

3/26/18

Impressively, Tom Gallo of Canaccord manages to analyse Dalradian Resources (DNA.to) and blow his boss at the same time

Figuratively speaking, of course.

Post-close today, the venerable Can Of Corn decided to transfer coverage of Dalradian Resources (DNA.to) from Eric "ZeeMan" Zaunscherb to its new boy analyst, Tom Gallo. The resulting note is one of the most embarrassing and pathetic that this humble corner of cyberspace has had the misfortune of witnessing for several moons.

Which means Gallo is going to fit right in at the house, of course.

Want to see what it looks like when a numbers wonk masturbates in public? Read on kind visitor, here's a chunk of the Gallo script from the DNA note, specifically the valuation paragraph:

Valuation

Our forward-curve-derived long-term gold price of US$1,499 generates an after-tax project NAV (6.5%) of C$900M (previously $799M). We have raised our discount rate to 6.5% (from 6%) to reflect apparent market hesitation and increased permitting delay risk. We derive a corporate NAV of $1.09B (previously $1.12B) with net debt and other corporate adjustments. With 455M shares outstanding (previously 463M) our corporate NAVPS of C$2.39 (previously $2.42) supports our rounded C$2.50 target price, which is unchanged
We note the following:
  • U$1499/oz??? WTF?? Why? When? How? Why not pick $1,300/oz gold, or $1,700, or Fly-To-The-Moon-Per Ounce?
  • Next, not only does an adjustment to a 6.5% discount rate from 6% reflect precisely bugger all, but it bears no relation to the true political, community and permitting risk of the location. 
  • Regarding that risk, Gallo has obviously fallen for the old "Oh they have white skin and speak English so no worries", trap. Plain fact is that pol risk around Curraghinalt is way higher than those smelly hot places with no aircon and small brown people, Tom. Sorry to let you down so early.
  • NAV, as always, is simply an exercise in MSU (make shit up).
  • And the final insult, a "rounded target" price. Why? When? How (etc)

What you see above is a classic example of the most cynical trick in the sell side's book, the reverse engineering of a price target. This humble corner of cyberspace can guarantee, God's witness and souls of family members*, that the numbers presented by Mister Gallo (Spanish for rooster, cockerel or just plain cock) derive from the target he was told to publish by the jerkoff in the corner office on his floor. His only leeway is that of an ultra marathon fell-runner, allowed to choose his route but the finish line is mandatory. Utter utter utter wank, Tom. Welcome to Canaccord.


*some restrictions apply