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5/17/17

Trevali (TV.to):Toldyaso

Back on March 14th, when Trevali (TV.to) announced its deal to buy Glencore's zinc producer assets, the sell side world was falling over itself to applaud, cheer, and generally FEL8 the big swinging dicks who'd put the deal together. Why so? Because there was CAD$230m bought deal attached and it was time to drink deep from the trough of legalized corruption. 

Unsurprisingly, your author didn't share their view. Here's the post from March 14th:

So if I have this right, Glencore is exchanging fixed assets for cash by selling two of its zinc mines to a company that is, for all intents and purposes, its unofficial subsidiary while zinc prices spike higher and the market lemmings are all gooey about the metal.

I mean, what does Glencore know about the price of zinc anyway?*

And as the big fish hands off risk to the small one, the people running the small fish does the same by diluting the merry hell out of its long-suffering shareholder base once again. Meanwhile, don't expect any sort of criticism for this outrageous deal from the sell side whores in suits and cubicles, there's commish to be made from selling paper. 

*If you're a mining investor and can't recognize the irony, may the higher deities help you


Aaaaaand here we are, two and a bit months later and not only is TV.to down 17% from the deal date, it's now one of the very VERY few zinc stocks that's down 2017 year-to-date.



Which brings up an interesting chain of logic:
  • There was a C$230m bought deal, sold by the sell side whores for juicy commish.
  • According to Canadian rules, they can only sell to "accredited investors".
  • One of the rules to become an "accredited investor" is that you must demonstrate a sophisticated level of market intelligence and experience.
  • If you couldn't see what's in front of your face on this deal, that Glencore made out like bandits and not only does it transfer all risk to TV (including closure costs) but also keeps control of all production from the mines via offtake agreements, you have to be a dumb and naive market dumbass.
  • Dumb and naive market dumbasses are not allowed to be accredited investors.

So who bought the shares?