Midas Letter by James West

What’s Included in a Midas Letter Premium Subscription

• Risk-free 30-day trial period: If at any time during the first month of your subscription, you don’t like the service, for any reason whatsoever, you just click on a link in the email we send with each issue, and you’re subscription fee is refunded in full.
• Monthly Strategy Letter: Once each month, you will receive the main issue of the Midas Letter which includes new featured investments, tracking of current and past investment features, notice of any media appearances by James West, plus, for accredited investors, advance notice of private placement financings in premium opportunities.
• Midas Letter Alerts: Occasionally, through my daily interactions with fund managers, company management and other industry participants, I become of aware of opportunities where unique conditions may coalesce that constitute a chance to take advantage for potential short-term gain. Subscribers are the sole recipients of these notices, which happen from time-to-time and not according to any schedule.
• Direct 15 minute consultation with James West by Skype messenger at JimboWesto.

Midas Letter’s Emerging Company Orientation

My inclination toward investing in and covering Canada’s Emerging company segment is based on an affinity for and love of entrepreneurialism, and the ‘never say die’ spirit that embodies it. All mega-cap, multinational, blue-chip stocks began life as a startup. Without a steady flow of new companies up the economic ladder into profitable enterprises ripe for acquisition, the mega-caps would stagnate and die.

Start-ups are where all the big ideas are born. It is in start-up companies that visionary leadership ignores the naysayers in single-minded pursuit of an idea that is worthwhile, and usually a benefit to humanity.

With start-ups, I can easily reach management. In fact, I’m on a first name, call anytime-basis with probably two thirds of all TSX Venture CEOs in Canada. The financial statements are uncomplicated and no forensic mindset is required, as is the case with mega-caps, where ‘off balance sheet entities’ were born.

While it is indeed a verifiable statistic that 90% of start-ups ultimately fail, therein lies both the challenge and the opportunity.

It is only among emerging companies that one can light upon 1,000 percent gains. For every 9 out of ten companies that will fail, a disciplined approach to the segment can easily generate outsized returns that more than compensate for the majority of losers.

My approach is simple, and proven.

I will almost never lose more than 20% on any given issuer bet, thanks to the deployment of ‘stop-loss’ rules that dictate, if any stock loses 20% in any 30 day period, the position is automatically sold in its entirety.

When a stock price doubles (a very common occurrence, given the prices of emerging companies at the point we deem it investment-worthy, often under $1 per share), we sell half. The rest is allowed to ride until such time as a subjective assessment generates a ‘sell’ sentiment.

In Canada, as in most countries, the stock market is covered by advertising-driven mainstream financial media who seek to pursue coverage of almost entirely large and mid-cap stocks to the exclusion of the emerging stocks. In my view, this fact alone underscores the requirement for emerging company advocacy. ‘Penny Stocks’, as they are often referred to with malice, are shunned by the majority of investors, precisely because of the contempt derived from the 90% failure rate.

Yet in our society, we proclaim to value individuals who have the chutzpa to try and fail, and try again. The reality is far from this ideal. I don’t know how many times I’ve encountered silver-spoon-fed Brioni suit-clad fund weenies who smugly and condescendingly declare ‘Oh I don’t do penny stocks,’ as if they are something that one must avoid stepping in whenever possible. I’ve never met a fund manager in my life who had an original thought that he didn’t purloin from some other investment legend’s repertoire. So these are some of the reasons why Midas Letter is dead-centered on being the Journal of Emerging Companies with ‘Best-in-Class’ Potential in All Sectors.

With the incredible rate at which start-ups emerge, there is tremendous opportunity for investors who are risk-tolerant, and who perceive the opportunity inherent in a disciplined, well-advised approach to the most prolific business segment in the world, the Emerging Company space.

Midas Letter brings an non-conventional quantitative and qualitative analytic approach to these companies, continuously monitoring the entire Canadian (only) roster of sub-billion dollar market cap companies. In broad terms, we seek to invest in companies who are turning the corner, or have turned the corner, from development stage to imminent profitability in growing sectors that are able to attract capital. We seek value in companies whose market capitalization fails to price in forward earnings.

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