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Kaiser Research Online - Your Guide to Resource Sector Speculation
Kaiser Research Online is an information portal with a powerful search engine whose universe consists of all TSX, TSXV, CSE and ASX listed companies which are primarily engaged in the resource sector. One way to benefit is to use the map based resource centers to research companies with the help of the Free Corporate Profiles as an anonymous guest. A better way to benefit is to purchase a KRO Individual (single user) or Corporate (multi-user) Membership which gives full access to all KRO content including the KRO Profiles. These provide factual information about management, financial status, active projects and access to news releases as well as company specific commentary by John Kaiser. KRO also provides a speculative value rating system geared toward pre-production companies and operated by John Kaiser. Each resource sector company will have one of the following speculative value ratings: Unrated, Zombie Spec Value, No Spec Value, Poor Spec Value, Bottom-Fish Spec Value, Fair Spec Value and Good Spec Value. Only companies with a Bottom-Fish, Fair or Good Speculative Value rating should be considered by KRO members seeking high risk high reward resource sector ventures. Within the group of Bottom-Fish, Fair and Good Spec Value rated companies John Kaiser will maintain a short list of current favorites. The KRO Profiles, spec value ratings, news releases and company comments are permanently restricted to active KRO members.
Daily Market Report - Bottom-Fish, Fair and Good SV Rated Companies
Effective January 1, 2019 all KRO features are available through a single-user KRO Individual Membership at USD $450 for 1 year or $200 per 90 days with or without auto renewal. Use your email to recover your user name and password if you Forgot your Password. At its sole discretion KRO will make available to active Individual Members access to the Kaiser Research Online Slack Workspace. In addition we offer an annual multi-user KRO Corporate Membership (max 5 simultaneous users) for USD $1,000 with or without auto-renewal. A KRO Corporate Member does not have access to the KRO Slack Workspace, but if it is primarily engaged in the resource sector, and listed on the TSX, TSXV, CSE or ASX, we will turn on their home and project web page links inside the company's Free Corporate Profile and make available a corporate overview provided by the Corporate Member.
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Effective December 17, 2018 all bottom-fish and spec value hunter picks from the 2016-2018 period have been closed out and assigned a speculative value rating under the new rating system described below. Companies that require further research were tagged as "Unrated", the default for all other KRO companies prior to an SV Rating assignment. Comments explaining the SV rating will be published on an ongoing basis. On January 1, 2019 KRO unveiled the initial KRO Favorites List. A stock will qualify as a favorite based on confidence about the medium-long term upside potential or short term timeliness. Companies with a Bottom-Fish, Fair, or Good Spec Value rating will be periodically dropped from or added to the KRO Favorites list. Favorites will receive greater commentary coverage from John Kaiser.

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Spec Value Rating Key - 2019 onwards
Unrated Spec Value Zombie Spec Value No Spec Value Poor Spec Value
Bottom-Fish Spec Value Fair Spec Value Good Spec Value
Bottom-Fish SV Favorite Fair SV Favorite Good SV Favorite
KRO Speculative Value Ratings
Unrated SV

Speculative Value differs from fundamental value in that fundamental value is based on cash flow expectations for a company already in production and usually involves some sort of cash flow multiple system rooted in return on investment. In contrast, speculative value is the current price for exposure to a future fundamental value whose outcome is uncertain. The fair price to pay for an uncertain outcome is the fundamental value of that outcome multiplied by its certainty. Except when viewed as proxies for changes in metal prices, mining companies do not have speculative value. Although KRO features mining companies, it does not assess their fundamental value so they are always "Unrated". For the rest of the "Unrated" resource companies it simply means no rating assessment has been conducted.
Zombie SV

These are companies in danger of disappearing or being reorganized at the expense of minority shareholders, usually due to negative working capital, lack of insider stake and failed projects. Unless something drastic changes, nothing can create shareholder value. A zombie can be interesting if it owns a project with potential to be valuable, but it is unclear how that value will be unlocked so that existing shareholders benefit. Betting on resource juniors with Zombie Spec Value has in the past been called "extreme bottom-fishing" and "dumpster-diving". Most KRO members should avoid these companies but for more sophisticated investors willing to dig deep to see if a zombie will be rescued with brutalizing minority shareholders, zombie hunting could prove very lucrative.

This is the worst rating a resource junior can receive because it reflects the judgment that there is no observable plausible effort underway to create value. Reasons include incompetent management, pump and dump agenda, and projects with no discernible fundamental potential. Resource juniors that have become shells also get a No Spec Value rating as do those that appear to be "life-style" companies. These companies are best ignored unless circumstances change.
Poor SV

The rational speculation model asserts that the fair price for an uncertain outcome is the value of that potential outcome multiplied by the certainty that outcome will be delivered. If the certainty of a $200 million outcome is 10%, the fair value is $20 million. But if the market value is higher than $20 million, the speculative value is poor. This can come about because a stock is over-promoted, often with the help of a tight share structure and a choir of boosters positioned at a much cheaper price. These are often well-financed companies with top tier management. They can go higher, but for buyers the downside risk is greater than the upside reward potential. But a Poor Spec Value rating can also come about because the market has a much higher fundamental value for the outcome in mind than the party which assigns the Poor Spec Value rating. A company can overnight plummet from Good or Fair to Poor Spec Value on the basis of news which destroys or shrivels the value of the expected outcome for the flagship project. Good management teams always have a Plan B in the wings which can take the place of Plan A as the flagship story. It is important to understand that a stock with Poor Spec Value can go higher, especially in a bull market cycle where the promotional efforts of management have even greater traction than in bear or flat markets.
Bottom-Fish SV

This rating is assigned when the resource junior offers fair or good speculative value for a fundamental outcome management is working to turn into reality but there is some obstacle or missing piece that inhibits making or breaking the story. Sometimes that is financing or an effective marketing strategy. Other times it may be permitting or better metal prices. Bottom-Fish Spec Value may also be assigned when the management team is good, but their current flagship story is weak or appears so. This often occurs with discovery exploration juniors because exploration disappointment is the norm, and even when a Plan B project is in place, market reactions to a disappointing outcome for Plan A can be severe. This also afflicts projects with a seasonal exploration constraint. A Bottom-Fish Spec Value rating is good because the uncertainty about timing for positive fundamental developments can result in very depressed valuations from which very dramatic gains are possible in the event of a breakthrough as the market adjusts the glass from half empty to half full. When that happens the company becomes eligible for rerating to Fair or Good Spec Value.
Fair SV

With pre-production resource juniors, especially ones for whose flagship project an economic study has not yet been published, the future fundamental value can often be plausibly outlined, but because of the uncertainty of actual delivery by the exploration-development cycle, the fair value is a fraction of the outcome's potential value. The biggest problem that keeps audiences away from resource juniors is the absence of an answer to the question: "how much money would I make if you deliver your project's potential?" Resource sector investing is betting on an uncertain outcome, otherwise unknown as gambling. But resource juniors make for lousy gambling because it is not easy to assess the size of the prize. You know what the "ticket" costs and you have a rough idea about the success odds, but what is the best plausible prize that can emerge from the available data? This is an innately difficult task known as "economic geology" which even many company executives do not practive, and even when they do, security regulations forbid them from sharing their internal expectations. But if a speculator can come up with a prize size, then one can apply the certainty percentage to determine if the market price is fair. What makes resource junior gambling more interesting than other forms of gambling is that the exploration-development cycle is a staged progression whose expected outcome sometimes grows sometimes shrinks with the completion of each stage. Sometimes the "race" is indeed over with a "make or break" drill program but it usually is not that simple. A company working on a project for which the reward potential is in balance with the downside from the current valuation in the event of the project's failure to deliver expectations represents Fair Spec Value in the sense of "fair trade", not in the sense where "fair" means "mediocre".
Good SV

This rating is assigned when the current market value implies a much lower value outcome than is plausibly visualized for the project. That makes the rating a rejection of the principle that the market is always right and asserts that at least in this case the market is inefficient. Good speculative value can exist in the junior resource sector because regulators impose severe restrictions on what the company can say about the potential size of the prize, the investing public is ignorant about how to handicap the potential prize, and there are far too many juniors which dilute the audience's attention. When a Good Spec Value rating is assigned it may not be long before it is switched to Fair Spec Value if the market agrees with the assessment. But because the size of the prize is in the eye of the beholder, that may not happen, and John Kaiser may simply be wrong. That is why he is the founder of the Share Collective which allows anybody to construct the size of the prize and share it in a public space for others to vote on, critique, or tweak to create alternative visions of the outcome. If enough independent "analysts" share their "predictions" which the crowd in turn can rank by choosing each one's favorite, a consensus outcome distribution will emerge that defines fair value. Individuals in turn can bet on the fair value consensus or the outliers which define the current market value as representing good or poor speculative value. But when a Good Spec Value rating is given by John Kaiser it is simply his judgment that the market is unduly negative about a company's potential.

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