As you might know by now I am too an investor in CUU. I am professionally currently an asset manager (used to be a broker) and privately own CUU. I can't buy and won't CUU for my clients since its too risky. I did buy Teck for them this week though :).

I am seeing more and more old timers getting frustrated and worried about the low shareprice. Let me start with saying, I know the feeling and as should everybody re-evaluate if a stock has gone 4 times lower then 2 years ago. I too bought too high in the 2's and in the 1's.

So what is causing this this shareprice decline? I know what your thinking, why if this such a great deal why aren't more people getting on board especially when the buy out is imminent and fundamentals are so great with so much insiders investing. What am a missing?

Here is my take on the declining share price of CUU:

1. Commodity market is at a 5 year low. Look at the gold price copper price etc. I've done some research in the beta of goldminers and junior goldminers. They logically have a bigger beta then the underlying commodity. This means simply put that if the commodities are in the toilet, the production companies (Teck BHP etc) are going to decline even more and juniors are going to be decimated. So its absolutely almost impossible to stay at the same level of april 2011.

The bigger issue is that institutials know this and with the first signs of a sell in commodities market, they are going to sell off the juniors. Well we have seen this from the summer of 2011.

2. Second, bigger players tend not to get too much involved in companies trading under 2 dollars and avoid companies trading under one dollar. This due to bankruptcy, volatility and liquidity risks. Its very hard to buy big amounts of stocks if they are trading to low. Only some widely diversified junior gold miner funds would pick up stocks like this but asset managers even for the more speculatieve portfolios are not allowed to pick up these stocks for their customers because of the big risks. Dont forget, asset managers make decisions often on strategic asset allocation level, so top down, the say lets decrease our 12% materials to 6% materials (thats what our house has done for instance) that means that a lot asset managers sell the other 6% and creating a selloff. Its sort of a sell forfilling prophecy, you just have the first to sell.

3 Then we have the margin calls, the price of a stock declines forcing margin calls, forcing more celling lowering prices and excludes professional interest. Besides that the stock its self gets less covage and you wont be able to loan money or stock on this stock due to its lower shareprice.

So what's left? Your retailers and speculants professionals. Well the retailers that understand the story arent leaving and mostly tapped out sow we cant expect them to drive the price up.

The result is a little float with alomost everybody sitting on the sideline. Thats what we are seeing here. Only major news, a mystery buyer or a revival of the commodity market can kickstart this stock again.

However does this mean you have made a bad investment? No the fundamentals are still very strong, we are almost there.

As you all know:

"The stockmarket remains an exceptionally efficient mechanism for the transfer of wealth from the impatient to impatient".