Share price vs flo thru

HIGH-GRADE NI-CU-PT-PD-ZN-CR-AU-V-TI DISCOVERIES IN THE "RING OF FIRE"

NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)

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khareema

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Share price vs flo thru

posted on Jan 07, 2010 04:21PM

Everyone is offering thoughts on the present share price and whether the previous flo thru PP has any effect on it. I doubt it for several reasons.

Usually one will get into flo thru as a way of hanging on to some of your gains from previous sales of stock. However if one was to have bought at 2.80 last summer, had the full benefit of the writeoff (high tax bracket), and therefore reduced your cost to the 1.68 mark, then sold here in this price range, there are still losses.

Effectively you would be taking a previous gain of 1.12 (2.80-1.68), dumping it into NOT for 4 months, then selling for a .40 gain. This equates to an .82 loss at the end of the day. It just does not compute for me, and I spend a lot of my time dealing with flo thru investments.

One effect that flo thru does have on our recent share price though is the abundance of flo thru that has been available this year. As an example, I have some good gains this last year in my portfolio, the most notable one was FWR. Although I sold it much too soon, I still did quite well as most of us did. I have managed to participate in several PP's in the last month, everyone was flo thru, and effectively reduce my net income to zero. My plan is to hopefully hold these until they become free trading, sell at or above my actual cost, and hold the warrants which are always attached.

The result of the above is that I effectively get to retain all of my income from last year, and have a huge number of warrants that cost me nothing, but will give me any upside that is to be had from these investments.

The downside of this is that I had to pull some funds out of places like NOT, and will be unable to replace it here until the end of the 4 month hold on these other investments. If you multiply my situation by a couple hundred or so, you can soon see that there is a shortage of funds available to be invested in NOT at the moment, and investors like myself may tend to hope that the SP does languish here for the present, until we can replace what we took out.