Even the best stock pickers will make plenty of bad investments. And unfortunately for Titan Mining Corporation (TSE:TI) shareholders, the stock is a lot lower today than it was a year ago. The share price has slid 51% in that time. Because Titan Mining hasn’t been listed for many years, the market is still learning about how the business performs. Furthermore, it’s down 40% in about a quarter. That’s not much fun for holders.
Titan Mining hasn’t yet reported any revenue yet, so it’s as much a business idea as a business. This state of affairs suggests that venture capitalists won’t provide funds on attractive terms. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, investors may be hoping that Titan Mining finds some valuable resources, before it runs out of money.
As a general rule, if a company doesn’t have much revenue, and it loses money, then it is a high risk investment. The is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. It certainly is a dangerous place to invest, as Titan Mining investors might realise.
Titan Mining had net debt of US$26,622,000 when it last reported in September 2018, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -51% in the last year, it looks like some investors think it’s time to abandon ship, so to speak. You can see in the image below, how Titan Mining’s cash and debt levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
Given that the market gained 3.5% in the last year, Titan Mining shareholders might be miffed that they lost 51%. While the aim is to do better than that, it’s worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock down 40% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Titan Mining by clicking this link.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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