New Financial Post article by mining reporter Peter Koven discusses the troubles of the TSXV and zombies. I am mentioned.
A broader and more esoteric concern is the potential damage done to the Venture brand after years of investor losses and falling liquidity. To many people, it simply isn’t as strong as it used to be.
One of those people is Tony Simon, co-founder of the Venture Capital Markets Association and a frequent thorn in the side of TMX management. His view is that the Venture’s primary strategy has been to maximize listing fees, and as a result, it has allowed too many low-quality companies to maintain listings.
Earlier this year, he called for a mass delisting of about 600 “zombie” resource firms that have negative working capital and no clear ability to create value for investors. He also said the Venture should not have allowed capital pool companies to proliferate so much and distract attention from more active firms.
“Let’s say you go to a restaurant and there’s 1,500 things on the menu, and if you’re lucky, only 50 per cent of them will give you diarrhea,” Simon said, in reference to the Venture.
“You’d be much happier going to a restaurant where they only have 10 things, but they stand behind them all. And if the prices were a little higher, you wouldn’t mind because they’re quality.”
Of course, investing in the Venture is high-risk by design, and most people aren’t as critical as Simon. But no one would dispute that a revitalization is a welcome idea.