children of an idle brain

The stupidity of fund managers never ceases to amaze

This is a bit of a generalized rant, not much more. Nothing particularly stunning or new contained either, I just feel like getting it off my chest every now and again that the utter dumbass stupidity of people that move millions of dollars’ worth of money (their own and OPM) is something I can never fully assimilate. After seeing a couple of examples over the last 48 hours to unfairly pick upon (unfair in the sense that there are dozens of other to choose from) it just gets me to a point. Take for example the blow-up on Great Basin Gold (GBG) (GBG.to) on its 2q12 results and firing of CEO. Back in March we laughed heartily about the way in which RBC Capital Markets ran a $50m bought deal at 75c, finishing with the line, But the great news is that Freddy Oh-No-I-Never-Mislead-Anyone Dippenaar says his mine will be up and running and free cash flow positive by the end of this year. AND THIS TIME HE MEANS IT. “ but our coverage of this perennial dog has been long-standing (check them all out here, including the Feb 2009 post in which we baptized the company “Great Washbasin Gold” due to the amount of dilution). It’s been dead dog obvious for years that this bunch of sophists shouldn’t be trusted further than the distance to which they could be thrown, but that didn’t stop the utter dumbasses filling RBC’s books with their orders for “cheap” stock. Wonder how cheap they think it is now?  Then yesterday, the news from Los Andes Copper (LA.v) also caught my eye, as some offshore fund outfit called The Turnbrook Corporation announced that it had upped its shareholding in LA.v to 50.786m shares representing 31.2% of company shares out. These are people who either have no contacts whatsoever in Chile or just prefer to keep digging when in a big deep hole, because it would take them possibly 15 minutes of DD to find out from knowledgeable third party sources ( I personally have had several conversations about this company with several trusted sources and they’ve always come to the same conclusion) that the LA.v project at Vizcachitas is fatally flawed and will never, as in never, become a mine. But no, fuck it, they just keep on buying through sheer ignorance, or arrogance, or chutzpah, or whatever other psychological failing is behind their stupidity. GBG, LA.v, a host of others. I try not to get too narked about retail shareholders making silly choices about their own investment decisions, as after all I’m one of them and make my own bad calls for my own bad money. But when you are running millions for OPM and just blindly buy into these obvious dog stocks without so much as a minimum of knowledge, save reading the corporate presentations and being so impressed you ring your compliance office immediately? The lesson here is to remember, and keep remembering (because it’s easy to forget) that the people running funds, buyside ops etc are ususally just as stupid as we are, but they’re often far more irresponsible.

UPDATE: Gary Biiwii adds his thoughts on GBG here

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