Small Cap Canadian Stock Newsletter

Written by Keir Reynolds and Kirk Gamleywww.RegentReport.com

Small Cap Canadian Stock Newsletter

The Regent Report, written by Keir Reynolds and Kirk Gamley,provides investors and market pros with commentary andspecific investment ideas for profiting on Canadian‐listedsmall cap stocks. About twice a month we issue reports onstocks that we intend on buying ourselves because ourresearch has identified them as having the potential to tradehigher.

Since 2009, the average share price increase offeatured stocks has been in excess of 250%.

Our Mandate

We seek to identify Small‐Cap Canadian 

Stocks with the potential for a minimum 1 year 

return of 100%

Who Are We?

Kirk GamleyPresident of Contact Financial and Co‐founder of the Regent Report,Contact is a strategic investor and high‐touch investor relations firmrecognized as a leader in the junior Canadian‐listed stock space. Uponbuilding a successful career in corporate development, Kirk is nowinvolved at the management and director level of many companiesincluding: Rockgate Capital and Rockridge Capital.

Keir ReynoldsVice President of Contact Financial, Founder of the Vultures NestInvestment Club and Co‐founder of the Regent Report. Keir was formerlya licensed advisor and a salesperson with a Vancouver‐based LimitedMarket Dealer (LMD). While at the LMD, the firm successfully structuredand participated in more than 15 equity offerings totaling more than$100M in the junior markets.

Our Track Record

Mercator MineralsAlerted in Mar. 2009 @ $0.44

Hit a high of $3.45 on Jan.11, 2010Price increase of 684%

Appleton ExplorationAlerted in April 2009 @ $0.12

Hit a high of $0.63 on June 15, 2009Price increase of 425%

Our Track Record

Rock EnergyAlerted in April 2009 @ $1.15

Hit a high of $5.45 on April 26, 2010Price increase of 374%

Tranzeo WirelessAlerted in July 2009 @ $0.365

Hit a high of $1.87 on Jan 20, 2010Price increase of 412%

How to Subscribe?

Go to: www.RegentReport.com

$249 + tax for 12 months

Expect to receive on average at least 2 reports per monthOne good trade can more than cover the cost of this annual fee

Small Cap’s: Big GainsWhy in this economy small caps will 

again be the place to be

May 20th, 2010

Why Do We Like Small Cap Stocks?

1. Lack of Analyst CoverageInvestors are not hanging on every bit of financial news and guidance from analysts causing stocks to trade down on the slightest failure to meet or exceed expected quarterly and annual performance.

2. Lack of DebtSmall caps often are financed through equity and usually have more conservative debt to equity ratios as their business is inherently more risky.

Why Do We Like Small Cap Stocks?

3. They are NimbleSmall companies are able to act more quickly to reel in expenses and change their business strategy to increase growth. They have less red tape and layers of management to go through to implement change. The world in general is becoming more entrepreneurial and small caps are all about entrepreneurialism. 

4. Less Exposure to the ConsumersSmall cap stocks have far less exposure to the over‐extended and tired US and European consumer. Large cap stocks have for the last quarter century relied on the consumer to drive their sales and share price growth. We’ve seen the effect of this during the recent market crash.

Why Do We Like Small Cap Stocks?

5. Less DiversifiedYes, you read it correctly, small cap stocks are less diversified with many of them involved in the exploration and development of metals, materials, energy and technology. As the world comes to grips with its disastrous obsession with  cheap debt and worthless paper assets, there will be a move towards real assets such as commodities including gold and oil. Canadian Small‐Cap’s are over weighted in these sectors.

A Society in Change

Currently the world is undergoing a generational change where both the Blue Collar and White Collar Middle Classes are being eliminated. Decent paying mid‐level jobs are disappearing and have been doing so since long before the 2008 economic downturn.

Pensions, traditionally a benefit paid to workers when they retire are being eliminated at an alarming rate. In a report this year by Pension Capital Strategies and JPMorgan, it is estimated that pension benefits in the private sector will no longer be available to new employees within 6 years in the UK!

A Society in Change

More than half the 15.3 million people out of work in the US in April said they regard their layoff as permanent, the Labor Department said. That's the highest proportion on records dating to 1967. In previous recessions, workers often endured only temporary layoffs: Their employers would recall them once business picked up.

Because these jobs won’t likely be coming back!

A Society in Change

Statistics Canada says layoffs among paid workers might account for some of the increase in self‐employment.

The agency reports self‐employment increased by more than 100,000, or 4.3 per cent, between October 2008 and October 2009.

Meanwhile, paid employment fell by 480,000, or 3.3 per cent.

A Society in Change

So big deal, what does this have to do with investing?

In this generation of change, there are a few things that are certain:

1. It’s too early to call for an economic recovery2. Bailouts have yet to properly play out3. Big business is moving towards increased 

productivity at the expense of a whole class of society

4. A generation of cheap debt is beginning to catch up

A Society in Change: Small Caps

There are themes that we see playing out:Canada’s currency and markets are world‐classCommodities in general will soften in price short‐term but will be the asset class of choiceTwo that we like NOW: Gold and UraniumMore and more of your future financial success is going to be in your hands and will be your responsibility The world is moving towards more self‐employment and in turn, align your investments with this line of thinking.

So Which Small-Caps Should I Buy?

All Small‐Cap Stocks are not created equal. In this market environment, the sector will get hit quite hard. Only key themes, management teams and structures will do well in these market conditions. 

We discuss these things in detail in our newsletter: 

www.RegentReport.com