Why I'm out on NorthStar Clean Technologies ($ROOF.V)
The ROOF isn't on fire, but if it were I wouldn't waste my piss to put it out.
Harsher than necessary sub headline? Probably. Clickbait? Likely. Accurately encompassing my current feelings? Most definitely. And let’s face it, with the current functioning of my aging prostate, highly improbable.
It’s never pleasing to feel this way like I currently do about a Wolf Pick - with NorthStar Tech a current one announced at the end of 2024. But here we are.
Yesterday, the company announced a non-brokered $3.6M private placement at 30 cents with a full warrant at 45 cents with a 36 month expiry, in addition to 30 cent broker warrants.
I announced NorthStar Clean as a 2025 pick at 31 cents back on Sunday December 15th and as of yesterday the 50 day average was 36 and 200 day at 34 cents with the stock closing at 37.5 cents on Thursday of last week.
I feel as though I have brought many new eyes and investors into the stock over the past eight months. Previous to July 10th when the company released news and an update video touting their achievement of producing their first liquid asphalt, the three highest volume days of the past year were on December 16th, the day after my Wolf Pick article was released to paid subscribers, and January 1st and 2nd, the two days following the free release of that same article. (Note, the fourth was today after I announced my exit in the Wolf Den discord at 10 am this morning)
I say this not to boost my own ego, but to highlight the fact that I feel a personal responsibility to tell it how I see it, good or bad, and even more so regarding stocks that I have put my name behind. And this pisses me off, even after sleeping on it last night.
Listen, as a pre-revenue longshot pick like NorthStar was, future dilutionary measures shouldn’t come as a surprise. But how raises are done are meaningful and they give you insight into how management values retail shareholders, so the way this one was done is very telling.
This raise was not available to the public. News of it only landed once completed and it involved insider participation and finders fees to third parties. More than half of the participants were not current shareholders which is additionally disturbing. WTF? This wasn’t done as a major strategic raise by one or two individuals or a current shingle manufacturers which would have been more palatable and acceptable.
I personally added more of the stock only three weeks ago and dozens of my subscribers have as well (Wolf Den discord users have a channel where they are free to share their live trades). Had a brokered deal been offered at 33 cents with a half warrant at 50 cents, I would have been one of the first in line, and I can assure you I wouldn’t have been alone.
Instead a friendly deal was given to insiders and a select few at a much higher discount than needed. This was a weak raise when they could have done one from a better position of strength. And that isn’t all that has occurred in the last ten days. Insiders also awarded themselves with 900k options at 33.5 cents and 1M free PSU’s - the “P” standing for performance btw.
I have my big boy pants on at all times, so I know how greasy microcaps can be sometimes, particularly pre-revenue ones. Sometimes it’s part of the game, but I also can choose which games I want to be a part of.
You know what would make this look worse? If an announcement comes out over the next week or so regarding the full commissioning of the Calgary facility. I think the chances of that are pretty good. In that case I could very well be leaving a few dollars on the table as the stock could pop on that announcement. Smart management may have waited for that announcement to potentially raise capital at a higher price. This management team chose to do it this way, participate themselves and offer it with a full warrant to a select few.
So how will they raise capital next time, because there will be a next time and what clique will that involve? I won’t be around to find out.
NorthStar Clean can kiss my asphalt.
Disclaimer:
My intent is for my reviews to be a bolt on to due diligence that you have already completed. I receive dozens of review requests a week, therefore my own DD may be great or none whatsoever. Unless otherwise stated or implied, my opinions are on the financial performance of the company based on their most recent filings. I conduct these reviews to assist other retail investors whose research skills are limited when it comes to reviewing financial statements. I do not accept compensation of any kind from companies I review.
Wolf FINS Reviews are intended to be informational and are based on personal opinion. They are not intended to be financial advice, and all readers are encouraged to perform their own due diligence prior to their investment decisions, including discussions with their investment advisor.
Wolf Appreciate honesty very rare now a days. Congrats on having the courage to say adios many don't and wonder afterwards.
Appreciate this Wolf. At one point in time, a long time ago, when I lived in the UK and 'rights issues' on capital raises were common. This means all existing shareholders were automatically offered to be part of these raises pro-rata before any other snouts could come to the trough. These were often underwritten so any not wanted shares were given to the underwriter....Wish it was this way in Canada! I'm going to exit this stock soon as well.