Saint Jean Carbon: A stock market lesson

$199.95. Or 70.17 percent.

That’s how much I am down in my investment in the stock of Saint Jean Carbon Inc.

OK. My investment is small. I only bought 1,000 shares that, with the $9.95 brokerage fee, cost me 28.5 cents a share. I didn’t gamble much.

And I am having my doubts that I will ever break even with this stock, or that it will even be around for much longer.

But I am not cutting my losses and selling now at its current price of 8 cents.

I’m keeping it in my portfolio for two reasons: as a lesson to remind me about doing thorough research (which I normally do, but didn’t this time) before buying a company’s stock, and to be in on any class-action lawsuits that might be coming against various insiders of this company.

It all began on March 1, when I was on the TSX site checking out another stock. Across the top of the page was a line of stocks that were trending at the time on the exchange. Saint Jean Carbon (SJL) was one of them: Its stock had shot up from 7 cents to about 35 cents and had slipped back to the high 20s.

I did some quick research: the company had issued a press release on Feb. 28 saying it “has received their first order from Panasonic Corporation to supply graphite anode material to their manufacturing facility. The order consists of two different material specifications. Panasonic is one of the largest battery manufacturers in the world and makes batteries for companies like Tesla, Toyota, Volkswagen and many other large corporations.”

Saint Jean Carbon described itself in the release as “a carbon science company engaged in the design and build of green energy storage, green energy creation and green re-creation through the use of carbon materials.”

The press release went on to say:

Paul Ogilvie, CEO, commented: “After more than two years of working on material specifications, sampling and re working, we could not be more pleased than to finally ship finished material to our customer. The order is part of an offtake agreement to supply multiple tonnes of anode material monthly for a number of years.  … We consider today as our greatest accomplishment; to be recognized and awarded with an order to supply one of the world’s best technology companies, is a tremendous accomplishment for the team.”

The Company will ship the first order within 90 days. The Company will continue to work with all of our other interested battery companies, and continue to help create better turnkey solution for anode materials and work to create higher performance that may untimely mean higher performance batteries.

No wonder the stock was soaring. It sure sounded promising, didn’t it?

I went on to their website, which is very professional. I discovered there is a huge float of shares, almost 200 million, and that shareholders recently gave the company permission to do a share consolidation, if it deems it necessary.

Everything looked good.

I even checked out an SJL bullboard site to read the latest chatter on the stock. Optimism abounded.

So, I sold some shares in another company and bought 1,000 SJL, thinking the stocks were sure to go to a buck or two as it supplied “multiple tonnes” of anode material to Panasonic.

Obviously, I was not alone. More than 20 million shares had traded hands on the day I discovered the stock; I don’t remember the final trading numbers for that day, but they were huge.

The next day, trading was halted in the stock.

The day after that, Saint Jean Carbon issued a statement “clarifying its Panasonic order.”

It said:

The Company is pleased to clarify certain information in the press release dated February 28th, 2017 at the request, and pursuant to the guidance, of the TSX Venture Exchange. The Company has received a purchase order from Panasonic Corporation to supply graphite anode material to their manufacturing facility.  While the size and value of the order is nominal, both on its own and in comparison to the anticipated monthly orders under the provisions of the proposed formal offtake agreement, the order is significant as it marks the first order for material that has been re-engineered by the Company.  Although the offtake agreement has not been signed at this time, the supply of the re-engineered material pursuant to the order is based upon the procedures and timelines contained in the proposed offtake agreement. The first order is anticipated to be delivered within 90 days from February 24th the date of the purchase order. The raw material is being re-engineered by the Company prior to its delivery; however, the supply is being out sourced as the Company’s properties are not currently in production.The Company confirms that it has both the financial resources and access to the raw materials necessary to complete the first order.  Both companies are working to finalize the proposed offtake agreement as soon as possible.

Not quite so optimistic anymore, eh? Now it was a “nominal order,” and no offtake agreement had been signed, hence “the multiple tonnes of anode material monthly for a number of years” mentioned in the first press release were now “anticipated monthly orders.”

When the trading halt was lifted, the stock plummeted to about 16 cents, and millions of shares traded hands again.

It hovered around that price until March 9, when trading was halted again. This time, the halt lasted until March 21, the day after Saint Jean Carbon issued “an update on its anode material order.” It seemed that the Panasonic offtake agreement would not be proceeding, and that SJL would only be selling them an 11-pound sample of the anode material for testing in its batteries.

The March 20 press release said, in part:

At the time of the March 3 Press Release, the Company was proceeding on the basis that Panasonic and Saint Jean were working together to finalize the proposed offtake agreement. The Company was informed by regulatory authorities on March 8, 2017 that Panasonic had advised them that it was considering cancelling the Order and that Panasonic did not intend to enter into the Company’s proposed offtake agreement. This information was inconsistent with the Company’s understanding of the business relationship with Panasonic at the time.

But Panasonic still wanted to test the sample, apparently, and the new press release said, “in case of mass purchase of Anode Material from Saint Jean, Panasonic will do so under its own form of standard purchasing agreement.  Even though Panasonic is proceeding with the Order, there can be no assurance that Panasonic will proceed with a large purchase of Anode Material from the Company, nor that Panasonic will enter into any other type of commercial agreement or arrangement with Saint Jean.”

So, there still seemed to be some hope, right?

Well, investors didn’t seem to share in the optimism. The stock sank further, back to where it was before the Feb. 28 press release.

By this time, many of the folks on the bullboard were crying foul. The first press release was misleading, they felt, and some people — like me — bought on the strength of that announcement, thinking it was a done deal.

Still, deals do fall through. I wasn’t thinking along the lines of stock manipulation, pump and dump schemes, and insider trading — even if some of the bullboard folks were.

But then came this announcement on March 23: “ASC issues interim against reporting insiders of Saint Jean Carbon.”

The press release on the Globe Newswire read:

Saint Jean Carbon Inc. … announces that the Alberta Securities Commission (“ASC”) has advised the Company that it issued an Interim Order against the following individuals: Paul Ogilvie, Dick van Wyck, Barry Allan Pearson, David Madill, William Elmer Pfaffenberger, David Edward Da Rin, Donald George MacIntyre, Donald George Snyder, Paul Cooper, and all “reporting insiders”, as that term is defined at section 1.1 of National Instrument 55-104, Insider Reporting Requirements and Exemptions (collectively, the “Reporting Insiders”) of Saint Jean. The Interim Order prohibits all trading in the securities of Saint Jean by the Reporting Insiders. The Interim Order is in effect until April 5, 2017, unless extended by the ASC.

As you can well imagine, now I am suspicious. I’m wondering what the ASC will turn up in its investigation. Did insiders sell a lot of stock in the company when the price soared after the Feb. 28 press release?

I decided to file a complaint with the ASC, just to be on the record as someone who bought because of the Feb. 28 press release. They responded quickly, and told me they can’t divulge information about their investigation, and they can’t get my investment back for me, that I would have to get legal counsel for that.

Which is fine: if there is a class action, I’ll go along for the ride and the learning experience. It would be a matter of principle for me — if there is any legal wrongdoing by insiders that had resulted in people losing money. I didn’t lose much; there are people who have lost a lot more.

Of course, it could turn out that insiders did nothing wrong and that this company has promise. If that is the case, they might think about hiring someone with better writing skills for the company’s press releases.

— Jillian

Photo: TMX’s LED board displaying TSX information. (Source: Wikipedia)

5 thoughts on “Saint Jean Carbon: A stock market lesson

  1. Jullian,
    Some basic rules to investing that I follow… (1) Don’t buy individual stocks. I have done that before and lost. I will never buy an individual stock again. I let the professionals invest for me – mutual fund managers. (2) When mistakenly buying a stock, don’t fall in love with it. Don’t hope it will go up when it goes down. Set a sell price – a high and low. In your case, it could go up. It could also become worthless – $0. Hope does not raise the price of a stock. (3) Don’t buy a stock of a company that you don’t fully understand (in my case I bought what I knew and still did not know enough – still lost). I have made many investment mistakes over my lifetime, most with individual stocks.
    Basically investing in individual stocks is risky, similar to gambling. Some of my best investments have been so boring that it is like watching the grass grow. I would put money into a fund and let it sit untouched for years. The more years, the more successful.

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    1. Thanks for the advice, Kirk. I do like to gamble with penny stocks, and have been pretty successful with it over the years. These days, cannabis stocks are flying, with many start-ups seeing huge increases in their stock values.

      But, yes, I have lost some money, too. I made some fundamental mistakes with SJL, though. I got caught up in a rush and didn’t do enough research.

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  2. I got in and got out of this stock and saw my investment rise by 70% and drop back down. I think I lost a couple of hundred. I feel fortunate to have gotten out as I had risked several thousand.
    It is obvious now to me that the press releases I found misleading and vague. There was no information confirmable by another party other than the company. 1. The results of battery tests were not available but announced. 2. The deal with Panasonic that is not a deal or order is announced and then clarified as insignificantly significant or something similar. 3. The paper that is rumored to be presented at a conference is not published (at the time of the announcement) and not available for review anywhere I could find, nor confirmed at the universities web site (at the time of the announcement) or the web site of the professional meeting at the time of the announcement. In my opinion, if it is not traceable when announced and confirmed by someone other than the company, it is dubious at best. Insiders: The legal council, an insider, sold a significant amount for a tidy sum. What did he know about the future of this company? The wives of two insiders sold significant amounts during this period as well. What do they know? The timing of the earliest press releases on the battery test (without the results) coincided with scheduled sales by other insiders, if I read it correctly. They did not seem to gain much (On the other hand, I imagine they did not lose). I hope that this company does well. I hope the news is real and the findings are significant, not only for the company, but for the advancement of science and technology to move us away from oil and coal. There is no evidence presented to confirm their announcements at the time of the announcements. I am actually surprised the stock price didn’t drop further given my explorations into this company and the evidence available on line. This is a risky game, IMO. disclosure: I have no shares of this stock at this time.

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