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Shell Summary for Oct. 26, 2020

2020-10-26 20:26 ET - Market Summary

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by Stockwatch Business Reporter

The TSX Venture Exchange fell 16.85 points to 701.28 Monday. Michael Galloro has filed a preliminary prospectus to list his third shell, AF2 Capital Corp. It plans to sell a $300,000 initial public offering at 10 cents through Haywood Securities Inc.

AF2 Capital sold two million escrow shares at five cents in August. Mr. Galloro, 46, bought 1.4 million. He is an accountant in Toronto, and he has been a director or officer of more than a dozen public companies. He listed his first shell, Black Sparrow Capital Corp., in 2011 with a $400,000 IPO at 10 cents. In late 2014, the shell rolled back 1 for 10 and launched Aphria Inc. (APHA: $6.02). It took almost a year before Aphria's stock began to climb steadily past $1, the break-even price for Black Sparrow's IPO investors. We typically expect a shell investment to yield a profit for IPO investors before the first anniversary of closing the shell's qualifying transaction, but in this case, the wait would have paid off handsomely. Aphria traded up to $24.75 in early 2018. Black Sparrow's less patient IPO investors had a few opportunities to get out with a profit in Aphria's first year, and the more patient ones had many opportunities to do better later. We therefore consider Black Sparrow to have been a success for its IPO investors.

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