Icebergshares; Nomads, Brokers and Market Makers (NBM’s).

I’ve contacted a few of these in the last couple of weeks, some with compliments, some with complaints and some with just advice or opinions.

This article is not about exposing anything, giving opinions on any companies in these arena’s (good or bad). All I want is for private investors to be aware and keep the roles these companies play in focus.

NBM’s are often the same companies, most of them perform all these roles and the 4 character market maker codes you see for your exploration company in Level 2, will often be a nomad for a different exploration company.

There are around 40-50 of these companies, they raise money, they ensure the companies meet the legal requirements of the LSE. They should have a detailed knowledge of the company they represent, visit the sites and provide PR for the company through well written research notes and broker targets for the share price. They advise on positive ways to represent information in RNS’s and can advise on the actual strategy the company might follow.

It’s easy to see that NBM’s are very important to the success of your investment.

The role of the NBM provides a raft of possibilities for conflicts of interest and they need to work hard to ensure this doesn’t happen. Sometimes this fails spectacularly, such as with Seymour Pearce and hefty fines and disqualification can occur.

There is considerable variety in the type and niche capability of the NBM’s. Some specialise in technology, some mining, some oil etc. Nomads should have an “Industry expert” on their field/s they represent. A further layer of niche specialisation occurs with come NBM’s dealing mostly with lower cap companies, an average of less than 25m MCAP, some have a much higher MCAP average(100m+).

NBM’s are NOT charities they make considerable money from companies. The more a company shouts about itself, the more liquidity exists, the more dilution, the more money the NBM’s make. I’ll leave it to you nice folk to imagine the kind of characters that might fall into this category. It’s nice for a company to make money for investors and be successful, but it’s not essential to the NBM’s as long as the investors continue to believe the dreams.

NBM’s can be further characterised by their aggressive strategies. Some NBM’s look to grow their client pool rapidly, they tend to sell themselves more and promise more…Therein lies the first large pitfall of a conflict of interest. Is the nomad well balanced? Or is paying more attention to the needs of the company than the company meeting its LSE obligations? How far is the nomad prepared to bend the rules for the company?

The next topic to think about is fundraising, Do you, as an investor, see the use of facilities provided by Bergen, Darwin, Yorkville as a good thing? It won’t take you long to notice that certain NBM’s have a preference for certain fundraising. RFC for example have led to several miners/explorers using Bergen. I am not inferring in any way that RFC benefit from suggesting the use of Bergen however it’s clear that certain NBM’s suggest a preference for certain fundraising.

You might also have been wondering about RNS’s, sometimes they are very bland and give out very specific highly technical information. Sometimes they are filled with possible, maybe, potential statements suggesting that the company is on the verge of the greatest find this decade. The Nomad does review every RNS that gets released, some are very firm about forward looking statements, some less so…..This “style” does help influence the variability of the share...

Many investors don’t consider the NBM when investing, personally there are some companies represented by a Nomad that I would never consider investing in. There are some where I would only invest short term. When reading an RNS or examining a new funding facility try and take note of who the Nomad is. It will help you realise whether something is a pipe dream or a likely reality.

Do NOT be afraid to contact the nomad, they should be there for you, they should want the opinions of investors, they should be holding companies to account.

Finally take note of when a company changes their Nomad. Is it because the nomad really is useless or it is because the company wants to push the barriers and is saying no?