I'm sitting down here with Krister Kottmeier, a Vancouver stock promoter. Thanks for taking the time to do this interview with us.
You're welcome. Now let me start with a basic question, since I think even some people that have owned stock and what not don't even know what you guys do. So, let me ask you, what do stock promoters do?
What do stock promoters do? Stock promoters do a wide variety of things, depending on how connected they are with the actual financial industry. Predominantly stock promotion involves investor relations, which is sort of deemed a necessary evil if you will. Investor relations involves contacting and keeping up to date all range of investors, stock brokers, stock analysts, mutual fund groups, institutional groups, etc. as to what's happening with your company. I personally work mostly in the mining markets and the gold markets which right now are seeing some activity, so my job is becoming a little more involved. What the basic sort of starter stock promoter usually starts with is investor relations, and that's just basic phone work, e-mailing, fax work, just sort of information dissemination predominantly, and dealing with individual investors mostly. When you get a little bit more involved in the markets you start moving towards larger block trades of stock and finance, actually raising capital for companies by issuing equity from the actual company itself in the form of shares or warrants. How a stock promoter in these two categories makes money mostly is off of course regular pay, but off of stock options set at a certain price and hopefully that the market will increase in value so that you can exercise at a lower price to actually make a profit of whatever the difference between the set price is and the actual current trading price at higher. Then of course How do you obtain these options? Are you sort of in a partnership with the company?
Yeah, I'll actually get to that. I'm just going to talk about what people do first and then go into how it's structured. Well, so that's one way, and then the second way that you move into in the first two categories is actually getting finder's fees, etc. Finders fees are based around the successful execution of a deal, be it financing, be it a property acquisition, be it a company acquisition, be it a reverse takeover, it doesn't really matter what, as long as there is a large exchange of value changing hands between two groups. If I the stock promoter introduced these two groups then I therefore am the reason it went through, or was initiated I should say, and if it does go through I get a benefit of that. Usually about five to ten percent of the actual transaction. So if I did a financing for a million dollars for a mining company, I could very easily make $50,000 to $100,000, which can be taken in cash, stock and cash, or stock itself, based around the value of the actual transaction. So, there's basically some good ways to make some coin and then the other way, a little bit more senior, is actually becoming a director of companies yourself. Stock promoters aim for that once they've actually acquired enough wealth to be able to take a substantial size share position in a company in order to steer it in the right direction with other directors and hopefully have increasing value for the actual company itself. So those are sort of the three main categories of involved with stock promotion. Everyone is always trying to increase the value of their company, be it either by actual work inside the company, asset accumulation, or actual stock promotion, and increase of the actual shares themselves.
It's a fairly lucrative business if you get to know people. Knowing people is half the battle. And when running a public company promoters really have to always keep in mind that their clients and the people that they raise the money through are one of the most valuable in the world and you always have to look out and make sure that they are fully up to speed and can actually access the company for information as best as possible.
I see. So the end sort of goal would be, I mean you're saying, you know, the more senior positions, maybe someone that we both know, like a Bob Gayton, is he someone that down the line most stock promoters would want to sort of, not emulate, but Absolutely. That's a very good question actually. What a promoter will do, especially if he's trying to create a company, whatever aspect of a public company you wish, yes exactly, you'd want to sort of combine yourself with people who are knowledgeable in other fields. For example, our associate Mr. Bob Gayton is a CFO of a number of companies, public companies. He was actually a partner at, I believe, Coopers & Lybrand, so he is top CFO quality. You want to align yourself with other smart and intelligent and track-proven geologists if you're in the resource business. You want to align yourself with good legal advice, and legal assistance, perhaps in the form of a director. All these things really contribute to the success of a public company, and of course the stock promoter is one of them.
Okay. As the internet obviously just changed many aspects of all of our lives, how has that impacted the stock promoting business, in that information seems to be a lot more easily available? I have a feeling that maybe years ago stock promoters sort of had their own people that only they knew with monies. Now it seems like everything's more out in the open. Has that affected business?
Absolutely.
I think that information flow really has increased dramatically because in the old days you'd have to every news release, if you could afford to mail it, would be mailed by snail-mail or regular post and that would take forever. It would take a lot of money to actually buy the goods and the materials to do that, and for start up companies that's a major factor. So, yes the internet itself, having websites, having e-mail capabilities, has really increased the actual means of information dissemination to, so you can get your company information to a wider audience of investors and hopefully increase the value of your stock.
Has that helped your profession or has this like hindered it?
Oh, undoubtedly. Yeah, undoubtedly. It's just put it into high gear basically. Okay. Stock promoters and stock promotion, as we're all well aware, is often viewed as a somewhat shady area of the stock business, which you alluded to earlier. Is this an accurate assessment and how did this perception come about? What types of things?
Yeah, sure, I mean that's a very good question. Really, stock promoters in the old days are labelled because of bad deals. What I mean by that is manipulation, and basically you get people who have a share position at the cheaper prices, and large blocks of it, and what the aim is, is to manipulate investors, or unknowing investors, into purchasing shares in their company which actually the people themselves are selling to the investors directly. Sometimes that's on false information. We actually have had some very damaging companies involved in the mineral sector itself, such as Cartaway, and of course everyone has heard of Bre-X. Bre-X was the largest gold manipulation, gold fraud in the world, where they claimed in Indonesia, that in Kalimantan Island that they had the largest gold reserve ever found. And it just turned out to be a complete falsehood and many, many people lost millions and millions of dollars.
Yeah, well, this just goes to show that the necessity for market surveillance and actual investigations into actual claims is very important and it has changed in the past. So investing in stocks is a little bit safer, but one always has to keep in mind that when money is being made you will attract all sorts of people. Looking, for example, at some of the larger firms like Enron and Nortel, I mean all sorts of difficulties of insider trading and false reporting of actual accounting methods, etc, etc. Yeah, wherever there's money, there'll be corruption, but then again, wherever there's good people, there's good potential to build good companies and that's what promoters really look for. And also, the other sort of adage I can say is that if a promoter screws a person over, or manipulates them, that person is gone forever. I mean you're never going to be able to continue on with a client base. I was once told by a broker when I first got into the business to always work my hardest but always tell the truth, and then that way you will go much further than if you told a little white lie.
Okay so, once you're sort of, if you are involved in a bad deal, basically you're saying you're sort of blacklisted by the community? It can happen. Yeah absolutely. You know, I mean sometimes I've seen guys who are involved in bad deals but they're not the actual culprits. I mean you, people do learn, you know, that, and your name can be "cleared", but it is very difficult yet. So, as a promoter you have to be very careful who you actually get involved with, and make sure you do background checks, etc., and ask around. Vancouver is a very small town, so having a number of different people that you trust involved in the business does greatly help.
Well tell me what a typical day for you would entail?
Okay. Well, as a stock promoter, and as I'd say an up and coming stock promoter, not necessarily an established stock promoter, my job is to do a combination of things. Of course, as I said before, the necessary evil of investor relations. Constantly doing phone solicitation and telemarketing, if you will, to get the information on your client company out to a wide audience. I currently work with three different companies. In my business job security is not very good, so you have to hedge your bets as best as possible. I try to have three or four different "deals" on the go at all times. That helps me to make sure that my income is always somewhat stable. And it's understood that that happens in the business, so working on two and three deals, four deals, is not uncommon. So what I do in the morning, I get up, I'll check my e-mail, see if there's any incoming inquiries from any investors, or brokers, or anything like that. Answer them. Have a cup of coffee. Get on the phones. Start calling people. Soliciting, you know, new clients, even soliciting current shareholders of the company to purchase more shares to see if they're interested in advancements of the company and they're wishing to strengthen their position. I'll talk to brokers, I'll talk to analysts, etc., etc. So that's one company, and I'll flip onto the next. I'll try and coordinate calling brokers during the actual hours they're at the office, which is from 6:30 a.m. to 1:30 in the afternoon, approximately. And then after that I'll do more work with the individual analysts and individual investors. Sounds like a full day.
It is a full day, yeah.
Well thank you for taking this time with us, Krister.
You're welcome very much, and I hope all these people listening to this will learn English. Okay, thanks.
And become stock promoters.
