WDG Giyani Gold - New Name, New High

This weekend's all-time high list has over 400 stocks led by the Basic Materials and Financial sectors. I want to focus on Giyani Gold Corp. (WDG-V) a small-cap resource stock listed on the TSX Venture exchange that recently changed its name.

WDG has a great chart and last week it emerged from a long consolidation to hit a fresh all-time high on nice volume. What is interesting to me is that the catalyst for the breakout was a name change. I've talked about WDG before when it showed up on the all-time high list as "99 Capital Corp" -- one of the most vague and non-descript company names I've ever seen. On January 24th the company released this statement: 99 Capital Corporation (TSX-V: WDG) (the "Company") is pleased to announce that, pursuant to a resolution passed by the Directors of the Company, the Company has changed its name to Giyani Gold Corp, reflecting the company's strategic focus on exploration and development in the Giyani greenstone belt of the Republic of South Africa.

Take a look at the chart. The stock broke out of a pennant formation on the day the name change was announced and it is up almost 50% since then. And the catalyst was a new name! (which, incidentally, FreeStockCharts has not updated)

It is still puzzling why the company waited such a long time to change its name to Giyani Gold. Why not announce that the company was a gold play a year ago when gold was breaking through $1000?

At the end of the day only price pays and my job is to listen to the message of price and volume. That's been relatively easy as WDG has shown relentless buying pressure since last fall when they announced they were in the process of acquiring properties in the Giyani region.

The aspect I grapple with is position sizing and risk management: How much capital am I willing to risk on a speculative company with no website and vague name? Obviously hindsight is 20/20 and in this case taking more risk would have been rewarded, but what about next time?

Risk management is the most important thing to be well understood. Undertrade, undertrade, undertrade is my second piece of advice. Whatever you think your position ought to be, cut it at least in half -- Bruce Kovner

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