Updated: Oct 29, 2020
Many new investors gets trapped into micro caps or small caps and loses money because they wants to become rich quickly. There are many micro cap stocks listed on ASX and on other stock exchanges, which will make you wonder that how are they legally allowed to be listed on the stock market. Normally management of Micro caps and small caps earn millions in wages regardless of company is making losses for years. I have seen most of the times that annual salaries of management of micro caps are about 50% of total Market cap of the company. They normally keep earning hefty wages for doing nothing . They keep showing dreams to shareholders but nothing happens. Once they run out of money they will show that they are good boys or girls and then they will get more cash through capital raise. They will continue doing this for years and poor shareholders loses their hard earned money. ASX and ASIC are hopeless they won’t do anything. White Collar Mafia also exists in mid caps and large caps but very less than micro caps and small caps.
I am going to give some examples of some stocks in here. I am not saying they are white collar criminals but those stocks have similar stories.
Range Resources Ltd (RRS:ASX) new name now Star Phoenix Group ltd (STA:LON)
Range Resources/ Star Phoenix Group is oil and gas Chinese company. Range Resources was listed on ASX before. The company ended up with $100 million USD debt because of unqualified and inexperienced poor management. The management kept earning millions of dollars in salaries while company was making loss and having a huge amount of debt. The total market cap of company ended up with only $3 million and directors were still taking millions in compensation. After leaving Australian shareholders in red company decided to delist from ASX for so call restructuring and cost reduction. Now RRS is listed as STA on london stock exchange. The company sold out their Indonesian assets to pay off all debts. The company is currently debt free and looking for new acquisition opportunities since last 2 years, however the management took $500k to $1 million in salaries for doing nothing. The same management was talking about cost reduction last year. There is another stock with similar story. The company name is Digitalx ltd (DCC:ASX). Management of Digitalx does the same thing, which is keep showing dreams to shareholders and keep taking unacceptable amount of compensation regardless of worst performance of the company in last 5 years, which left majority of shareholders in red and regardless of poor peromance of the company Directors kept taking performance rights which is totally unethical. ASIC and ASX are hopeless they won’t do anything. So Investors needs to be very careful before investing their hard earned money into micro caps or small caps.