Your scenario is entertaining and totally ridiculous. The small cluster of institutions you are referring to are BlackRock, Gramercy, Market Vectors Junior Gold Miners ETF, Franklin Advisers, I.G. Investment Management, Van Eck Associates and Tradewinds Global Investors.
These institutions are investing their clients' money and the more they make their clients the more they make themselves. I agree these institutions are here because Banro is both the best of the best as far as junior gold miners go and an extremely attractive acquisition target. I disagree with your absurd assumption that these institutions are going to sell Banro to China Gold (or anyone) at any type of bargain price.
These institutions will demand and receive top dollar for Banro. If they do sell to a non-public entity like China Gold they are going to require ten to 15 times earnings. Not current earnings but the earnings of a gold miner producing 60,000 ounces a quarter. Banro's profit target is $500 per ounce. They could hit that by the end of 2015 with $1,250 gold and much sooner if gold goes up.
That would put Banro's yearly EPS at $0.48 meaning the small cluster of institutions would require a bid price from a non-public entity of at least $4.80 per BAA share. There will then be counteroffers that will quickly drive BAA's PPS to $7.20+. Should the suitor be a public company like Barrick Gold (ABX:NYSE) it would likely be a deal that involves both shares and cash.
These institutions you are referring to are not harming us individual shareholders, they are protecting us! They are protecting Banro. When Banro ran into problems paying back their loans earlier this spring they simply called the bank and the bank said "No problem...we won't even charge you anything." I posted that after the bankers hung up the bankers' next call was likely to BlackRock and as a reward I'm sure BlackRock gave those bankers a lot more than a fruit basket.
The good news is we won't need to wait long to find out which one of us is right. Institutions do in fact own nearly 90% of BAA and we'll find out how they vote on June 27th. Should Liberty rack up some institutional votes we'll know whether or not they were backed by an institution. I'm fairly confident that come June 28th we'll have at least 5 of Banro's 6 nominees still on the board. Personally I'm voting for all 6 of them. My vote may or may not mean anything in the final tally but to me it means that I have shown my support for the managers of the team who got us here.
BAA Long & Strong!
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