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Great post.
I do think most believe the pps will drop based on the r/s.
I also think that most agree the pps will rise based on solid financial results.
There has been tons of $s made by shorting this stock, by trading this stock and my hope is for those who hold this stock.
Really it all depends on your entry point and trading strategy.
I look for value plays and hold them longer-term. Then I sell them and look for the next opportunity (but do take profits at certain exit pts.).
Totally agree.
1. This is not your typical OTC Management Team. How many OTC companies have management with senior leadership experience in large cap companies like Coca-Cola, Kraft, Molsons, Heinz, etc.
2. This is not your typical OTC Company. How many OTC companies will have revenues pushing $200M this year. Last fall this company was on their way to a Nasdaq listing. We know what happened there, but I still believe that is this companies future. This company had a market cap of around $350M 6 months ago....and revenues that are growing exponentially each Q.
I get that the stock went into a death spiral once the Nasdaq filing was abandoned. I get the dilution we have had based on that toxic debt. But the debt has been addressed and the financials have improved over the past 6 months.
IMO this stock is way undervalued right now.
I know, I think a text message would be sufficient these days.
That is funny
I found this:
MARKET MAKER SIGNALS
Penny traders believe that Market Makers (MM) will "signal" moves in advance buy using small amounts of buys or sells as "signals". The "signals" are such a small amount of shares (worth no more than 5 or 10 dollars) that no trader would have paid a commission that costs more than the amount of shares bought. The "signals" are from one MM to another.
100 - I need shares.
200 - I need shares badly,but do not take the stock down.
300 - Take the price down so I can load shares
400 - Keep trading it sideways.
500 - Gap the stock. This gap can be either up or down, depending on the direction of the 500 signal.
911 - Pending News
Wouldn't surprise me...
My illustration was more to show how I was not sure either scenario results in a different result, but I agree with your opinion.
My view/outlook is longer term, so that is why I am indifferent towards the scenarios.
I think your strategy is sound though.
Well if people expect $50+M in Q4 revenues they will probably be disappointed. They would also be disappointed if they had a positive net income expectation (we would need Q4 revenues to be ~ $66M for that to happen).
Other than that you will have to enlighten me... :)
I am not sure it really matters which comes first.
I do think the pps will drop based on the r/s (nature of the beast), but conversely the pps should increase based on a solid 10-k.
At the end of the day I think we settle at a higher pps than what we have now regardless of the steps taken.
Ex. #1 (10-k released 1st):
pps rises in anticipation of 10-k release - lets say $0.20.
10-k is released and it is good - pps rises to $0.30.
1-10 r/s is announced - $3.00 pps
market correction based on negative interpretation of r/s - pps down to $2.25-2.50
Ex. #2 (r/s released 1st):
pps rises in anticipation of 10-k release - lets say $0.20.
1-10 r/s is announced - $2.00 pps
10-k is released and it is good - pps rises to $3.00.
market correction based on profit taking, "sell on news" actions, etc. - pps down to $2.25-2.50
This is all conjecture and illustrates my uncertainty on if the end results differs between either scenario.
Long-term (greater than 1 year from now) I do not believe it really matters what comes first (r/s or 10-k).
Totally agree. That Preferred Stock section was the main reason I voted no to #2...
The a/s increase proposed was only up to 350M (of which 20M would be preferred). Not sure where you got the 600M # from?
Anyway, once the r/s was approved the a/s increase was not required/necessary. 1-10 r/s frees up 270M authorized shares and 1-20 r/s frees up 285M authorized, so 270M-285M provides plenty of flexibility.
LOL - your post still stands...using big words doesn't help support what you originally said...
Now if you said "rarely", "most times" or even "almost never" I probably would not have even replied.
But you used "Never" and even in bold font (LOL), "Any" and "Always" and said that was a fact.
I quoted one example and one example was all that was needed to dispel your stated "fact".
I could have gone on and listed more (Evolution Petroleum Corp, Protalix BioTherapeutics, Ziopharm oncology, Vitalstream Holdings, etc.), but like I said listing only one company (company that completed a r/s while on the OTCBB that post r/s benefited shareholders) was all that was required.
Here are facts:
1. My post was not a technicality.
1. I am not embellishing anything. You actually embellished your argument because yours was the one that contained untruths.
2. There is no desperation in anything I have posted on the board. I have no hidden agenda. I am not a day trader, I am not a large shareholder in this company, I am not working for anyone else, etc. - so the daily/weekly swings mean nothing to me as I am not selling anything until the pps is at a level I believe it will get to.
I will post if I feel I can add value to the conversation or if I have a question I think someone on this board can answer or in response to something I do not believe to be factual.
Your statement wasn't factual so I replied to it...
Should a company publicly disclose its share repurchase program?
Yes. In order to avoid potential liability for insider trading in connection with a share repurchase program, a company should publicly disclose the program prior to its commencement. Disclosure should be made after consultation with counsel. At a minimum, disclosure should be made with enough time to allow the market to absorb the announcement and include the following information
1. the estimated time period during which the purchases will be made;
2. the maximum number of shares proposed to be acquired or the maximum amount of funds to be expended;
3. the objective of the acquisition of shares;
4. any plan or proposal relating to the disposition of the shares to be purchased; and
5. an indication of how the purchases will be made.
The disclosure may be made in a Form 10-Q or 10-K, or by means of a press release or Form 8-K, depending upon timing of the approval and commencement of the program. The company also should issue a public announcement disclosing any material modifications to a share repurchase program.
Open Market Share Repurchase Programs
What legal issues should a company be aware of as it designs and implements its repurchase program?
Avoiding fraudulent and manipulative practices
Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 (the Exchange Act) prohibit fraudulent and manipulative practices in connection with an issuer’s or “affiliated purchaser’s” purchase and sale of the issuer’s securities.
Rule 10b-18 provides a non-exclusive safe harbor against allegations of market manipulation under Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5 under the Exchange Act solely by reason of the manner, timing, price and volume of the repurchases when the company’s repurchases are made in accordance with the conditions set forth in the rule. Rule 10b-18, however, does not protect against other types of violations of the Exchange Act and Rule 10b-5, such as violations arising from purchases made by an issuer on the basis of material non-public information.
In order to come under Rule 10b-18’s safe harbor, a company and its affiliated purchasers, taken together, must meet all the following conditions:
1. Manner: all of the bids and purchases must be made through only one broker or dealer on any single day;
2. Timing: the purchases must not:
» (a) constitute the opening transaction,
» (b) for a security that, during the preceding four weeks, has an average daily trading volume (ADTV) value of at least $1 million and a public float value of at least $150 million, be made during the 10 minutes before the scheduled close of the primary trading session in the security’s principal market, and during the 10 minutes before the scheduled close of the primary trading session in the market where the purchase is made, and
» (c) for all other securities, be made during the 30 minutes before the scheduled close of the primary trading session in the security’s principal market, and the 30 minutes before the scheduled close of the primary trading session in the market where the purchase is made;
3. Volume: the aggregate purchases on any given day must not exceed 25 percent of the purchased security’s ADTV. “Block” trades typically will be included in computing a security’s ADTV. However, once per week, “in lieu of purchasing under the 25 percent of ADTV limit for that day,” a company or its affiliated purchasers may make one block trade of its shares without regard to the volume limit, provided that it does not make any other Rule 10b-18 purchases on the same day. Purchases made pursuant to this block trade exception will not be included in computing a security’s ADTV for purposes of Rule 10b-18 volume limits; and
4. Price: the purchases must not be made at a price that exceeds the highest independent bid or the last independent transaction price (whichever is higher) quoted or reported in the consolidated system at the time the purchase is made.
The safe harbor applies on a daily basis, and a failure to meet any one of the four conditions will remove all of a company’s repurchases from the safe harbor for the day.
Generally, companies attempt to comply with Rule 10b-18. Companies typically enter into an arrangement with a broker or dealer that agrees to implement the repurchase program according to the companies’ instructions and in accordance with the requirements of Rule 10b-18. All of the major brokerage firms understand the Rule 10b-18 requirements and implement programs accordingly.
I am positive that the company has not been buying shares on the open market in order to not follow through with the r/s.
If they were, the stock price would be allot higher than $.12.
Also, they would have to do allot of buying. The volume of shares moved since March 10th isn't even close to what they would need to acquire.
The r/s is happening, it is just a matter of what ratio.
Not factual.
Many examples of OTCBB companies that did a r/s with the sole purpose of appealing to a broader range of investors and in order to reach a pps that met the up-list min. requirement.
You look at the OTCBB Graduation List and you will find many that undertook a r/s prior to up-listing.
ARC Wireless Solutions is just one.
So "Never", "Any", "Ever", "Always" is not the facts...
$0.08 avg.
It really comes down to why the company had a r/s.
This company had to do a r/s for them to address the toxic debt that drove the pps down to pennies. You do not see the recent 8-k without a r/s.
This stock has been hammered by short sellers. One benefit of a r/s is that by reducing the shares outstanding and share float, the stock becomes harder to borrow, making it difficult for short sellers to short the stock. The limited liquidity may also widen the bid-ask spread, which in turn deters trading and short selling.
Now with that said, in the vast majority of cases, a r/s is done to fulfill exchange listing requirements. Either to maintain its current listing or in order to reach the min. share price for up-listing.
It is never a good thing when a company undertakes a r/s based on delisting risks (the pps has dropped below the min. requirements for a reason). So that is why you usually see a drop in share price after a r/s.
I could see a drop in share price here post r/s based on fear and individuals not understanding what is at play here.
But, I think the 10-k will balance that off. So either the 10-k gets released propping up the pps prior to the r/s and then it settles somewhere a little lower or the r/s is completed and then the 10-k gets released to hold the price at that pt. in time.
Now that the toxic debt has been addressed and once the r/s is done and 10-k released I believe we will see increases to the pps based on revenue increases and profitability. Then, based on fundamentals, we will reach a share price that allows us to uplist. Then, longer term, as the Industry continues to grow (multi-billion $ industry) and revenues continue to grow we will continue to see share price appreciation (ECIG is well situated for increased market share).
This is just how I see things playing out (and ultimately why I an comfortable in my investment).
The secret trading strategy from the 1930s that hedge funders don’t want you to know about
Business InsiderOne of the key takeaways from the book is that if you want to succeed, you have to learn to recognize the professionals and understand what they are doing. That's what those who follow Wyckoff do — they watch the large operators.
“The large operator does not, as a rule, go into a campaign unless he sees in prospect a movement of from 10 to 50 points. Livermore once told me he never touched anything unless there were at least 10 points in it according to his calculations.”
So writes Richard Wyckoff, the legendary trader who in the 1930s wrote a manifesto that gained him a cult following on Wall Street.
His 1931 book, “The Richard D. Wyckoff Method of Trading and Investing in Stocks – A Course of Instruction in Stock Market Science and Technique,” is out of print and somewhat difficult to find these days (not impossible), but even in 2014, hedge fund managers still swear by it.
One of the key takeaways from the book is that if you want to succeed, you have to learn to recognize the professionals and understand what they are doing. That’s what those who follow Wyckoff do — they watch the large operators.
Wyckoff walks us through the process of how a large operator will manipulate a stock up or down — so that next time one sees it unfolding on the screen before his or her own eyes, he or she can react accordingly.
This, you could say, is real technical analysis …
First, some context: trading is a lot like any other merchandising business, and liquidity is important
Wyckoff writes, “When you have learned to take a wholly impartial viewpoint, unbiased by news, gossip, opinions and your own prejudices, you will realize that the stock market is like any other merchandising business.
“Those who understand it buy only when prices are low with the idea of selling when they are high; and they operate only in the stocks or commodities which they can move best so they may secure the highest possible rate of turnover of inventories.”
Source: Wyckoff (1937)
It takes a while for a pro to accumulate a position in advance of a big move – buying too many shares at once would cause the price to rise too quickly
“The preparation of an important move in the market takes a considerable time. A large operator or investor acting singly cannot often, in a single day’s session, buy 25,000 to 100,000 shares of stock without putting the price up too much. Instead, he takes days, weeks or months in which to accumulate his line in one or many stocks.”
Source: Wyckoff (1937)
Instead, here’s how he sets it up: first, he’ll “shake out” the little guys by forcing the stock lower in order to get a better price
“He prefers to do this while the market is weak, dull, inactive and depressed. To the extent that they are able, he, and the other interests with whom he works, bring about the very conditions which are most favorable for accumulation of stocks at low prices…
“When he wishes to accumulate a line, he raids the market for that stock, makes it look very weak, and gives it the appearance of heavy liquidation by sending in selling orders through a great number of brokers.“
Source: Wyckoff (1937)
Then, he will try to time the top of his planned price rise with some “good news” about the stock he may already know about
Remember the saying, “Buy the rumor, sell the news”?
“You have often noticed that a stock will sell at the highest price for many months on the very day when a stock dividend, or some very bullish news, appears in print. This is not mere accident.
The whole move is manufactured. Its purpose is to make money for inside interests — those who are operating in the stock in a large way. And this can only be done by fooling the public, or by inducing the public to fool themselves.”
Source: Wyckoff (1937)
So, let’s look at an example of a typical market operation. Say a stock is trading in the $30-35 range and the pro sees it going to $60 soon…
Source: Wyckoff (1937)
He’s trying to pick up 50,000 shares, but it’s too much, so he starts by taking as much as he can between $30 and $35
Wyckoff (1937)
Source: Wyckoff (1937)
When it gets back to the top of that range, he forces the price back down so he can pick up more shares for cheaper
Wyckoff (1937)
“Then he forces the price down to around 30 by offering large amounts of stock and inducing floor traders and other people to sell their long holdings or go short because the stock looks weak. By putting the price down, he may sell 10,000 shares and buy 20,000; hence he has 10,000 shares long at the lower prices of his range of accumulation.
“By keeping the stock low and depressed, he discourages other people from buying it and induces more short selling. He may, by various means, spread bearish reports on the stock. All this helps him to buy. When he is thus buying and selling to accumulate, he necessarily causes the price to move up and down, forming the familiar trading ranges, or congestion areas, which appear frequently on figure charts.”
Source: Wyckoff (1937)
Using this method, the pro will accumulate a large enough position to effectively remove almost ALL would-be sellers from the market
Wykcoff (1937)
“Finally he completes his line. The stock now stands at 35, and, as he has absorbed 50,000 shares below that figure and other operators have observed his accumulation and have taken on considerable lines for themselves, the floating supply of the stock below 35 is greatly reduced. At 36 the stock is prepared for the ‘mark-up.’ It is ready to go up as soon as he is willing to allow it.”
Source: Wyckoff (1937)
Then, he starts driving the price up to $60 by buying more shares – and he really ramps it up toward the end to coincide with the “good news” he is expecting in a few days’ time
Wyckoff (1937)
Source: Wyckoff (1937)
Now, the pro has accumulated a huge position in the stock, and he needs to find someone to sell it to at $60. By now, people have seen the surge, and they think something’s coming
“The process of distributing calls for much publicity so that the attention of the public will be attracted to the stock. The rise to 50 started a whole crop of rumors. Brokers who are close to the bankers or the management of the company have been trying to find out what is going on to make the stock so strong.
“Insiders have hinted vaguely that ‘something good is coming out,’ and without knowing just what this expected favorable news is, the brokers have put their clients into it. Considerable outside public following has been gained during the rise. The market for the stock is broadening.“
Source: Wyckoff (1937)
Then, the news hits, and the pro can instantly unload 20-30k shares as people rush in to buy
Source: Wyckoff (1937)
To finish unwinding his position, the pro does the exact same thing he did at the bottom – he works that stock up and down in a range until he’s sold it all
Wyckoff (1937)
“After this the price may recede a few points, but he, having sold a large part of his line, is willing to take a small percentage of it back at 57 to 56, and after this has been accomplished, and the activity has quieted down, he will mark the price up to 60 or 61 again.
“At that point he either turns seller, and markets the balance of his stock on the way down; or he works it up and down in a range of a few points from the top, till he has completed his selling.“
Source: Wyckoff (1937)
Now, the stock is in “weak hands” – everyone bought it on bullish news after a ~$30 rally
“The operator has now disposed of his entire line, and as the news is now known to the public and many people have bought and thus taken the stock off his hands, the stock may be regarded as technically in a weak position, for it is in what is called ‘weak hands.’
“By this I mean it is held mostly by those who have bought at the top of a 30 point rise, when the news was bullish; most of these purchases being made on margin, the holders can be shaken out or tired out.“
Source: Wyckoff (1937)
So, it’s time to go short at $60! The pro can initiate a big short position, but fool people by putting on good-sized buy orders at $56, supporting the stock and inducing people to keep buying
“The operator now sees a chance to make a turn on the short side, so while the market is in this range of say 56 to 60, and after he has completed selling his long line, he sells short, say 25,000 shares.
“In doing this he makes the stock swing back and forth over this range, keeping good-sized supporting orders in around 56 to fool the floor traders, the specialists and the public, who see on the floor and on the tape evidence of his support on the reactions. Thus they are led to believe the stock is going still higher.”Source: Wyckoff (1937)
Then, he pulls out the rug – canceling all his buy orders and leading a raid on the stock. That’s how it’s done – played in both directions
Wyckoff (1937)
“When the operator has sold all of his 25,000 shares short, he cancels all of his buying orders. The specialist in the stock then tells some of the more important floor traders that the stock is in a weak technical position and that there is no support for the next 8 or 10 points and they all get together and raid it down to 50, at which point the operator covers his shorts.”
Source: Wyckoff (1937)
My question exactly. The 8-k is filed, so obviously it can be done...
I would have thought that this type of deal could only come after the r/s which would free up the shares (in this case warrants) to sell.
One things that makes this positive for me is the Institutional Investor must have wanted to get the deal done pre-r/s because they see a pop in the pps (can you say very good 10-k).
This is getting interesting...
Appreciate your response.
I am not a huge player in this stock (just over 100K) and don't plan to sell anything until probably Q3 (assuming revenues continue to grow).
I am really looking forward to the 10-k and then r/s announcement.
After that I anticipate an uplist at some point (months away).
I am struggling with the 8k as well. How can a company sell 226M in warrants when there are not any shares available?
Anyway, if it is as some have said and this is pre-r/s then they only sold 7.7% (23M/300M) for $13M.
This board is getting spammed with pumpers....
If a company has uplisting aspirations a r/s would not be viewed negatively by investors (which is the case here). It is those companies that do a r/s to remain on an exchange that are in trouble....
The r/s does not rid the co. of the debt. However, assuming a 1/10 r/s, there will be over 270k o/s that become available to pay off the current debt.