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If TREK is delisted from the OTCBB, which seems inevitable, then it will definitely trade on the pink sheets, imo. Management indicated that the reverse split and delisting was part of a 'going private' transaction. Whether they intend that to mean just becoming a non-reporting company, or whether it implies that shareholders will eventually receive a management buyout offer remains to be seen. Given that they are making this move just as the shares are seeing all-time highs on record volume (albeit still light volume) is mysterious. I can only suspect selfish motives. Perhaps they will ultimately try to buyout shareholders at a small premium to the market price, and then sell the company at a big profit, given the $6 per share present value of their reserves plus the $1 per share tangible book value. I was hoping for a takeover, but not like this !
Bobwins: RSGC has been drifting lower since they announced the merger with Strategy International, valued at $1.75 per share, on 12/17, now trading at a mere .72 after having rallied up to 1.05 on volume of 6 million shares the day of the announcement. Are you suspicious of the merger plan, or will it indeed be consumated around 3/1 as stated in the press release ? And if it falls through, do you think the Company can keep reporting EPS of .05 as they did in the latest quarter ? Below is an excerpt from the PR.
It is anticipated that Strategy International will offer cash and stock, which would result in a value to RS Group common stock holders of $1.75 per common share, to acquire RS Group's outstanding common stock (approximately 65 million shares), representing a 237 percent premium over the closing price of $0.52 on December 15, 2004. Strategy International, with input from RS Group, is in the process of determining the most effective method of achieving this acquisition. The transaction will not be conditioned upon Strategy International obtaining any financing.
"This acquisition provides Strategy with marketing and management resources that further enhance the Company's expansion. RS Group's proven product expertise and administrative capabilities will be an exceptional addition to the Strategy underwriting group," said Stephen Stonhill, President and CEO of Strategy International Insurance Group, Inc.
Strategy International expects the transaction to close on or about March 1, 2005, subject to the necessary shareholder and regulatory approvals. Strategy International estimates that the proposed transaction will be neutral to its 2004 earnings.
Niles: It certainly seems management is acting in their own self interest, and not that of the shareholders as they state in the PR. It's very disappointing news, just as the stock is making new highs and as the value of their reserves has soared with the price of oil. But it's another risk inherent to investing in the microcaps.
TREK going private
DALLAS, Jan. 10 /PRNewswire-FirstCall/ -- Trek Resources, Inc. (OTC Bulletin Board: TREK - News; the "Company") announced today that its Board of Directors unanimously approved a 1-for-100 reverse stock split as part of a going private transaction. The reverse stock split has been structured to reduce the number of the Company's stockholders such that the Company will qualify to terminate its registration as a Securities and Exchange Commission ("SEC") reporting company. The reverse stock split is subject to the approval of the Company's stockholders and certain other conditions. There can be no assurance that the reverse stock split will be consummated.
While stockholder approval is necessary, it is anticipated that shares controlled directly or indirectly by Michael E. Montgomery, the Company's Chairman, Chief Executive Officer and President, and his mother, Faye C. Briggs, will be voted, by written consent in lieu of a stockholder meeting, in favor of the reverse stock split. Mr. Montgomery and his mother currently own approximately 59% of the Company's outstanding common stock and 100% of the Company's outstanding Series A convertible preferred stock. The reverse stock split must be approved by (1) the holders of the Company's common stock as a separate class and (2) the holders of the Company's common stock and Series A convertible preferred stock voting together as a single class.
As proposed, the Company's common stockholders will receive cash in the amount of $2.50 per pre-split share in lieu of any fractional shares of post- split common stock as a result of the reverse stock split. As a result, holders of fewer than 100 shares of pre-split common stock at the time of the reverse stock split will remain Trek stockholders after the reverse stock split. Holders of more than 100 shares of pre-split common stock will receive one share of new post-split common stock for each 100 shares of pre-split common stock, plus cash in lieu of any fractional share. The per share price represents a 14% premium over the closing price of the Company's common stock on January 7, 2005. Our board of directors feel that the $2.50 per pre-split share of common stock to be received by holders of common stock who will hold fractional shares immediately following the reverse stock split is fair, from a financial point of view, to the stockholders.
Upon consummation of the reverse stock split, the Company intends to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company will then cease filing reports with the SEC and the Company's common stock will no longer trade on the OTC Bulletin Board.
Mr. Montgomery stated, "It is the opinion of Trek's Board of Directors that going private via a reverse stock split is in the best interests of the Company and its stockholders. Trek's common stock is not very liquid in the public market and stockholders do not receive any appreciable benefit from Trek being a public reporting company. In today's business and regulatory environment, the costs and burdens of being a public company far outweigh the benefits for a company the size of Trek."
Argyll: IPII reverse split
From my conversation with the CFO, Howard Ehler, this morning, IPII's planned reverse split is contingent upon being accepted for NasdaqSC listing based on all other qualifications. Then they will implement the split and get listed. They don't want to do a reverse split any earlier than they have to, as that event is normally interpretted negatively by the markets, and typically the stock price (adjusted) drops. If the split occurs simultaneously with the NasdaqSC listing, the price should rise instead.
lentiman, I'm a bit pessimistic on the long term for this stock, but it's a great story, be it true or not. And clearly investors and traders are having a love affair with NWAU.pk, for the time being, anyway. I'm glad I came along for the ride, but also glad to have realized some profits. It will be interesting to see the SEC filings in a few weeks, and what the stock does before then, and after !
hweb, congratulations on WSTF. I considered buying it after your posted several times recommending it in the 3's, but I couldn't get excited about it and didn't think would rally as strongly as it has. Damn that was a mistake, but then again, hindsight is always perfect !
Damn, I took profits in NWAU in the .70's on Friday thinking it was due for a pullback. I still have some shares, but clearly sold too soon. This stock is amazing and so is the volume. If their earnings guidance is at least partly true, then all is well, but if not, then 'look out below'. Good luck to all with this flier.
Just spoke with IPII CFO Howard Ehler
He said that their NasdaqSC listing application will be filed 'shortly', but would not give a specific target date, saying just that there was a fair amount of paperwork to complete. Their reverse split will be implemented if they are accepted for Nasdaq listing, which seems very probable since they meet all other listing requirements. He said Q4 would likely again not be reported until late in March due to the heavy seasonal work backlog of the auditors. He implied that their roofing supplies business has been exceptionally strong in Florida since the hurricanes, but could of course not provide any details. He remains optimistic about continued strength in new home building in Florida and the Southeast, and said the Company is considering further expansion in the future. IPII earned 0.21 through 9 months of 2004, and looks undervalued at 1.55, especially considering their strong growth, that results are already fully taxed, and their good prospects for a NasdaqSC listing.
MANC should have a strong quarter
Just heard a report on CNBC that Dell's plasma TV's are in such strong demand that there's a 6 week wait to buy one. That's a good sign for plasma display resellers like MANC. And hopefully they've been able to 'jack up' margins as sales increase. MANC is up 12% ytd, versus a generally weak tech sector. Their quarter ends Jan 31. Hopefully we'll see a further runnup before they report.
Are ZEUS and IIIN a 'steal' ?
The 3 steel processors that I follow are TONS, ZEUS and IIIN. Until November they traded pretty much in tandem, but since 11/2/04, TONS is up 192% versus only 22% for IIIN and 44% for ZEUS. TONS just reported another record quarter with EPS of 2.37 for their November quarter, up sequentially from 2.17 in the August quarter. That bodes well for strong quarterly results from IIIN and ZEUS. I'm pessimistic about the sector long term, but the short term outlook remains excellent, and TONS reported a strong backlog. ZEUS reported EPS of 1.80 in their September quarter, yet now trades at a deep discount to TONS, with a current share price of about 25 versus 66 for TONS, even with similar EPS. I think the gap will have to close, and I wanted short TONS and go long ZEUS. However no shares of TONS are available for shorting, so I went long on ZEUS anyway. It will be interesting how it plays out ....
OT: ANTP
This is certainly a strange case and I would have expected the stock to be much lower by now. I'm glad I never found any shares to short, because this stock has become more about trading than fundamentals. Huge volume today and up over $7. Today's volume of 2.8 million so far equals 4x the public float. Right now it's strictly a daytrader's stock, but longer term I think the volume will settle down and the stock will trend downward. But going short is a risky game - there are so many overvalued stocks out there, yet many of them keep going up anyway.
I've been accumulating NWAU and bought 5k at .61 before the close. However I remain skeptical even as I am buying, because 'talk is cheap' and it's easy to tell a great story, that in reality is mere facade without substance. Fortunately we won't have long to wait, since the Company plans its SEC filings by the end of January. If February rolls around and they haven't filed, I will become ever more skeptical. I view my investment in NWAU as a stock option. It gives me lots of leverage for a 5 or 10 bagger, but the Company's financial guidance could also turn out to be a scam, with the stock trending to zero. TELT's press release boasting the planned sale of 24 million shares at $1.88, and VLXC's fantastic earnings guidance are examples of questionable PR and likely scams. But I think NWAU has much more potential to be a winner than those other two ....
Bobwins, since the new board will effectively be a spinoff from this board, I think it's a good idea to keep the 'Value Microcaps' title. I like 'Value Microcaps Off Topic', or 'Value Microcaps Other Opportunities', or 'Value Microcaps Story Stocks'.
MSGI: SHO regulations affect only heavily shorted stocks. It should not affect the broader market, imo. This is a correction that will run its course. New year profit taking in the small caps is partly to blame, however I believe money managers are on the sidelines with new cash to invest at the opportune time. Hopefully we'll be getting a rally soon.
hweb: ANTP -7.75 to 37.70
It's down less than I would have expected given the sharp sequential drop in EPS and order backlog. Still no shares available for shorting at Waterhouse or Ameritrade. Hweb, at which broker were you able to get shares for shorting ? Did you have any trouble getting them ?
ANTP will definitely take a big hit tomorrow. I tried several times to short it over the last 2 weeks, including again today, but no shares were ever available for shorting. EPS of .22 in November Q2, versus .39 in Q1 does not justify $45 price. Backlog down as well.
Cash inflows may cause a nice bounce. This is a bad way to start the year, but money managers may be watching from the sidelines eager to buy the selloff once it has run its course. That's what happened in January 2001. In the first 2 days the Nasdaq sold off over 9% from 2470 to 2251, but the third day it had a huge rally over 2600, and for the month closed at over 2700. I don't think it will be the same this year, but I do believe all the new sidelines cash will cause a nice rally at some point in the coming days or weeks.
2005 is not off to a good start. I hope that's not a harbinger for the whole year. I sold my remaining position in ETEC today. There seems to be good support just under $3, but I think it's gotten near fair value. But it was a great run, and I'll gladly buy back shares if it dips again.
Wade: CPTC
I imagine it's down primarily due to profit taking ... up a few 100% in the last 2 months. Traders seem to feel the 6's was a top. Time will tell.
ORFR has been up sharply on heavy volume the last 3 days ... evidently the news of $2.5M in new orders leaked out early to some. We'll see if it can move still higher tomorrow, or whether profit takers spoil the party.
Wade: KCS at 13.63
The entire O&G sector was hit hard today by falling oil prices and profit taking in the new year (thereby delaying taxes by a year). KCS has been on my watchlist and looks good, but the EPS going forward is very dependent on what the price of natural gas will do in 2005. I'm bullish on O&G prices, but plenty of volatility is assured. The warm weather in the northeast put downward pressure on heating oil today. KCS has been pretty range bound the last few months, but if it drops some more I'll probably pick up some shares. EPS of $1.06 through 9 mos, however keep in mind that they're in a very low tax bracket and that will change in roughly 18 months when they run out of operating loss carryforwards. Good luck with it !
MANC hit $12, up 20% ytd. One of the few bright spots in my portfolio. I'm hoping this one runs like ANTP. It keeps ratcheting higher up on big volume ! Maybe Q2 will be an earnings blockbuster !
hweb, I also added to my ERS today, and was surprised to see it go under $4 briefly. Solid growth, value and a dividend in this stock. Also 20% below the 52 week high of $5, which will likely be exceeded in the coming months, imho.
Wade: CGNW
Maybe down on profit taking. Some investors like to defer profit taking into the new year so they can defer the taxes by another year. Ultimately the fundamentals will determine the stock price. Hopefully they can beat or at least match the EPS of .027 last quarter. That will provide the basis for a further move upward, imho.
hweb, ETEC has certainly attracted attention. Volume is already over 70k today, which is 30x the daily average of just a few months ago. It's got significantly more liquidity now and has Nasdaq potential. I sold my first shares this morning, but will buyback on a significant dip, if it happens.
Thanks, hweb. Of course my list for 2005 would be much more limited, were it not for this forum. In fact, most were originally introduced by you and Bobwins. Until last February when I found this message board I had hardly ever ventured onto the OTCBB, but now I have about 30 of those stocks in my portfolio.
Top Picks for 2005
IPII - 1.55 Imperial Industries is a building materials supplier doing business primarily in Florida and neighboring southeastern states. The Company recently received shareholder approval for a reverse split to allow an application for Nasdaq listing. Fully diluted and taxed EPS was .21 through 9 months, and .07 in Q3. Third quarter results include a one time gain, and loss of business due to the hurricanes, that roughly cancel each other out. Revenues were up 33% from a year ago for the 9 month period. Q4 should be strong due to the company’s roofing supplies segment and the rebuilding effort in Florida. Nasdaq listing is likely to occur in Q1, and the stock should then command a PE of 10.
TMFZ - 2.60 TMSF Holdings is financial holding company specializing in non-conforming and sub-prime mortgages. In the last year the Company has grown rapidly, expanding geographically beyond its California base, and shifting from refinancing to purchase mortgages. Fully diluted and taxed EPS was .19 in Q3 and .41 through 9 months. While rising interest rates are a concern, primarily the low end of the yield curve has been affected and mortgage rates have remained low. Furthermore, the Company’s market niche is less susceptible to interest rate fluctuations than the prime mortgage market. Trades at a deep discount to its peers and management would like to upgrade to the AMEX/NasdaqSC in 2005.
ERS - 4.12 Empire Resources is a distributor of a wide range of aluminum products. Earnings and revenues have grown steadily over the last 4 years, with EPS of .12 in 2001, .24 in 2002, .37 in 2003 and on track for .48 in 2004. 2005 EPS should be approximately .60. Dividend yield is over 5%, including the special year end dividend. Nothing exciting here, but this AMEX listed microcap should provide solid returns in 2005.
EGY - 3.88 Vaalco Energy continues to have success in oil field exploration offshore from Gabon, West Africa. Fully diluted EPS was .16 in Q3 and .32 through 9 months, though much higher tax rates are looming short term. However new tax credits from further exploration and development costs will arrive next year. The ETAME field alone represents several years of production at current output levels, and prospects for substantial new reserves are good for 2005 in the Abouri and Etoumi oil fields. The recent registration of 37 million shares represents a potential overhang of shares for sale into the public float, however successful institutional placements of these shares could be good news for the stock.
DGIX - 0.85 Dyna Group International, a manufacturer of a wide range of pewter based consumer products, has shown solid growth over the last 3 years with EPS of .02 in 2002, .08 in 2003 and on track for .14 in 2004, assuming the usual seasonal strength in Q4. Earnings are fully taxed and diluted. Tangible book value is .62 with no long term debt. This stock is thinly traded, but that could change as it gets discovered. Plenty of upside potential from these levels, especially if the earnings growth continues.
The above five stocks are among my favorites, but there are plenty of others I also like. Too many to name them all, but here are a few others ….
PKZ, 37.10, is a small midcap, but as cheap as some of the microcaps. A pipeline to China is due by early 2006 and will greatly reduce oil transport costs. EPS was 2.27 in Q3 and the Company continues to buyback shares aggressively. If oil prices stay at these levels, EPS could approach $10 in 2005. But the negatives are unresolved tax issues with Kazakhstan, a pesky dispute with Lukoil regarding their joint venture, and limited growth potential for their reserves.
CGNW, .39, had EPS of .027 in the latest quarter. Looks like they’ve turned the corner and 500k shares were bought by insiders over the summer.
TREK, 2.30, earned .14 in calendar Q3 and it should be more in the December quarter. Has substantial o&g reserves listed at a present value of nearly $6 per share in the recent 10K filing. Negatives are gradual declines in production and management’s lackluster growth plan. Nonetheless a very interesting asset play, that could even be a takeover candidate given their large reserves, especially if oil prices trend higher.
MANC, 9.99, may be a good short term play on expectations for a strong January fiscal Q2, due to hot selling plasma displays over the Christmas shopping season. Has had a good run already, but the stock is acting like it could go much higher ….? Priced at $9.99 to close the year, it might be a bargain with Freudian overtures.
STV, 5.19, has seen an 80% increase in construction backlog. If margins stay strong, EPS could rise sharply in 2005, up from an estimated .50 in 2004.
NWAU.pk, .45, is my favorite pink sheet ‘special’. Management might be clowning around with their guidance for .30 EPS in 2005, but their story seems to have some credibility. It could go to zero if they’re full of ‘hot air’, but 10 bagger potential also seems within the realm of possibility.
I've recently taken big profits in my favorite sector of 2004, the oil tankers, because spot market rates have come down dramatically in the last 6 or 8 weeks. But the spot market is notoriously volatile and could rebound sharply. Stocks like FRO, OMM, SFL and GMR could be interesting trading vehicles if they come down too far.
Best of luck to all with their 2005 investments !
The Wall Street Journal has its annual year-end review of the financial markets in tomorrow's edition. It comes with a special pullout section that's worth saving for reference purposes. Loaded with statistics and results of the past year. Well worth a special trip to the newstand, imo.
And the winner is ...
Researcher59 in the contest to post the first 'Happy New Year' greeting of the New Year. He posted just 1 second after 2005 began in New York City, the financial capital of the world.
Happy New Year !!!!!!!!!
HAPPY NEW YEAR !!!!!!!!! HAPPY NEW YEAR !!!!!!!!!!!!
Spot market tanker rates have dropped dramatically these last 6 weeks or so .... it will be interesting to see if they rebound in the New Year, or continue to head lower. They're still at highly profitable levels, but the steep drop has been alarming.
I ordered one of their denim shirts from their website many weeks ago and was impressed by its quality. However the price of only about $6.75 brings into question how much profit can there be ?
Fireworks are going off in Moscow's Red Square as I post. It's midnight in that part of the world. Capitalism has gained a big foothold in the former 'East Block'. PKZ remains my largest holding, an oil company doing business in Kazakhstan, a former Soviet Republic. How times have changed in the last 15 years !
It's year end window dressing time as well as the last 20 minutes for tax loss selling. Maybe someone will even place a small order for CGNW at .46. Hey, this stock was .26 just 2 weeks ago. Maybe it doesn't even need window dressing. What a great run. Thanks again go to Bobwins, Hweb2 and all the other fine posters on the Value Microcaps message board. Best Wishes to all for a Happy New and good luck with their investments in 2005 !
Bobwins, I'm no tax expert, but that should be correct. You cannot claim the 1st loss immediately due to the wash sale rule, however the loss reduces your cost basis on your 2nd purchase. That's my understanding of the rule.
Final hours for tax loss selling. I just dumped my YPNT at 1.32. They reported eps of .18 for the September fiscal year, but a small loss in Q4. It seems their billing practices are under the gun and I'm happy to be rid of it and can well use the loss for a tax writeoff.
I'm going to post my top picks for the New Year over the weekend, and I hope many others will also post their ideas, as some already have. Of course, some stocks are much more speculative than others, and some are more short term plays, while others have more long term potential. A lack of liquidity in some microcaps could also be an exposure if the overall market turns down after the January effect comes to an end.
MANC +1.00 to 10.05 on heavy volume. I'm hoping this stock continues its nice run in anticipation of strong fiscal Q2 earnings for the 1/31 quarter. Plasma displays were a hot seller this Christmas season, and MANC is a distributor. Traditionally distributors have low profit margins, but they can expand substantially when their products are in heavy demand. EPS of .21 in Q1 could be much higher in Q2, with late add on orders by retailers. The stock could run much higher if the daytraders take it for a ride. Just look at what happened to ANTP ! Of course, as MSGI pointed out, ANTP has the advantage of a name, PHAZAR, that rhymes with TASR. Maybe that explains the huge run ANTP has had .... LOL.