PLAY em & FLIP em>>>a good read as to why
Arch's editorial comments: Be realistic with your penny plays - for the most part, each position you take is just a means to an end, and that is to make money and profit. Review the Golden List link in the Scrapple iBox - much to be learned there
Graduating to a Larger Exchange: Why Doesn’t Your Company Ever Move Up and Out of the OTCBB?
By Daryn P. Fleming
Published by OTCBB News Network
06/29/2001
You read the news everyday. Some young company has the next product that will change the world. Company ABCD has a contract with a larger, well-established company listed on the NYSE. Everything from cancer cures to solving the world’s energy problems can be found in companies listed on the OTCBB. But how many of the companies actually succeed? The answer to that question would depend upon your definition of success. For most OTCBB investors, the company has succeeded as long as there were opportunities to successfully go in and out of the stock for profit. From a more practical, strictly business standpoint, however, we need a more definite gauge for success. We could go into dozens of business theories as to what exactly constitutes success. But let’s focus on one—moving to a larger stock exchange.
A lot of investors are convinced they will find the next Microsoft trading as an obscure penny stock on the OTCBB. But whoever believes that is in for a rude awakening, as this perception is based on fantasy rather than reality. The fact is, very few companies actually move from the OTCBB on to a larger more prestigious exchange. There are roughly 3,700 companies listed on the OTCBB. In 2001 only 33 companies have graduated and moved up and out, away from the OTCBB, and over to a more prestigious exchange like the New York Stock Exchange, American Stock Exchange, or NASDAQ. We studied all of these companies in order to see what the differences were between these companies and those we read about every day at the OTCBB News Network. Here is a look at a few of these companies.
On January 16, 2001, The York Water Company (NASDAQ: YORW: $24.96) went from the OTCBB to the NASDAQ. The 52-week range for the Company is $14.25 by $25.50. The Company apparently has real earnings of $1.25 per share. The total shares outstanding are roughly 3 million with virtually all of that 3 million in the public float.
On February 5, 2001, Speedcom Wireless Corporation (NASDAQ: SPWC: $2.40) went to the NASDAQ. The stock had a 52-week high of $27 and a low of $2. Although the company has negative earnings, it must have had the assets, operating history, minimum stock price, etc. to graduate. The total shares outstanding are 9.50 million with a public float of 6.2 million.
On February 15, 2001, East Penn Bank (NASDAQ: EPEN: $5.65) went to NASDAQ. The 52-week range is $4.30 by $9.75. The bank has seven branches and $219 million in assets, reported record earnings of $256,000 for the first quarter of 2001. The represents an increase of 45.5% over earnings of $176,000 from the first quarter of 2000.
On March 8, 2001, South Texas Drilling and Exploration, Inc. (AMEX: PDC: $4.40) moved up to the American Stock Exchange. The 52-week range is $1.77 by $7.60. The Company has earnings per share of .19.
On March 27, 2001, Apartment Investment & Management Co. (NYSE: AIV: $48.02) moved to the New York Stock Exchange. The 52-week range is $39.25 by $50.12. The Company has earnings per share of .28.
On May 18, 2001, Fisher Communications, Inc. (NASDAQ: FSCI: $71.75) moved from the OTCBB to the NASDAQ. The 52-week range is $40 by $79. When announcing that the company would leave the OTCBB and list on NASDAQ, President and CEO William W. Krippaehne Jr. said `` I believe being listed on NASDAQ will increase the visibility and understanding of our company and its operations, and I believe NASDAQ is viewed as a fair, efficient, and liquid marketplace. Further, listing gives the Fisher team access to NASDAQ's powerful data gathering and market intelligence resources, while providing a basis for continuous comparison to peer communications and media companies.''
We could have made our sample list much longer, but it would have been highly redundant. We found the essential story behind each company was the same, over and over again. After studying the 33 companies we are able to come to some interesting conclusions. The bottom line is that those companies that actually moved off of the OTCBB to a better exchange are high caliber companies, most of them with substantial revenues and real earnings, high asset base, sufficient operating history, and a stock price that managed to hold up above the minimum price required by the higher exchanges. These companies were heavily scrutinized by the exchanges and were able to past the tests. These companies didn’t get to leave the OTCBB because of reverse stock splits, announcements about major contracts, cranking out press releases (many of the companies on our list had only SEC filings, with no press releases at all), hiring investor relations firms, and other activities that we see everyday in our reporting.
The companies that were fortunate enough to graduate to the higher land did so because they delivered. There is an old saying that there are two kinds of people in the world—the doers and the talkers. The talkers never do and the doers never talk. So if you are looking for the next Microsoft on the OTCBB, you might be looking for quite a while, and losing a lot of money while you wait. The chances are high that your OTCBB company will never move to a higher exchange. In fact, if you look at the facts, the chances are actually better that many of these companies will be de-listed from the OTCBB and forced to move to a lower ground known as the Pink Sheets. So if you want your company to move to NASDAQ, NYSE, or AMEX call them up and tell them to quit talking and start delivering.
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