Value Microcaps Pick Six Lotto 10

[nsomniyak]

THE NSOMNIYAK CHALLENGE - my own picks

Here are my picks and my reasons for picking them. I am not entirely happy with this set, as there is nothing really original in here.

ASPN.OB - Simple logic here--this is an otherwise undistinguished US natural gas company, except for one thing- the company is for sale. Long story short--old founder/CEO retired, brought in new guy who was really good, new guy had stroke, orig guy reluctantly came back (temporary, hoping for the new guy to make a recovery), new guy won't be coming back to work, and company has announced they are "opening up their data room". Basically, this means the company is for sale and right now. I am just hoping they get an offer sometime in the contest period, and that it is at at least a small premium to the market price. I believe the fact that they are hiring someone to run the data room means they have at least one buyer actively sniffing around.

http://biz.yahoo.com/iw/080904/0430763.html

ATPG - ATPG is one I have liked for a long time but never owned. It has been pushed to new lows, and might go further if oil prices weaken. On the other hand, I think that fears of damage from hurricanes Gustav (ATPG came through fine) and Ike (?) may have been putting pressure on ATPG, as few want to hold Gulf operators over a hurricane weekend. My understanding is that ATPG's facilities are modern and better suited to weather the storm than many others. On the other hand, 'canes are powerful and ATPG could be impacted if other infrastructure they rely on (i.e. collection pipelines) are damaged. Over the contest time frame, we should see what bids ATPG gets related to the assets they have indicated they "wish to monetize" (read: for sale). ATPG is given a very low cash flow multiple relative to its peers. Bids are due in the next month or so, and there is general belief that the assets are worth more than the value they are given as part of ATPG's stock price. Unfortunately for me in the contest, ATPG has moved up pretty sharply the last couple of days going into the close Friday 9/12 (although it did back off at the close)

CSKI - CSKI is a drug and medical company operating in China. I have liked China Sky Medical for some time, and had it, as CSKI.OB, in earlier PSL contests. It uplisted to the Amex (as CSY), and will be moving to the Nasdaq Global Market over the weekend of 9/12 to 9/15 (as of Monday 9/15/08, it will be CSKI). It was pushing 15 when this was announced, and has fallen off since. I like the company and its niche, but am also betting on getting better visibility on Nasdaq. I also am looking for a stock where some specific development is expected early in the contest. Given the way the market has been, this might be just an excuse for more people to hate it, but I have had too much "dead money" in prior PSL contests, where nothing was anticipated until an earnings release 2 weeks before the contest ended.

FRPT - I have owned FRPT for years. One thing that can be counted on is that it will pop and plunge over the course of a 3 month period. At an approximate entry point of 3.70, I like my changes of seeing the mid 4's in the contest time frame (20-25%), with an upside chance of catching lightning in a bottle, as FRPT is always surrounded by buyout rumors (much of which is wishful thinking, but FRPT will be generating very strong cash flows). I looked at a lot of stocks for the last of my 5 non-wildcard picks. Many of the rest offered potential but looked like trying to "catch a falling knife" as far as entering at the close 9/12.

TXIC - TXIC operates in the auto body sector in China. They are finalizing a merger at this time. This is a bet that they will have good earnings, and provide more clarity on their merger, in their conference call on Tuesday 9/16/08. I have spoken with IR, and believe they have a lot to say once the merger is final. As much as anything else, this is another bet on a stock where SOMETHING will happen early in the contest. In real life I own the warrants TXICW, for leverage.

MOSH.OB (wild card) - MOSH is a lotto ticket, based on their significant lawsuit against PXD, JPM and Woodside. There is extensive DD available on the MOSH board on iHub. I think they have a pretty good chance here, and this is one of the few stocks out there where I see a real chance at a 10:1 move, or better. Further, there is reason to believe that the stock will move in the PSL10 timeframe. There is a lot of legal posturing going on, primarily by the defendants who are refusing to provide documents and log data related to MOSH's well(s). Many interpret the court's schedule to mean that if these docs and data are not provided by 9/28/08 the defendants may face a contempt charge. The judge has dismissed almost all of the procedural roadblocks the defendants have attempted to throw up. Trial is scheduled for November 2008. I believe that one or more of the defendants may decide to settle rather than risk treble damages from a jury. The suit if for $1.2 billion dollars, and that was based on oil prices from several years ago. Even a mid 9-figure settlement would make MOSH a ten bagger and more immediately. At this point it looks like MOSH will get their day in court, despite the maneuvering by the defendants. As long as MOSH's case is not dismissed outright within the contest timeframe (unlikely) then it is very likely that MOSH will heat up as a speculation, and as a hedge, as we approach the trial date.