A couple of thoughts:
1) If the float is 100M and there are at least 2000 shareholders, then either the average position is 50,000 shares per holder or there is a naked short. If the company has bought back the float down to 50M, then you could only squeeze in 2000 investors with positions averaging 25,000. Those are $500 positions (BS!!). If there has been a buyback + 50M for BMAS + 50M on this board + 2000 other holders, then this is really wild.
2) Some naked short situations never get resolved. Once they drive the company down close enough to zero it appears from my reading that things get really messy trying to enforce our laws. Read up on Global Links for a case study. The difference with VW, by my reading of it, is that there was a real company and the party buying up the shares was another real company (Porsche). Where we lie on the continuum between defunct penny stock and major player I do not know. I believe there is considerable risk that this thing does go south on us if the company is not seriously savvy. (And if they say they benefit from help with locking up certificates, then I believe them.)
3) If we can start moving up, however, then the risks get less and less. Some have said that they are playing this for a bump up to 6 cents. In my opinion, you should be buying more at that price, not selling. In fact, the safe way to play this is to get only a third as many shares once it goes over 6 cents...
4) Why? Well, a move to 6 cents suggests to me that the shorts are letting this get out of control. Also, the company has a lot more possible strategies available at 6 cents than at 2 cents, and still more at 20 cents than at 6 cents, etc. For instance, at 20 cents the company could issue 100M shares into the float and buy back all of RM and recapitalize the entire company. Or, they could feel safer about having RM convert from shares to a loan (adding 12M to debt, but cutting O/S by 600M).
5) IF there is a single major player who owns, say, all or more than the float, then the options get even better. Heck, if I had DEEP pockets, I could buy 150M shares and then get the company to sell me one class B share for $50M with the understanding they would use the proceeds to pay out a dividend of $1 to all non-restricted and non-insider shareholders. The company would be neutral on this ($50M in and $50M out), but somebody would have to pay me $150M and a buck a share to everyone else. After doing that once, the short would wise up and try to buy back in. The sky would be the limit at that point. And the company could straighten out the RM shares and recapitalize for a minimal share issue -- perhaps a private placement to the short at $1 a share. Well, maybe this is outlandish. But there is a lot you can do here if you have a very tightly control stock, a rising share price, exploding earnings, and a white knight financing source through RM.
So, this is by way of me trying to convince myself not to sell once my profits start getting obscene, which will happen around 6 cents. Selling at that point would, I honestly believe, be selling this investment seriously short. I plan to hold at least a quarter of my shares for the long term, having sold the remaining three-quarters for what I hope will be an average share price around 40 cents or better.
Yes, FFF, I should not be mixing drinks with Koolaid...
Wadi Rum
