Here is how I see it (and please attempt to correct me if you believe that I am mistaken).:
When LLEG was trading on the pinks a little over 2 weeks ago, a market was made for the stock by the Market Makers (MMs). To put this into an easy to understand example, picture an outdoor market with vendors all selling the same item. Let's say all the vendors are selling bricks and the brick manufacturer only produced a certain number of bricks. Consumers would walk around the market from 9:30AM - 4:00PM buying and selling bricks. The price per brick depended upon the proportion of how many bricks were being sold to the vendors vs. how many bricks were purchased from the vendors. On days when consumers decided to sell bricks because they thought they could get a fair price for their bricks, they would walk up a vendor who would bid a set price for the bricks. Not all the vendors sold bricks for the same price, so naturally you would sell your bricks to the vendor who would give you the most money for your bricks. Some days, consumers would buy bricks from the vendor who would sell them bricks for the least amount of money. After consumers purchased a certain number of bricks, the vendor can decide to raise the cost of the bricks, thus also raising the price at which consumers could re-sell their bricks for.
If, on a given day, more consumers were selling bricks than buying bricks, the vendors would lower the price of the bricks so that they could buy more from the consumers for a lower cost. Sometimes, consumers would see other consumers selling their bricks, not know why, panic, and sell their bricks thinking that the cost of the bricks was going to drop substantially. Other consumers, recognizing that bricks are worth more than the vendors are selling for, would buy bricks to sell later for a higher price. A few days out of the year, consumers would buy more bricks than usual. This would cause other consumers to think that bricks are going to be very expensive soon and lead them to stock up on bricks, further increasing the price per brick.
Overall, the price per brick was affected solely by how many bricks the vendors had available to sell. If there were a lot of bricks owned by vendors, then the price per brick can be kept low since the demand is low. Conversely, if the number of bricks owned by vendors began to decrease, the price per brick would increase since the demand is greater and the supply becomes exhausted.
Some vendors chose not to buy and sell these bricks. They just laid in the sun and promised to buy bricks for very cheap and sell what little bricks they had for a lot. These vendors didn't see the brick trade to be very lucrative. However, 5 or 6 vendors saw the market for bricks and decided to adjust the prices based purely on supply and demand (and ever so often a little manipulation, to try to buy a few bricks for cheaper than the average consumer is willing to sell for).
Fast forward to now. The vendors have closed up shop and the only people left in the outdoor market are the consumers who bought bricks and are now wondering what to do with all these bricks they've purchased. Some consumers believe the market for bricks will come back and some consumers would rather sell their bricks for whatever they can get and switch to trading rocks.
Since the vendors are not buying and selling bricks, the number of bricks currently owned by the consumer collective can never change. This is because bricks simply change hands from one consumer to another. The price per brick is no longer determined by supply & demand, but by what these consumers think the price per brick should be. Some consumers are frightened because the vendors the relied on to buy their bricks when the consumer no longer wanted to own any bricks are gone.
Bricks are now selling for cheaper than they have in several years. For every consumer selling a brick, there is a consumer buying that very same brick. Some consumers are accumulating bricks. If a vendor returns to the outdoor market and begins buying and selling consumer bricks again, the price at which the consumers were bartering at is now a lot lower than the actual market price for a brick. Consumers who sold their bricks for cheaper than they were actually worth are upset because they could have gotten more for their bricks, while those who bought discounted bricks are rejoicing because the vendors are buying their bricks for much higher than the consumer paid. If vendors never return to the outdoor market, then the bricks will always be bricks and the value will always be purely speculative.
If the wind begins to blow, those bricks are going to look very appealing to consumers who never before thought of buying bricks.
Laidlaw is in the biomass industry. We all know this to be true. We also know that this industry is heavily regulated and at times, sluggish. Not the industry to be in to make a quick buck. However, the industry is great for those with a vision of the future and imagine LLEG biomass a part of it.
What are your bricks worth to you?
Matthew
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