Want to see a post by an investor, in my very humble opinion, is the best on SI or IHUB?
To: Jill who wrote (1488) 4/15/2006 2:01:42 PM
From: rrufff Read Replies (1) of 1505
Hi Jill - I hate answering questions like that. LOL
So should I park my $ elsewhere.
I'm no more qualified to tell you where you should park your money than anyone else. You have to make those decisions. I can only tell you what I did and why. If it's small as you say, then go for it. It will be an exciting ride and like a lottery ticket.
I sold because I feel the total picture's value has not been explained to justify the current price per share. I sold at .074. I feel it will trade between .03 and .07 until more details are given. Consequently, I may very well buy in again at the low end of that range.
In pink sheet stocks, the price is determined by perception largely given the fact that few of the variables are known.
There are some great posters on IHub that give the bullish arguments very well. The best I've seen are from stronglong and spencer. Basically they are saying that you will get a dividend of an OTC BB stock for free and that you are foolish not to take advantage of that. Furthermore, there have been projections, which if believed, could value the entities much higher than current value.
On the other hand, I looked at it this way.
As a value play, based on revenues or earnings or assets or equity, it's hard to come up with something worth more than a penny because the fully diluted shares (after preferred shares) may be as high as 2.5 billion shares. Again, trying to be objective, it is very difficult to analyze as so many of the variables are purposely kept vague to make sure that the maximum move will be had when they PR good news. Today's share price is a function of supply of stock (float) vs. demand for stock (perceptions of value), no more no less.
The PR indicates that some assets will be transferred to the OTC BB company and that some shares will be distributed to HISC shareholders. There is no way to truly value each so one has to look at total value. We do not know the a/s count for the new entity or the make-up of its capital structure, whether the preferred shareholders will get shares of the new company, whether or not preferred shareholders will convert to common, how many shares the HISC entity will retain (and indirectly management which controls most of the preferred sharers). We don't know which assets will be where or what revenue and earnings will be projected and received in which entity.
The only piece of the puzzle we have is that each share of HISC will get a share of the new entity which the PR arbitrarily valued at .01 (.50 divided by 50 shares). For me, I had to decide whether the remaining .064 (now.05) represents a bargain given what I perceived was the likely function of the pink HISC entity after the merger. That's why I decided to sell.
One more consideration. On the last day that you can get the dividend, let's say that HISC is selling for .06. In all likelihood, the next day, HISC will open at .05 if the new company opens at .50. This is simple math and it describes a truism that mere shuffling of paper does not create value.
After that, anything can happen. The new company could go to $1 or more. The pink HISC could go up or down. I suspect it will go down for awhile, at least until they show significant actual sales. Mathematically, you lose if the new company goes to a buck and the old company goes to less than .04.
For me, at this price, there is too much risk. At .02 or .03, I would likely change my mind.
As I said above, my opinion has no more value than any of the posters here or on IHub.
I'm just wondering if can ever get there! Now that's going deep!
Bravo! Bravo!
GB-ND
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