Why I am still bullish on HERC, MANAGEMENT, MANAGEMENT, MANAGEMENT..
Management is the key to any small cap company. HERC is a small company that needed to expand. HERC completed their first private placement through GKN Securities in April of 1996. HERC also completed a second private placement in December of 1996. Two private placements immediately brings about concerns dilution. However, according to Steve Carl, there shouldn't be a need for another private placement. Do you believe MANAGEMENT? I do. The Carl family owns approximately 20% of the company. Steve and Shelby bought and were issued approximately 410,000 shares of the first private placement. Is the company expanding? I think so. If Steve states "there shouldn't be a need for another private placement" (quote from the Calgon conference call in May), then I would think that the company is beginning to produce enough cash to fund operations. This should satisfy the dilution of stock concern. The ICING ON THE CAKE should be earnings for the third and fourth quarter.
HERC in my opinion is one step away from being a great stock to own. That one step, EARNINGS. So lets wait until the third and fourth quarter to see. If you believe management, I wouldn't wait. HERC's management recognizes the the enormous potential of this product, and is the process of executing a well thought out business plan that has positoned HERC for some major growth over the next couple of years.
I believe the stock price should start to move up considerably in anticipation of future EARNINGS. Speaking of stock price, remember, we are dealing with market and what makes stocks go up??..more buying that selling!! As I said before, HERC needs outside interest.
There are no hypsters involved with HERC. If you noticed HERC's press
releases, they rarely report contract dollar amounts until the work is completed. Thus,HERC could be working on some major contracts right now. The outside interest may be waiting for HERC to show that it can be profitable before taking positions in the company.
In any event, I believe HERC will be profitable soon and that revenues
will be close to the 9.7 million dollar that is estimated for 1997. If this happens, the outside interest will come, either institutional or individual, it will come.
I hope this clears up some questions on why I have faith in this company. The shareholders meeting is scheduled for 4 August 97. I would guess that 2nd Qtr. earnings may be out before the meeting.
Later,
ralph |
