All: Another ho-hum day with ISGI. 2 million shares traded. The same cast of characters playing their game today. Enough on that.
Its nice to see the comments in regards to my proposed reverse split scenario. For the most part it seems like most people agree with my assessment while some mentioned "bloodbath". A couple of more thoughts....
In no way should ISGI consider a reverse split unless they had a substantial Investment Banking partner to do it with. Otherwise it WOULD be a bloodbath as the shorts would continue to attack the stock irregardless of the fundamentals. IF one would occur, I am of the opinion that the stock would initially be under attack as the shorts would short into the reverse with hopes of driving the stock even lower after the split is consumated. This strategy would be circumvented IF we had a viable IB to "stand in the gap".
Again, I am of the opinion that this is the only solution for the company to get out of the morass that ISGI is now in. The company has never been in better fundamental shape yet we are at the lowest bid price in the past 4-6 months. At todays closing bid price we have a $51 million marketcap utilizing 75 million shares out fully diluted. 1/2X this years revenue? Is that a fair value for a telecommunications company that owns 10 switches?
As Bob Ponko pointed out in his excellant post, the market will EVENTUALLY catch up with this company's fundamentals/financials. But why not correct the obvious manipulation incentive that currently lies in this stock (perceived HUGE float) and expedite the process? What this company and stock NEEDS is new MM's and a smaller float. If you talk to any large wire house they will tell you that they will not get involved in "penny stocks" (this is what makes PWJC's presence interesting). If a reverse is the catalyst to attract new IB's and market support, I am all for it. Otherwise we will always remain at the mercy of these vermin.
Lets play with some numbers to see how it might work. ISGI/TWT has stated that they will do in excess of $100 million. Lets say they can have a conservative net profit of 8% or $8million. That would be .11EPS utilizing the 75 million fully diluted figure. A conservative 25PE would be warranted, so we would trade at $2.75 per share. IF the company can do these types of numbers, would it not be prudent to put your penny stock days behind you via a reverse? Would not the shareholders be benefited via real price appreciation when the stock can trade on its own merits instead of penny stock manipulation? Especially if the reverse is the KEY to new MM's and support!?!
Some people might say, "Well Flint, all reverses are bad and I'll get hurt. I own this stock at $1.25!" To the contrary, heres why we would benefit (I have paid as high as $1.28). IF the company did a 1-10 reverse and decreased the float from 23 million to 2.3million. Decreased shares out from 75 million to 7.5 million. Turned the .11 cent profit to $1.10 profit, everything else remains constant. The ONLY thing that changes is the price of the stock goes higher and the SUPPLY of stock that is available goes lower. The DEMAND for shares now increases as there are less shares available for this profitable Telecom company that is no longer a penny stock. New IB's can now make a market that were precluded before hand. Institutional investors can now take a position. NMS would also be in the cards. Where would this stock trade to? If Diana Corp traded to $120 with 1/3 the revenue and not profitable, would ISGI trade to $12.80 which would allow me to break even on my $1.28 pre-split purchase? I believe it would and then some.
The BIGGEST benefit would be REAL MM's and no manipulation. If these extortionists will never let this thing go, how are we ever going to trade above $1.00? Yeh we might get it going with these types of numbers, but we will always be at these scumbags mercy until we can attract a larger IB. How can that happen if we remain a penny stock? Can we reach $2.75 with 23 million in the float and no MM's OR $27.50 with 2.3 million in the float and REAL MM's? IMO there is NO COMPARISON to what scenario is the best.
I am mentioning this reverse because I am sick and tired as an ISGI shareholder putting up with what we have to put up with in the marketplace. I am well aware of the fact that this is all contigent upon the company doing the numbers that they say they will do. I believe they will. (Strong management background with Salinas and CEO Lents has a Who's who in Fortune 500 clients with his Credit Unions). I am encouraged in seeing the fundamental progress that the company has made since the TWT acquisition. It seems like everything is falling into place except the market dynamics. With the talk of Seth L trying to approach Lents, why not present a reverse scenario to the company and see what they have to say? What do we have to lose? We obviously have a vested interest as co-owners in the company? Maybe they have already discussed this? If not, lets bring it to there attention.
In closing, I will remain a patient investor whatever the company decides to do with the stock. I feel ISGI has a very bright future and I will continue to put my money where my convictions lie. I have sliced this thing every which way and everything points positive. Am I missing something? I doubt it. Frustration is what I feel right now. The churning of the market and panic induced selling is not fun to watch. The solution is obvious to me.....
John |
