To All
If you are interested in my thoughts on the source of selling pressure on GPGI, read on.
I think someone is shorting the stock. It's the only explanation I can think of that fits all of what I can observe. I think someone is intending to profit by the collapse and demise of GPGI in the same manner as has occurred for other companies that are commonly grouped into the same category as GPGI. I have read that it is possible to short penny stocks in Canada, so I presume that's where it's happening since GPGI is not marginable in the USA.
I have read somewhere on the internet the last two years that shorters of penny stocks in Canada can assure their own profit by denying a company's access to capital. The share price is driven so low that a company cannot obtain capital. Also, the declining share price in itself becomes a self fulfilling prophecy, as it leads to predictions of further declines and questions about unknown negative fundamentals. Zeev's thoughts expressed here are a case in point.
My conclusion is based partly on having discarded the notion that the share price is telling us that there are negative fundamentals regarding GPGI that are known only to a few knowledgeable sellers. I think Mike McKay has given us a look inside the company to the degree that I don't know what else of a material nature there would be to know. It's clear that success now hinges on what return comes from Sabin, and that's known to anyone who reads publicly available information. A key point is that I believe what Mike has posted here. I have seen enough evidence to convince me that he does lead a group of investors interested in the long term success of the company. It would also be in his interest to at this point to share his opinions and knowledge of the company. The only inside information I can concieve of today that could explain the continued selling would be that the shipments to Sabin are a bust. But this could only explain the decline of the last few days or so. It would not, for example, explain why the stock got hammered at the run-up in July.
I can easily see how a negative opinion would prevail of GPGI among Canadian brokers dealing with hard mining stocks because of its identification with the DD's. I think such a broker could easily think he is pretty damn smart right now, and he is as interested in selling at 40 cents as at $2 or $1. His game has to be carried to completion.
I have also discarded the notion that there are "large uninformed investors" dumping the stock. Anyone who has put money into GPGI has done so on the fundamental story, and to take a loss at 40 cents just as that story is almost to happen would be stupid beyond belief, especially for the size of investor who could drive this stock down.
I also don't think 144 investors are shorting the stock. I doubt it's at a level now where any of them would make a profit by doing so, compared to the net price they would have paid for the stock. Also, I do not think there is much, if any new money being invested in GPGI 144 shares at this level. I asked Dennis DeNoble about private placements in a recent email. His response indicated they are not actively looking for private placement investors at this time, since they are hopeful that current resources will carry them until they have reached positive cash flow from the shipments to Sabin. (He also said they might not turn down an offer, if someone comes to them, as you can never have too much working capital.)
If my guess that there is substantial shorting going on is correct, I think it means that we are in the midst of a high stakes struggle in which either GPGI and us longs, or the shorter, are going to lose big. (At least we won't lose more than we've invested.) Someone may have a substantial outstanding short interest in GPGI, and in order for their position to be profitable they have to keep the share price down to keep the company in a bad light (hence the stock gets hammered on good news in July), plus they are now also praying for at least a temporary glitch at Sabin.
I have a GTC order in at 3/8.
Randall |
