copied from RB: there was a 504 with just under 30million shares.. and my instincts were right.. this poster says they have been gobbled up already.. most likey they were and so I agree in part with this poster: nice reading. jim
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By: BKR
Reply To: 27053 by JimB Sunday, 25 Jul 1999 at 9:40 AM EDT
Post # of 27085
JimB - Next Weeks Volume/Price Activity & Outlook
In your Post you said that 10 million share days should move the price along quite nicely, you also implied that the price might drop off a little on volumes below that level. While I agree with much of what you've written concerning the current outlook and price/volume relationships etc., I do not agree with the 10 million share volume figure - IMO the stock will do just fine at volumes of a great deal less than that.
Since you appear to be an experienced investor from the tone of your posts, let me add a few additional facts to add to your DD folder on this little piggy which might lead you to reach a conclusion more in line with my own thinking. If you have erred in your post, you have erred on the side of conservatism, and there's nothing wrong with that.
Many of the new posters here wonder about the huge price jump and volumes at the end of May and the subsequent fall-off in price. Taken at face value, the chart looks like a typical pump & dump operation, which it really wasn't, but it isn't obvious either without further research. In order to properly evaluate otherwise, however, it is important to have a full understanding of the factors at work at that time to be able to forecast how things might work out in the weeks and months ahead.
During the month of May it became apparent to many of the stockholders that the company was on the verge signing its first contract, based upon statements attributed to management on several occasions, including confirming comments made during a visit by stockholders Wendy Jakeman and her husband to the corporate offices. If we had ready access to the corporate minute book today, I believe we would find that the company did in fact have a contract available to it, but that the board decided to reject it.
In retrospect, while certainly not a pump and dump, I have some reservations as to whether the company had all of the necessary "ducks in line" to have been able to perform the things required. There has been great progress in the past two 1/2 months since that time, and I feel the company is much better positioned today to be able to take on contracts and perform them successfully.
It is not obvious from the share/volume statistics, but the company completed a 504 offering at the end of May (see current newsletter) under which there were 24 million additional shares sold by the company at 4 cents per share. Many of those shares were sold by the company after the market price had already begun to increase above the 4 cent mark. While many of the shares were restricted since they were sold to insiders, probably 6 to 8 million were added to the float at the same time as the price was increasing. Although many of those shares are still held by longs, a substantial portion of the shares were sold and had to be absorbed into the float. During the fall-off and accumulation phase the number of shares held by longs continued to increase, as the "weaker hands" grew impatient. Many of the longs - realizing what they had, added to their positions, creating an environment where today the stock can move up on substantially less volume than before and is less vulnerable to declines than in the past. At this point in time there are actually fewer stockholders than before, with quite a number of persons controlling more than 1 million shares each. In addition, the "longs" on this board easily control 25% of the total float on this stock, and you can see how we stick together.
There was a lot of bashing going on for the last two weeks prior to the current RIG report being issued, a fact which I think the MM's may have either noticed or helped along a little, because somehow they ended up selling more than they bought by about 6 million shares. They may have been banking on being able to walk the price down a little more. In any event the broad distribution of the RIG report probably caught most people by surprise. Some of the longs on this board were not surprised by the E-Mail blitz however, because we had been expecting something of that nature. Due to the number of day-traders who inevitably show up at events such as this, the real "net" volume on Friday was probably closer to 7 million shares, with in-and-out trades accounting for the remainder. Many of the "net" shares were purchased, IMO, in the hour prior to closing. Since the "longs" weren't selling, these shares had to have been sold "short" by the MMs. If the volume continues on an extended basis, which I think it will, the MMs will be increasingly hard pressed to maintain prices at anything close to the current levels. Like you, I do expect them to try to play some "games" on Monday and Tuesday but I don't think they will be very successful.
We all know that a press release is imminent. As a result, don't expect much in the way of selling volume from existing shareholders, some of which have been waiting faithfully as long as 4 years to see the company negotiate its first contract. We also know the company is negotiating several more contracts at the same time, with related news releases to be issued within a relatively short period of time. As a result, there is very little upward resistance to be encountered before the stock reaches 40 cents, and the MM's are going to need to provide most of the "net" shares up to that point. Since the MM's are going to be very short long before then, the resistance level will probably be shot through with ease.
You have mentioned in your post something to the effect that the company should benefit greatly from the International Swine Semen Conference on August 8-11. I agree - Struthers is a sponsor of the event - in addition, this conference could not have come at a better time for the company. For those who don't know, this conference is huge in the industry, being held only every four years.
During the past two weeks I have been studying the price/volume relationship during the heat of the bashing that was going on. I noticed that on days where there was over 4 million shares traded, the price traded at a higher level the majority of the day, even though the closing price may not have reflected it due to the spread on the bid/ask. At 2 1/2 million the price would sag and in between would trade about even.
After considering everything I have written here, I think that the stock only about 5 million shares in daily volume to maintain daily price increases in the future and that a level of at least 40 cents can be easily maintained, even with volumes of less than that. With news - and there will be news - this stock will be going at more than $1.00 a share. My personal one month target is $2.00, for reasons I will discuss in other posts. Believe me, if the contracts are only 1/2 as good as I expect, STRU may very well be selling at more than $5.00 by the end of the year.
BKR
(Voluntary Disclosure: Position- Long; ST Rating- Strong Buy; LT Rating- Strong Buy)
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