Sunday, November 12, 2006

A Safe Pink Sheet Investment? YOU BET!!!

Dan Holtzclaw here, author of the best selling Little Black Book of Microcap Investing. This book is available at Amazon.com for up to 30% off. The 1st printing of the Little Black Book has already sold out and the 2nd printing is on the way! I have an interesting stock for you this week. I am very excited about this one. You will see why...

Are you tired of OTCBB and Pink Sheet investments that must be constantly monitored? One common complaint about OTCBB/Pink Sheet stocks is that investors just don't have the time or energy to babysit these high risk investments. If you invest in these stocks, you know the scenario. While many OTCBB/Pink Sheet stocks certainly do enjoy incredible runs that achieve astronomical gains, these runs are often short lived and fizzle out just as fast as they come into being. If you were not watching your computer on that particular day and time, you could miss the entire run completely. Over the years, I have seen OTCBB/Pink Sheet stocks rise and fall hundreds of percentage points within a matter of hours. If you were out of town or stuck in an important meeting, you would be out of luck. The worst part of this scenario is that once a stock makes its big run, investors often move onto the next "hot stock" and you will be left holding the bag as interest in your stock quickly fades away. This situation can be avoided by placing a limit sell order, but many investors don't do this for a variety of reasons.

What if there was an OTCBB/Pink Sheet stock that broke this mold? A stock that could offer stout gains, yet shed the requirement of continuous scrutiny? Well, my friends, there are a few out there. One of these stocks is FutureVest (Pink Sheets: FRVT). In my opinion, this stock may be one of the safest bets that I have ever seen on the OTC market.

For starters, let's examine the share structure of FRVT. According to Fidelity Transfer Company, FRVT's transfer agent based out of Salt Lake City, Utah, FutureVest has 30,016,515 total shares issued and outstanding. Of these shares, the transfer agent indicates that just over 27 million are restricted. The public tradable float for FRVT is 2,914,129 shares. By all measures, this is an extremely small float, especially for an OTC stock. Now, here is the unbelievable part...the actual available tradable float for FRVT is rumored to be a mere 200,000 shares as nearly 2.7 million non-restricted tradable shares are said to be held by investors and hedge funds that are "friendly" to the company.

200,000 shares? Is it possible for a stock to have a float that small? If you examine the recent trading data for FRVT, the 200,000 share float sounds plausible. Over the past 10 days, FRVT has risen over 18% on average trading volume of just over 4,000 shares. I have been monitoring this stock and it seems as if FRVT gains a nickel each time someone buys shares in the company.

With FRVT being an OTC stock, and an "expensive" one at that, one might fear that this stock is a prime candidate for shorting activity. My investigation of FRVT has indicated that a number of institutions own a substantial number of shares in this company. Apparently, these institutions have owned these shares for many years and acquired them at prices considerably less than where the stock currently trades. These institutions are friendly towards the company and have protected it against attempted shorting activity. When a short appears on the horizon, these institutions unleash a flurry of buying activity that effectively kills the short. As such, the short position against FRVT is non-existent.

In the world of OTC stocks, share control is one of the most critical aspects of success and is often overlooked. Many OTC stocks have a great story and wonderful prospects, but they have no control over their shares. This is usually due to poor financing deals and issuance of shares for services rendered. This often leads to the precarious situation of large short and naked short positions in addition to wholesale dumping of shares on the market. This, in turn, leads to a death spiral of continually shrinking stock prices and share dilution. This situation is one that you will never have to worry about with FRVT. FRVT's control of its shares is phenomenal. Over the past 7 years, FRVT has painstakingly gained and maintained control of its shares. Between company insiders and friendly institutions, 99.3% of the total issued and outstanding shares for FRVT are said to be in safe hands. In fact, I have heard that the largest individual owner of non-restricted tradable FRVT shares owns 30,000 shares. Essentially, the company has control of almost all of its shares.

One criticism that many investors will have of FRVT is its miniscule trading volume. Agreeably, a trading volume of 4,000 shares per day is rather light. However, let us consider a few things about this volume. First of all, not many people know about this stock. FRVT does not pay for any public exposure and my conversations with the FRVT CEO indicate that the company never will. In my book, this is a good thing. Not paying for public exposure means that there will be no "free shares" floating around waiting to be dumped on the market. Second, FRVT is by all accounts an "expensive" OTC stock. Many OTC investors want stocks that cost a dime or less. Asking these OTC investors to buy a $3 stock is like asking them to dump their Hyundai for a Rolls Royce. Third, shares in FRVT are not easy to come by. Likely due to its incredibly small float, the FRVT MM's do not easily part with their FRVT shares. You can forget about getting FRVT shares under the ask. Heck, in many cases, you can forget about getting FRVT shares at the ask. Oftentimes, when I have attempted to purchase this stock, I have found it necessary to offer 5 cents more than the ask in order to get filled.

Is the volume situation for FRVT likely to improve soon? Personally, I would answer "Yes" to this question. If you look at the trading history for FRVT, you will notice that its volume has picked up over the past 10 days. I am hearing that a group of California based investors has taken an interest in this stock and are beginning to acquire shares. This interest may be due to a rumor that FRVT may soon list on a major exchange. The company alluded to this in its November Letter to Shareholders and its recent acquisitions and current share structure/financial strength are indicative of an impending move to a major exchange. I have heard, and this is simply gossip around the water-cooler, that FRVT could be listed on a major exchange as early as January 2007. With that being said, I expect interest in this company to ramp up considerably over the next 90 days.

Up to this point, I have told you about the share structure of FRVT and reasons for impending interest in this company, but what in the heck do they do? Do you remember CMGI from the internet heyday? FRVT is somewhat similar. When you think of FRVT, think of a stock incubator. FutureVest makes strategic equity and equity-related investments in small and medium-sized companies in a variety of industries worldwide. The company relies upon a focused investment criteria, early stage funding opportunities, and potential exit strategies before any investment is initiated. FutureVest's two operating divisions, Capital Investments and Venture Services, allows the Company to enter an investment at the earliest possible stage and assist in the management of the investment to ensure the goals of FutureVest are met. The operating divisions also ensure that maximum returns are achieved for shareholders.
FutureVest not only invests in prospective companies, they also serve as active directors of their portfolio companies by working closely with, and in support of, management. FutureVest believes that thier relationship with entrepreneurs is based on a partnership whose ultimate goal is building a successful business. This partnership enables FutureVest to work with their management teams to deliver superior returns to shareholders.

Let's look at some of the companies in FutureVest's portfolio:

Company #1: IZECOM. Secure, encryptable email technology. IZEMAIL enables companies and individuals to protect incoming and outgoing e-mail. IZEMAIL is based on PKI ('Public Key Infrastructure'), which is a standard for e-mail and web protection, adopted by the EU and by most governments. Izemail encrypts e-mail messages and signs them with a digital signatures ('certificates'). These certificates are included with Izemail, or you can use your own certificates. Izemail works within your current e-mail infrastructure. There are Izemail plugins for Outlook, Lotus Notes and other e-mail programs, and there is a server version for encrypting and/or decrypting e-mail on the server, between the firewall and the virusscanner and spam filter. Combined use of desktop Izemail and server Izemail is possible.

One very exciting product from IZECOM is its S/MIME encryption product for the Blackberry by Research in Motion (NASDAQ: RIMM). Izemail for Blackberry in conjunction with the Blackberry mobile device allows a user to read S/MIME encrypted email on the handheld device. This should be a HUGE product for IZECOM. As Blackberries are almost exclusively used for business purposes, the demand for encryptable email applications could be tremendous. Personally, I would be willing to bet that RIMM will eventually acquire IZECOM from FutureVest for inclusion of its encryptable email technology into its Blackberry products.
IZECOM does much more than email encryption. For more information, check out their website

Company #2: CipherPass. CipherPass delivers data protection solutions that help enterprises and individuals protect their most valuable digital assets.
CipherPass’ C~suite product line provides the last bastion of data assurance for confidential information. By leveraging your existing business applications, C~suite provides an additional level of protection that is simple to use, very secure and affordable. Headquartered in Santa Monica, California, CipherPass also has operations in Toronto, Canada.
CipherPass trades on the Pink Sheets under the symbol CPHC.

CipherPass clients include:

The city of Beverly Hills, CA
MedicalSuite Consulting and Technologies, LLC
Delisys
GeoTrust, Inc.
PostX
Contego Information Security Services
QD Technology
For more information check out the CipherPass Webiste

Company #3: SolutionNet. SolutionNET is a global company providing IT consulting and services in diverse application areas.SolutionNET consistently delivers quality software solutions to a discerning clientele through its offices in the US, Australia, Singapore, Malaysia, Middle East, and India.
SolutionNet provides online banking serives, e-Remittance, e-Insurance, and more. The company has an extensive list of high profile clients including:

HDFC Bank
Corporation Bank
ING Vysya Bank
BNP Paribas
Canbank Factors Limited
Hindustan Lever Limited
Brakes India Limited
Qatar National Bank
Bank of Bahrain and Kuwait
Shamil Bank of Bahrain
El-Khalifa Bank
Deutche Bank
ABN AMRO
CitiBank
DBS
Standard Chartered Bank
MayBank

For more information check out the SolutionNET website

If you are like me, you are excited about FutureVest. FutureVest has an extremely small float, tight control of their shares, and a robust portfolio. Each company in the FRVT portfolio looks outstanding and has a bright future. When these companies grow, FutureVest benefits as they own a majority interest in each company. In addition to the solid FRVT foundation, there is the aforementioned rumor info...

As always, please see my disclaimer

Saturday, November 04, 2006

Small Floats = BIG Gains

The formula is simple...high demand and low supply leads to increased prices. That simple formula is the basic premise behind trading small float stocks. When there are few shares to go around, any demand for those shares will cause the price of the stock to skyrocket. If you couple a small float with a stock that has a very inexpensive share price, you have a the makings of something magical. Add a little bit of volume to that inexpensive low float stock and you will see an explosion!

How does a 900% gain in one day sound? It may sound ludicrous to some, but this was an actual gain for a small float stock as recently as last week! (see example 1 below)

Here is a small float stock to watch for next week. Walker Financial (OTCBB: WLKF) fits the small float billing perfectly. According to its most recent 10-QSB SEC filing, there were a total of 15,945,220 shares of the registrant's common stock, par value $.0001 per share, outstanding as of August 8, 2006. Of those 15.9 million total shares, 9.8 million shares are in the public tradable float. There have been NO INSIDER SALES of WLKF since December of 2005, and that sale was a measly $1,100 worth of stock. So, we have a stock with a small float and have satisfied ingredient number one. Now let's look at ingredient number two. WLKF has a ridiculously inexpensive share price of only 1.5 cents!

Can you believe that? A share price of only 1.5 cents gives WLKF a market cap of only $239,170! That market cap does not equal 1/4 of WLKF's anticipated yearly revenues! When you consider the fact that most stocks have market caps of 2-5 times their yearly revenues, WLKF has alot of room to grow!

We now have 2 of the ingredients for a stock price explosion for WLKF. The stock has a very small float of only 9.8 million shares. The stock is inexpensive at only 1.5 cents. Now, the only ingredient left to ignite this explosive stock is volume. Add a little volume to WLKF and this stock will catch on fire! It won't take much to get this stock moving. At its current share price, a mere $15,000 will create 1,000,000 shares of volume! Think about this...less than $150,000 in total volume would be enough to trade all shares in the float at WLKF's current price! A few days ago, $58,000 worth of WLKF traded hands and the stock rose 66% intraday. If this stock were to see, say, $500,000 worth of trading volume, the gains could possibly be 200-300%. $500,000 is not a number that is too far fetched. CKYS, a stock that at 2.4 cents is just a shade more expensive than WLKF, has been recently seen trading volume anywhere from $400,000 to $900,000.

To see what is possible for WLKF, look at example 1. Metropane (Pink Sheets: METP) is a stock with a small float like WLKF. In two trading days, this stock rose an amazing 900%! I would also like you to look at examples 2 and 3. These two stocks don't have small floats, but they do have share prices that were similar to WLKF prior to their runs. Both stocks easily achieved 100% gains despite their large floats. When you consider the fact that WLKF's float is anywhere from 7-10 times smaller than the floats for the stocks in examples 2 and 3, you can't help but to get excited!

WLKF has 2 of the 3 ingredients necessary for a price explosion. Take a look at the following examples to see what is possible with small float and low priced stocks. Pay particular attention to example 1 as the stock had a share price and float number that is somewhat similar to that of WLKF.

Example 1: Metropane Inc (Pink Sheets: METP)
Share Price Run: $0.008 - 0.08
Shares Outstanding: ~12,000,000 shares
Shares in Float: ~7,000,000 shares

When I look at Metropane, this is what I envision with Walker Financial. METP has a similar number of shares in the float as WLKF. METP has ~ 7 million shares in the float while WLKF has 9.8 million shares in the float. Over the past week, METP ran from lows of $0.008 to a high of $0.08 for a potential gain of 900%! Most of this gain took place on Monday and the gains lasted throughout the entire day. Similar gains could happen for WLKF with a little volume.


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Example 2: Cyberkey Solutions (Pink Sheets: CKYS)
Share Price Run: $0.012 - 0.033
Shares Outstanding: ~580,000,000 shares
Shares in Float: ~180,000,000 shares

Let's take a look at the recent performance of Cyberkey Solutions. Over the past few weeks, this stock has run from $0.012 to a high of $0.033 for a potential gain of 175%. CKYS has an an estimated 580 million shares outstanding and a public tradable float estimated at 180 million shares. The float for CKYS is 10 times greater than the float for WLKF....10x! If you look at the trading volume for CKYS, you can see that it steadily increased and reached ~7X normal trading volume during its biggest spike.


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Example 3: Global Diamond Exchange (Pink Sheets: GBDX)
Share Price Run: $0.012 - 0.033
Shares Outstandig: ~350,000,000 shares
Shares in Float: ~75,000,000 shares

Let's take a look at the recent performance of Global Diamond Exchange. Over the past few weeks, this stock has run from $0.015 to a high of $0.032 for a potential gain of 113%. GBDX has an an estimated 350 million shares outstanding and a public tradable float estimated at 75 million shares. The float for GBDX is 7.5 times greater than the float for WLKF....7.5x! If you look at the trading volume for CKYS, you can see that it steadily increased and reached ~7X normal trading volume during its biggest spike.


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External disclaimer was removed broken link stockdoconline.com
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*** If you liked this article on small floats leading to big gains, you will love The Little Black Book of Microcap Investing by best selling author Dan Holtzclaw. This book is the current #1 selling microcap book on Amazon.com Get it today for up to 40% off!