3SOF

Good morning !

You know that in principle the 3 Stocks on Fire Portfolio doesn't allow for OTCBB or Pink Sheet stocks, only in special cases where the risk/reward case looks very compelling, both from a technical and fundamental perspective.

IBCX presents an opportunity where one can lose 50% in a few days (or even in one day, beware), or make 10 times the money invested in a short period of time. I think the rise would occur over a short period because this is a market inefficiency, not a growth story, not a trend, but a fact not yet reflected by the share price.

Since the risk is high and the liquidity low - the stock traded $456,000 yesterday - we'll only buy 1% of the 3 Stocks on Fire Portfolio, that is, about $3,400. I urge you not to buy a significant portion of your capital in this Pink Sheet stock, preservation of capital is the most important issue for long term trading success. We'll try to get shares between $0.007 and $0.012, let's give it ample leeway.

Here's my DD but you should read this entire thread: IBCX-breakout

«Ok, read this thread (great info, thanks ), the press releases and the company's website and here's how I figure IBCX:

- They probably contracted an investment banker or trader to advise them on getting some investors money so they could acquire the Country Club & Golf Course. I say this because on the balance sheet released on October 23rd and on their website, it shows 200 million authorized shares, 188,937,483 issued and outstanding; This is also the share count you get on Yahoo and www.marketwatch.com.

- Then, on November 22, they release this: IBAC Corporations Board Approves Reduction in Its Authorized Shares by 150 Million. From 500 million to 350 million. But "hey, never heard of 500 million, we thought the number of authorized shares was 200 million !"

- So, the company's plan with all the press releases and marketing (I received information about IBCX on other stocks folders, as they were spreading the information) was to get investors attention and ultimately, money. Anyway, it seems like they were surprised by the market response and got more than they wanted, or got it easier than they thought, so ...

- The reduction of authorized shares from 500 million to 350 million. Since the price of the stock rose 15 fold in 5 trading days, the value they got for their shares rose a lot, so they didn't need to sell to the limit of 500 million shares. Hence the 25% stock dividend.

- This stock dividend of 25% means nothing to me. You get 25% more shares but each share represents 25% less of the company's value. But it's a good marketing tool.

- AussieTrader did good DD on bringing up that NASD regulation, I didn't know about that. I guess most people don't know it either, and that may at least partially explain the 3 days fall out (many people bought because of the dividend news and now are selling because they think it is the ex-dividend date).

- Now, let's get to the interesting point. The current market cap is about $0.009*(350,000,000/1.25) = $2.52 M. The company expects $10.5 M to $11.5 M revenues in calendar 2006. If their 14% net profit margin is maintained, net income will be $1.54 M, so the earnings multiple is 1.64

- If the information presented here is true and the company doesn't increase the number of shares authorized without any word to investors (as it did recently), this stock should rise 10 fold from current levels to reflect the true value of the company.

- These are big "ifs", but also considering the property check Michael did (and bringing out the balance sheet and the math), I think it is worth the risk. You risk, say, 50% if it's all bullshit, and get 500 to 1000% if it's true. Also, technically the stock is at a sweet spot to buy, finishing wave 2 at the 200 day SMA, as Elliot theorists would say.

Thanks for all and good luck »

Trading plan: Buy IBCX between $0.007 and $0.012 (try not to put orders before the open, or we'll create an imbalance at the open, possibly getting a bad fill and perhaps ruining momentum). Just 1% of capital for the 3 SOF Portfolio, never more than $5,000 to anyone, due to liquidity issues.

OK, in at .0075

same in at .0075

In now at .00065 with a small position, figured I cant lose much more than this bloody market has already made me lose today, an dif things go well then I can get some of that loss back.

I've had a limit order at .0061 since the market opened and they are not filling it even when it shows the price is .006, pinksheet stocks are always a nasty business one way or the other. 

Hmmm..  Maybe this can explain why we are down today:

QuoteThis Is a Public Service Announcement
By Bill Mann (TMF Otter)
December 1, 2006

I wish the emails I've received from "nakedstock staff" were remarkable. I wish I could say that I didn't receive scores of emails from semi-literates pumping some worthless stock. I wish that an estimated 20% of all spam email weren't related to stock hyping.

I wish.

Rain Man investing
Nakedstock tells me I need to "hurry" to buy shares of IBAC (OTC BB: IBCX.PK) so I won't miss its 25% stock dividend on Dec. 1. The email shouts out in huge type: "You have to own IBCX as of December 1st to receive 1 free share for every 4 you own."

http://www.fool.com/news/commentary/2006/commentary06120103.htm?source=eptyholnk303100&logvisit=y&npu=y

I have to say that I haven't received any emails from Nakedstock and I receive quite a lot of those but if they are trying to pump this stock they are certainly not doing a good job. Nobody here has mentioned the stock dividend as a reason to buy this stock (well at least I haven't because it is a non event).

There is a lot of other reasons to buy IBCX but TMF Otter unfortunately didn't take the time to discover those

Well it seems we are in for a bumpy ride...

Motley Fool recognizing a pink- amazing

Got some attention now

I believe the drop in PPS on Dec. 1st was from.....

1. Profit taking from longtime holders
2. Shareholders believing that they get the dividend thinking Dec. 1st is ex-dividend date.
3. Fear, people panic when PPS drops on good news.
4. Technical retracement to fib level with 50MA support at .007

Furthermore, if the company was dumping shares, the price would not have stalled at .006-.007 for 2 hrs.

That's why I bought shares near the bottom at .007

Question, if MM's have heavily naked shorted this stock at the top PPS, wouldn't they have to cover before the Dividend payout date on Dec. 15th since they truly don't have the shares they borrowed?

Quote from: bocasva on December 01, 2006, 02:06:23 PM
I've had a limit order at .0061 since the market opened and they are not filling it even when it shows the price is .006, pinksheet stocks are always a nasty business one way or the other. 

They never filled any of it, and I'm glad they didn't.  Might try to pick it up between .004 and .0045

if they didn't fill you at .0061, why do you think you'll get it in the .004's

Quote from: elliemae on December 03, 2006, 04:18:04 PM
if they didn't fill you at .0061, why do you think you'll get it in the .004's

Not completely sure of the nature of your question.
Monday will be a new and different trading day from Friday.  IBCX needs to bounce off .006/.007 strongly otherwise it will seek lower support; but no complain at all if I don't get filled. Like I said, pinkys are always a nasty business and I'd rather play them conservatively or not at all; that's just me.

Sorry, I wasn't trying to sound rude, was just curiuos on your logic

This post was written by anviriling, but as we changed the 3 SOF server (do you notice the website is opening pages faster?) it was lost. I saved it just before the transition:

«I've yet to buy, but I'm thinking more like 2 or 3%. Arkansas, for those of us who live nearby, is becoming a very cool place. Retirees are flocking there by the droves and for good reason: Arkansas is cheap, beautiful, and the climate is splendid. I'm a Texan but we go there trout fishing often. We love the place. It has an historic place in the history of America's westward expansion from about 1812 through the1860s and was such a wild and beautiful place, the Rockerfellers bought it: literally. They did and still do own a whopping chunk of Arkansas and held the governorship in the earlier part of the  20th c. Known all the way through the 1950s for their "penis" shaped signs advertising local "hot springs" or "spas"  (whorehouses) as well as dubious politics right up to the present, it is a state with a lot to offer and a huge change in demographics underway: the state has picked up a huge hispanic populace of late due in large to the job opportunities there in several areas of business. The southern part of the US is the new promise land for a growing number of people at different economic levels.
Now, Rosswood, although I don't know the place personally, sounds very "Rockerfellerish" to me. An old money golf course and club that can attract a lot of highbrow residents. We have several places nearby here to my home that have done the same thing from scratch and we have mosquitos and fire ants to deal with and not nearly the nice weather. Building in Arkansas is cheaper by the yard than just about anywhere else I can think of. The margins on these homes must be attractive. To build such as this in say NY state would entail every permit you can think of as well as several bribes to get it accomplished. So much for the liberal eastern US. Arkansas sound good to me. I think these folks may have something here.

                            regards, mitch»

This thread is great, we should do more Pinks

No, we shouldn't, but it attracts you (and myself), because we know there are a lot of inefficiencies on that micro cap market, so a deep study often pays (well, there's only one problem, dilution may kill any sound and correct analysis).

Michael and elliemae made excellent points explaining Friday's fall. That "Naked Stock Staff" e-mail is a shame, pumping the stock because of the irrelevant 25% dividend (since it is a big number, it works as a marketing tool, but it's irrelevant as the share count will also grow 25%).

I like the way Motley Fool explains the phenomenon:

«This is "Wednesday is fish sticks" logic. You remember in Rain Man, when Raymond Babbitt is about to go apoplectic because he always has eight fish sticks, and sitting before him are only four? So what does Charlie Babbitt do?

He cuts them in half.

A "free share" is the same exact thing as a pizza cut into five pieces instead of four.»

This is really amusing

What Naked Stock Staff and Motley Fool didn't do is to go deeper on the study of IBCX

None of them considered the assets, the revenues, the profits (assuming the balance sheet and income statements published on their website are close to the truth) or the projects. Not even the market cap.

I also enjoyed anviriling's post, describing Arkansas property market, thanks

I guess Naked Short Staff and Motley Fool put many eyes on IBCX for the wrong reasons, but those eyes will start seeing the truth soon. And when the price pops 100% or more in one day everybody will study IBCX and see what we're seeing here.

My only fear, as always happens with Pink Sheets and OTCBB stocks (and on other small cap stocks too), is the possibility of heavy dilution coming underway. There's no way to know if it's coming or not, because a PK can change the number of authorized shares without any word to investors.

I guess that now that they bought the Rosswood property they will get the bank loan to make that $100 M investment in home construction. No bank ever loans money to construction without you owning the land.

They can't possibly think to dilute shares to get the $100 M, that's impossible.

IBCX is now a $1.96 M market cap company with $10.54 M in assets, $11 M revenue estimate for 2006 and about $1.4 M net income estimate for full year 2006.

The earnings multiple seems like 1.4 now. If it's true. I would really like IBCX to move up to the OTCBB, so they would report the 10-Q and 10-K. They're working for it, at least that's what they say:

• IBAC Corporation Prepares To File Form 10 in Anticipation of Move to the OTCBB
Business Wire (Tue, Nov 28)

«The company is working on a fast track basis, and expects to file the form 10 very soon, thus giving the company the ability to trade on the OTCBB.» Let's see what "very soon" means. Well, only 6 days have passed.

Another press release today: IBAC Corporation Signs Sponsorship Agreements for Their Florida Restaurants

Not relevant, I think, but you know Red Sox better than me

This text is getting loooonnnnngggg, I don't know if anybody will read this until the end.

The doubt always is: is the stock extremely attractive and the market just didn't notice it because it was too small, or the market noticed indeed but there are problems we don't see? So, is the market inefficient or is this thread inefficient?

We'll soon find out, but my money is on this thread.