POCC.OB

[David Randolph]

Hello

I've been studying several stocks over the last couple of days, particularly CAR, ZNH, DYII and POCC.OB.

CAR is Avis Budget Group, I'm sure you know this car-rental company, I guess it is the largest in the World. At $2.5 B market cap, way below its historical highs and turning back to profitability and growth it seems like an ideal turnaround play. However it seems close to fully valued given the next 12 months fundamental prospects.

ZNH is China's major airline, with tremendous historical growth and it just turned profitable. However the stock is already up 220% in 2007 and seems particularly stretched now, as it rose about 60% in just the last couple of weeks due to all sorts of rumors. The stock still looks attractive from a price to sales ratio perspective (and what you can see from potentially 1.3 billion people flying around), but I'm a chicken and won't buy it this high, will wait for a pullback.

DYII is a $100 M market cap company which just delivered a very strong quarter with 61% revenue growth from the year ago levels. It rose quite a lot already, but it is still trading below 10 times earnings if we take this latest quarter as a reference. I truly enjoy the company's business model (it builds hospitals and then let's doctors and other hospital personnel take an interest) and the prospects of the new hospital they're about to build in Shangai (they currently have three units in the US - it is a US based company) looks very promising. I like the story a lot but I'm somewhat afraid the last quarter was a one off event and will look for more fundamental confirmation as the stock consolidates the 220% one day rise it had when it reported earnings

Finally we have POCC.OB. The company wasn't always an OTCBB traded stock and I believe it will soon reemerge out of the OTCBB back to the Nasdaq. The chart is very powerful, but what I like the most are the fundamentals.

The company has been very aggressively making acquisitions lately and it now owns 75% of RVEP, a Nasdaq listed company with a $28 M market cap. RVEP just made an $18 M acquisition of a company which had $3 M in EBITDA in 2006. POCC's market cap is $26 M and even though the stock came off from a high of $11 in 2000 to a low of $0.5 in 2006 and 2007, there wasn't any relevant dilution, which I appreciate.

POCC is going from oil & gas distribution to oil and gas production. This seems like a major change. The company still isn't profitable but the $33 M in revenue it had in the 2nd quarter alone (for a $26 M market cap) makes me comfortable.

I know this is incomplete information (it always is), but I feel like buying 6.66% of the Main's capital in POCC.OB and ask more questions later.

The Trading Plan is:

Buy POCC.OB, 6.66% of capital as always (between $1.6 and $1.8 ).

[Dracull]

Regrettably, my broker IB doesn't allow me to buy this one. Good luck to all than can.

[David Randolph]

Regrettably, my broker IB doesn't allow me to buy this one. Good luck to all than can.

I guess you're not the only one Dracull, volume is rather low ... I bought just half a position and will buy the other half on a bullish breakout of the $1.80 short term resistance level or on more fundamental study.

I'll update the initial comments after the close.

[Garoh]

Hi David welcome back 

Best entry point will be around $1.50
This is a very nice pick and chart looks cute

[David Randolph]

Hi David welcome back 

Best entry point will be around $1.50
This is a very nice pick and chart looks cute

I don't know about $1.5 Garoh, I got just half a position at $1.7 and wish I got it all.

Institutions have been accumulating POCC.OB, look at, for example, this Strategic Turnaround Equity Partners LP Cayman:

On March 17, 2006, they had 375,646 shares:

http://www.sec.gov/Archives/edgar/data/893813/000114420406010473/0001144204-06-010473-index.htm

Then, on August 24, 2006, they had 688,648 shares:

http://www.sec.gov/Archives/edgar/data/893813/000114420406035588/0001144204-06-035588-index.htm

On April 12, 2007, they had 1,268,805 shares:

http://www.sec.gov/Archives/edgar/data/893813/000114420407018428/0001144204-07-018428-index.htm

And on May 29, 2007, they had 1,339,605 shares:

http://www.sec.gov/Archives/edgar/data/893813/000114420407028998/0001144204-07-028998-index.htm

And this isn't the only institution accumulating shares.

This issue isn't enough to invest for the long term in POCC.OB, as I like to do my own thinking, but it sure is comforting to have institutions on our side, especially when we're talking about an OTCBB traded stock.

POCC.OB is a somewhat complicated situation ... I see that RVEP will pay $1.25 dividend per share:

• Rio Vista Energy Partners Expects To Pay Distribution Arrearage of $1.25 Per Unit
Business Wire (Tue, Jul 31)

And at the same time I see POCC.OB taking a 75% interest in RVEP's "general partner":

• Penn Octane Corporation Increases Ownership Interest in Rio Vista GP LLC
Business Wire (Mon, Jul 23)

I still need to study some more to get to a very strong hand on POCC.OB and increase my stake to 6.66%, but so far I like what I see. It's just that the company's 10-Q is 60 pages long and I still didn't get time to read it all.

I'll keep holding POCC.OB.

[David Randolph]

It will take me all afternoon to study POCC's and RVEP's (where POCC has a meaningful stake) 10-Q forms. For now I'll just hold my 3.3%  of capital in the stock and will make a conclusion for Monday's session, about increasing the position or selling what I have.

I confess that at first the stock looked very attractive, but now I need to study more to know if what I saw is the truth or not.

[realcoolhead]

David, looks like the 75% stake in RVEP's general partner, not RVEP itself. I don't know how much difference it is though.

One problem I see in this OTCBB stock trading is, it can be very hard to sell when you need to. One time I was trying to sell an OTCBB stock at its bid price, but it sits there for hours and couldn't be sold. Later I was told in the case of OTCBB, the bid/ask is just a "suggestion". Their market maker is not committed to buy or sell.

[David Randolph]

David, looks like the 75% stake in RVEP's general partner, not RVEP itself. I don't know how much difference it is though.

Right, POCC.OB owns 75% of RVEP's general partner, which owns just 2% of RVEP:

«On September 30, 2004, Penn Octane completed a series of transactions that (i) transferred substantially all of its owned pipeline and terminal assets in Brownsville and Matamoros to its wholly owned subsidiary Rio Vista Operating Partnership L.P. and its subsidiaries (RVOP) (ii) transferred Penn Octane's 99.9% interest in RVOP to its wholly owned subsidiary Rio Vista and (iii) distributed all of its limited partnership interest (Common Units) in Rio Vista to its common stockholders (Spin-Off), resulting in Rio Vista becoming a separate public company. The Common Units represented 98% of Rio Vista's outstanding partnership interests. The remaining 2% interest represented the general partner interest.»

All the news that pushed POCC.OB up were RVEP related, but POCC.OB owns just 2% of RVEP. Therefore I see the rise was unwarranted and believe POCC.OB's value is substantially less than what it is now.

One problem I see in this OTCBB stock trading is, it can be very hard to sell when you need to. One time I was trying to sell an OTCBB stock at its bid price, but it sits there for hours and couldn't be sold. Later I was told in the case of OTCBB, the bid/ask is just a "suggestion". Their market maker is not committed to buy or sell.

Yes, that's a problem realcoolhead, another one is that many times the business model is very complex and sometimes it also happens that common shares don't represent the company.

In POCC's case what appears to me, after extensive study, is that the company was going bankrupt, but management sold the company's assets to investors in a spin-off and was able to keep their well paid jobs. However, POCC's common shares almost don't have any value now ... unfortunately it took me a lot more time than usual to see this, and at first sight it looked like a great opportunity.

I'll keep away from OTCBB traded stocks in the future.

The trading plan is:

SELL POCC.OB.