BRVO.OB

[David Randolph]

Good morning, I hope you all had an happy ThanksGiving 

Let's see, we've had these news from BRVO:

Bravo! Foods International Enters Into Agreements for $20.25 Million Private Placement of Common Stock

I have three major comments to make:

1) Thinking about BRVO's recent history, you can see how the company's intrinsic value is growing a lot. I'm not talking about revenues or earnings multiples, and I'm not talking about the book value either. I'm talking about what big sharks are willing to pay for the company in terms of its share price (what matters to us, small shareholders).

Let me explain: In July 2005 CCE was going to get control of the company, 51%, paying just $0.25 per share for it. In August 2005, they were willing to pay $0.36 for 18.65% of the company. And now, in November 2005, institutional investors are willing to buy a big block of shares at $0.50 and they have warrants to invest more at $0.80.

We're talking about higher and higher prices to pay for a chunk of the company. I believe $0.50 will be seen as a floor to this penny stock, the stock won't go near or below that level anymore, because if institutions with much more information than us (we suspect) were willing to pay $0.50, why would we sell shares near that level?

2) In terms of dilution, everybody knew this was coming. Even at the Conference Call Roy talked about 270 million shares on a diluted basis, and outstanding there were only 141 million shares.

3) We all listened and talked about the capacity problem the company had. They would sell a lot if they could produce it. Now they have the money to do it, so nothing standing in the way.

I feel the news was great.

Technically we have support at the ascending trendline which for today stands at $0.67 and resistance at $0.80. I expect the stock to continue trading inside this range and ultimately break it on the upside.

[stocky]

Again great analysis David. I want to make a point here. Yesterday at my local Walgreen there were about a dozen orange slammers. I picked them all for my family. The manager told me that they dont have more in stock. Reason: Supplies. If BRVO has enough capital it can stock up as soon as it depletes.

[don]

David: appreciate those comments. They are out of date now. Latest trade was at .635
Would you update your technical reading of where we are going, before I buy today? Thanks Don.

[basonista]

While the trendline support didn't hold today, BRVO has bounced off it's 50% fib retracement so can still considered to be in bull mode.  Former TL support is now resistance with the open being right at it but we'll have to see if it maintains itself as that.  A close above it would be a very bullish sign!  In the meantime, watch for the 50% fib to maintain itself as support.  While I sold BRVO on Wednesday to cover some substantial losses, I agree with David that this is still an outstanding pick and more financing can only help it produce and sell more product.  Good luck to Don and all holders, I still think you have a good one here! 

[don]

Excuse the delay - we lost power for all of today.. this was drafted last evening...so it is now 24hours older!
Gap: good points.
May I comment as follows:
1. backing up to your and Davids earlier posts, if I may:
I ran these comments by RW:
Hello Roy:
let me quote you this, off a discussion  group I participate in:
Quotes from: Gap/David
At least in BRVO.OB we know there won't be much more dilution, since the number of authorized shares is 300 million.David,
Any idea of how they will structure the needed financing ?
From the conversation with IR:
BRVO has alot of expenses to consider.
The are responsible for advertising in the CCE deal.
And they are paying alot of money to ramp up the Missouri production facility.
Remember, the CCE money (warrants) are on the side lines indefinitely, so BRVO needs financing to move forward.
Response from BRVO:
Hi, I really cant comment on this but will do so when ever we have updates.  I agree with the 300mm reference, that is our authorized maximum now.Thanks.  rGW

my comments: I expect/it is likely that the authorized will be increased. Roy is cautious to say the least, this is a good development.
2. re-Quoting from financing IR: The proceeds from the financing will be used for increased production capacity, the launch of marketing campaigns, redemption of 30.3 million
warrants, paying the finder's fee relating to the Coca-Cola Enterprises Inc.
Master Distribution Agreement and general working capital purposes..
my comments: that certainly answers your wish, Gap (so BRVO needs financing to move forward.). It also confirms your opinion that the CCE warrants will stay un-exercised.
3. This leaves us with the same 2 issues which you have addressed:
(i) is it toxic or good? Wish I had hindsight! A holder of stock is relying on Roy and his advisors. So, how competent are they at avoiding those who call themselves arbitragers, but who, in fact are the scum of the earth.
(ii) Revenue projections: the bane of us all! Every prospective buyer has to do his/her own dd. My profession was to to cut through the crap and 'firm up' the numbers.
At this point I am not too interested in forecast sales,  nor the extension thereof – stock price as a multiple of sales. What I do forcus on is the fact, as posted before, that management has obtained a distribution deal with the 600 pound gorilla. I will be watching the gorilla. That is all. Don.   

[don]

My view: Knocking on the bid door, at 635/645. EOM. Don.

[boatguy]

Taking the gamble- bought more at .643!!

[don]

10k at 635 open.
10k at 645 filled  eom. Don.

[don]

While I sold BRVO on Wednesday to cover some substantial losses, I agree with David that this is still an outstanding pick and more financing can only help it produce and sell more product. Hey, basonista. Thanks for the good wishes. I agree with David, the small caps will be tough sledding, heading in to this year end and the prospect of a slowdown in interest rates. For me, I believe that one should only sweat the big stuff. I am in US$ and yet I spend Thai Baht. So, the prospect of expectations of lower interest rates should scare the bejasus out of me. It doe not. It is similar to finding a new friend, who is genuine; or finding a mentor in the business world. Look to your heart and your instincts as much as to any doctrines you may come across. We have 100 years of technology and  yet, we are made up out of millions of years of evolution. The news is not that you are driven by hopes and fears - it is that everone else is too. I appreciate that you sold BRVO at a gain to pay for some losses. That is a wise move. Converting your capital back into something of intrinsic value - cash.  Perhaps now is the time to reestablish your investment criteria/strategy. My strategy is totally unlike the average. I believe that my own skills are only good enough to identify, assess and stay invested in one or two stocks, at a time. As I put it, in an earlier post, BRVO has a  600 pound gorilla in its corner. I will stay focussed totally on BRVO, until that changes. Don.

[don]

Trading update: 12.40 eom. Don.       
Symbol                   Bid   Ask          Last     Change   Volume 
BRVO US U    +    0.655    0.66    0.655    -0.04        1,849,526    

[fill_the_gap]

Don,

As always, great posts. Applaud !!!

Some call me ' Devils Advocate '.  After getting burned by pennies this year, I want to present and research all angles.

Financing is what seems to kill the shareholder value in pennies.  When the companies become desperate, they give away the farm and sell out to toxic financing.  See EYII for an example.  Although a company may make it, the shareholders lose as they are used as collateral.

That said, BRVO may be different.  They have a product we can drive down the street to purchase.  And they are involved with Coke.  We all knew that financing was needed.  It is just unclear at this time who the investors are.  And we will have to speculate on them selling shares.

BRVO is an incredible growth story.  The rewards should be achieved even on the low end of estimates. 

I still wonder why CCE backed out of 51%.  And it bothers me about the 3.25 million versus 4 million.

So 70-100 million for 2006 is what they say.  I will now estimate the low end.
The question is: what multiple do we assign to come with a price projection?  Any thoughts ?

Based on the TA and fundamentals, I bought at 64 today to hold.  We will see.

At this time, BRVO is the only penny that I am willing to buy.

[oicpecnoc]

David,

In regards to point #1, at the end, you raise the question, "why would we sell if people much more in the know were buying at .50 .  Logically, I totally follow you, but I have a personal experience with two companies, bivn and incx that cause me to be suspicious.

I've tried to shake the specifics from my memory, but incx did a private placement when the stock was at $24 I believe for $18, now it is less than $6, less than a year later.  Bivn pp'd at I believe $7.50 recently and is below $6 as we speak.

Neither of these stocks are BRVO, and one could list the ones where the pp price held, and the escalated, however, all private placements are not the result of "belief" in the company in my opinion.  Particularly in the case of incx, in hindsight, I don't believe the company that gave them the cash thought for one minute that company was worth that share price.

I am leery becasue I typed the "somebody smarter than me thinks its worth xyz line" a number of times as I held on the way down to 12.  I was wrong then, and I will always be suspect of that logic in the future.  I do appreciate and agree with your other points.

By the way, take this with the humor it is intended with, but I have seen shirts that say things like, "I paid $300 for the 3sof service and all I got was this lousy t-shirt."

I could not say that at this point, because I have gotten good information, and no t shirt.   

[don]

Gap - good post earlier by you, as you motivated me to post!
The question is: what multiple do we assign to come with a price projection?  Any thoughts ?
I don't have any idea. I could crunch numbers. But last time I did that was DMX and I believe many of us bought in to our own projections;, instead of evaluating and identifying  what was crap (former) mgt.
I have set myself 2 objectives.
1. I have a 10% /$1,000 profit plan for my trading stock. Every time I can sell at that, I will do so.
2.I will hold my investment stock for some clear idea (or some wild moves in the stock ahead of same!) of what Q4 is going to look like, for revenues. Sorry if this appears unimaginative! I need, one more time, to be disciplined. Don.
PS: on reflection, let me say no s&m intended! D.

[David Randolph]

Good morning, I hope you all had a nice weekend 

Great comments on the BRVO.OB thread, as usual. Let me address three:

David: appreciate those comments. They are out of date now. Latest trade was at .635
Would you update your technical reading of where we are going, before I buy today? Thanks Don.

Hello Don, as you know I don't comment on intraday activity, just when the market is closed, every trading day. Also you shouldn't trust intraday technical signals, just signals on close.

BRVO.OB closed at $0.66, I know I said the ascending trendline was at $0.67, but this is too close to call, just a very small change at the slope and the stock held the trendline on close.

I'm glad you bought BRVO at an average price of $0.64, I believe you'll do well.

I still wonder why CCE backed out of 51%.  And it bothers me about the 3.25 million versus 4 million.

We'll never know, why not ask CCE for a reason, you're the man who talks a lot with IR  Thanks. I think management gave a credible explanation for the $3.25M versus $4M.

So 70-100 million for 2006 is what they say.  I will now estimate the low end.
The question is: what multiple do we assign to come with a price projection?  Any thoughts ?

Maybe that will be revised lower, they will tell us about that in January. Probably we'll need to start thinking about earnings, not revenues, in the future. I would like to hear the company on when they expect to deliver a profitable quarter.

Based on the TA and fundamentals, I bought at 64 today to hold.  We will see.

Good luck 

At this time, BRVO is the only penny that I am willing to buy.

I agree, maybe in a few weeks/months pennies will be hot again.  I hope so.

David,

In regards to point #1, at the end, you raise the question, "why would we sell if people much more in the know were buying at .50 . Logically, I totally follow you, but I have a personal experience with two companies, bivn and incx that cause me to be suspicious.

I've tried to shake the specifics from my memory, but incx did a private placement when the stock was at $24 I believe for $18, now it is less than $6, less than a year later. Bivn pp'd at I believe $7.50 recently and is below $6 as we speak.

Neither of these stocks are BRVO, and one could list the ones where the pp price held, and the escalated, however, all private placements are not the result of "belief" in the company in my opinion. Particularly in the case of incx, in hindsight, I don't believe the company that gave them the cash thought for one minute that company was worth that share price.

I am leery because I typed the "somebody smarter than me thinks its worth xyz line" a number of times as I held on the way down to 12. I was wrong then, and I will always be suspect of that logic in the future. I do appreciate and agree with your other points.

By the way, take this with the humor it is intended with, but I have seen shirts that say things like, "I paid $300 for the 3sof service and all I got was this lousy t-shirt."

I could not say that at this point, because I have gotten good information, and no t shirt.

Great post oicpecnoc 

Probably I didn't explain myself well, I was writing exclusively about BRVO, a generalization is dangerours. I didn't said, or didn't meant to say, that when there is a private placement at a level the stock probably won't go below that level, not at all. But I think in BRVO that's the case.

What's the difference between BRVO.OB and the stocks you mentioned (INCX and BIVN)? The ability to sell with a profit.

The financing to INCX and BIVN produced an instant profit for the financiers. They lend the money to the company, got shares, sold those shares in the open market and booked a profit.

But, can they do it with BRVO.OB? I don't think so. If the financiers were to unload 40.5M shares in the open market at this moment I think they would collect an average selling price lower than $0.50, which is the price they paid for the shares.

We know this, they know this. So I don't think they are short term traders looking for a quick buck. They can't be. Since they're not short term investors probably they are long term investors and they are that because they believe in the company's fundamentals and prospects, as we do.

Lol about the t-shirt comment, the t-shirt was already sent by regular mail 

Now we'll do our best so you can never complete that popular sentence 

Considering BRVO.OB, I still think Friday's news was positive and the stock will recover today. Whatever happens, I'll continue holding for the long term.

[don]

To that guy who posted me privately: Let me reply publicly.
I am convinced that yours and my 'chat' is  worthy of publication.
Mainly because - people like variety!
You asked me:
how do you decide how much to put into each of your picks?  Have you set a limit on the number of stocks that you own at any one time?  Do you have a set loss % before you sell a stock?

Before I answer, understand that I had a bit of an career  'epiphany', at 52.  I decided that, using the analytical side of my brain exclusively produced way too much stress (which my personality was addicted to) and was likely to reduce the number of years I was going to live on this planet, and concurrently, screw up my relationship with my wife who was allergic to stress.  Since I had found my soul mate, and I liked wine and good food and a very few good friends; I figured out that  I did need variety in my life...if I wanted to stay here as long as I wished to enjoy  life..
So, I do use my analytical expertise, but in a very limited way; together with a respectable proportion of intuition. .
That said:
1. how do you decide how much to put into each of your picks?
I never put more than 20% of our total net worth in the stock market. My wife refers to it as 'gambling' and....what can I answer to that? I have 10% in cash, 10% in very liquid interest bearing (non equity) investments and the balance of 70% is in property: being our home, our rental properties and our speculative land buys. We have lived in our home for 20 years at a time (we are Euro trash) - so that tends to reflect a lifestyle choice, rather than an investment philosophy. Really, why would you ...no, I am not going to go there...
2. For an individual stock, I never say 'never'. Yes, I would like to say I practice discipline. But, I do not. If I like a company's prospects,, it can take 50% of my investing dollars. (I do hedge a bit by buying in different currencies). I made a ton of money on BIDCOM and lost a ton on DMX.
3. If I feel sick about my investment -, and if I think that daily volume is indicative of something negative, I may sell, regardless of profit or loss %'s.  2 recent examples would be:
(i) CMMN - I like the company; it has revenue, growth; great somewhat unique products, no debt; and profitable, marginally -   and, I have made some money trading it between 90 and 1.10.
But, very recently,  I got out at 105 because they posted sequential decreases in revenues for  2005 YTD quarterlies.
I may buy it back, on weakness, because I suspect that they will post good numbers, for Q4 (Christmas);  or, just as importantly,  the market will perceive that they will do so.

(ii) DMX/NUVO: I lost a lot on this one (prior mgt.- think dead parrots) . Bgt. at what I thought was the low at .25.  It dropped to 12, on low volume. On the way down, I got out at 16. Now at 19.If it happens, one news release will 'punt' this one to a 5+ bagger. My plan is to put some BRVO trading profits in to it. No real logic to that. Don.