The next Microsoft

At least once a week, we stumble upon some Internet investment site that suggests the next Microsoft or Yahoo! is hidden somewhere in the penny stock netherworld, just waiting to be discovered.

 

Our experience suggests otherwise.

 

I’m hard pressed to think of more than a handful of companies from the Pink Sheets or Over the Counter markets that have produced sustained returns for investors over the past few years — AND contributed to the U.S. economy by generating substantial revenue, earnings and jobs.

 

Given the trillions of dollars sloshing around in venture capital funds, private equity funds, hedge funds and other pools of ready and restless capital, what are the chances that a company with a promising product or technology is actually going to be overlooked?

 

To occupy some time while we wrap up our first major investigative piece, I’d like readers to cite examples of tiny public companies that have proven themselves to be something other than momentum plays, hype vehicles or outright scams.

 

If you’ve got a favorite, please cite the attributes that you think made the difference.

 

Thanks for stopping by Sharesleuth.com. Look for another posting soon.

38 thoughts on “The next Microsoft

  1. Diamond Fields Resources. They found the needle in the haystack (well, Voisey’s Bay, actually) and cashed out for C$4.3 billion.
    Ka-ching, ka-ching.

  2. GYSLF, which looked really, really sketchy in the late ’90s (they were, I kid not, as a gold exploration company about to get into the China ‘net portal business when they thought better of it and reversed that financing). Its ordinary trades elsewhere (GSL on the TSE). I’ve had other lucky (or luckily timed) picks that similarly are really just synthetic versions of foreign ordinaries (CMGHF, IPOAF, IMPUY, SGTZY, NILSY). Lots of resources there; that’s where you end up when you’re buying reserves, as I certainly was.
    CWLM is one I can think of that isn’t an ordinary. It’s basically private, but a few shares change hands. Great move the last couple years. Not tiny and not Microsoft, it’s a tug operator and transport play.
    FD: I am zeroed out of all these names right now. I have a tiny residual position in GSL, but in the ordinary.
    Oh, almost forgot: SBMRY, now listed in London but back when I picked it up, in Joburg. Also not small, they’re now the #2 brewer in the world by beer volume.

  3. The OTCBB and Pink Sheets are dangerous places. Although, 95% of them all go to zero eventually, sometimes diamonds can be found in the ruff.
    SPEA traded at 0.12 for years.. Today listed on NASDAQ under CKXE closed at 12.95. no reverse split involved.
    see for yourself..
    http://www.google.com/finance?q=CKXE

  4. Seattle based Jones Soda (JSDA:NDAQ) listed as an otcbb security for quite a while. Will it be the next Hansen (HANS:NDAQ)? Who knows.
    It is a legitimate business with a niche product and is no longer just a regional firm with respect to marketshare growth/visibility.
    The above being said, this firm recently had an SPO so this is not considered to be a solicitation to invest in it without doing one’s own due diligence.

  5. Yeah, such is the hype on JDSA — the next HANS. Too bad they no sales and their drink is a blueberry concoction that nobody will ever like. Drink company, yes. Profitable… uh, no.

  6. Dade Behring went into bankruptcy and onto the pink sheets (DBEH) a couple of years ago. Traded under a dollar and finally grew into DADE on the nasdaq. The difference here is that DADE is a real company with a real business model and a real cash flow. Its so easy to give a gold or resource company as an example of a pink sheet that turned into a winner, because they are literally searching for buried treasure. While there are a number of those companies that have turned out well, there are twenty times more of them that didn’t. Every Canadian citizen and their uncle owns a piece of a mine somewhere, so be wary of the people that say “This is the next big mining company in the pink sheets!”

  7. I think that precious metal and oil exploration plays are still often found in the pink sheets, as opposed to would-be Googles that exist on VC funding. Maybe this is because they tend to be more one-off plays that just distribute wealth to shareholders if they get lucky, as opposed to going concerns that can be floated by those who have expertise in taking companies public?
    With that in mind, if you’re looking for a long-shot exploration play and think that a name is undepriced (which seems contrary to human nature in such a speculative corner of the market, but is certainly possible) then the pink sheets might be worth a look.
    Then again, you’d probably have more fun just going to Vegas.

  8. Also, are the comments always going to be in this unreadable, unmoderated format? Why not borrow some Slashcode or using a reddit-style moderation system? Or at least allow replies so threads can develop!

  9. Hi Chris,
    This is my list of known boiler rooms shares that are currently quoted on either the Otcbb or Pink Sheets:
    Allied Energy Corporation: http://www.alliedenergycorporation.com (AGYP)
    American Utilicraft (AMUC)
    Amerossi Energy Corp: http://www.amerossi.com (AMER)
    Angelciti Entertainments: (AGCI)
    Apollo Resources International Inc: http://www.apolloresources.com (AOOR)
    Atlantic Wines: http://www.atlanticwineagencies.com (AWNA)
    Avitech LifeSciences Inc: http://www.avitechls.com (AVLF)
    Bio-Solutions Manufacturing: http://www.bio-solutions.com (BSLM)
    Black Gold Oil and Gas: http://www.blackgoldgo.com (BKGD)
    CardXX Inc: http://www.cardxx.net (CXCQ)
    Chelsea Management Group: http://www.chelseamanagementgroup.com (CLMP)
    China Wireless Communications Inc: http://www.chinawirelesscommunications.com (CWLC)
    Cobra Energy Inc: http://www.cobraenergyinc.com (CBNG)
    CyGene Laboratories Inc: http://www.cygenelabs.com (CYGE)
    Echo Resources: http://www.echoresources.net (ECHR)
    Eden Energy Corp: (EDNE)
    Eldorado Exploration Inc: http://www.eldoradoexploration.com (EDEX)
    Fletcher-Flora Health Care Systems: http://www.labpak.com (FFLH)
    Galaxy Minerals Inc: http://www.galaxyminerals.com (GAXY)
    General Components Inc: http://www.gciworld.com (GCPO)
    Great Western Gold: http://www.greatwestgold.com (GWGO)
    Global Reality Developments: (GRLY)
    HQ Sustainable Maritime Inds: (HQSM)
    Idate Corporation: http://idatecorp.com (IDTO)
    Immune Tree Inc: http://www.immunetree.com (IMUT)
    Integrated MDA Holdings: (IMHI)
    International Child Care Corp: http://www.iccmc.com (ICCR)
    IQ Webquest Inc: http://www.iqwebquest.com (IQWB)
    Kinross Gold Corp: http://www.kinross.com (KRSGF)
    Lasertek Nuclear Lab (LSTKF)
    Linsure Holdings Inc: http://www.linsureholdings.com (LSHJ)
    Logistical Support, Inc: http://www.logistical-support.com (LGSL)
    Material Technologies, Inc: http://www.maetech.com (MTNA)
    Mobilestream, Inc: http://www.mobilestreamoil.com (MSRM)
    Mundus Environmental Products Inc. (MNDS)
    Nanoforce, Inc: http://www.nanoforcetechnologies.com (NNFC)
    Nano Science Tech: http://www.nanoscience-tech.com (NANS)
    National Storm Management: (NLST)
    New Century Energy Corp: http://www.newcenturyenergy.com (NCEY)
    Netgates Inc: (NGHG)
    New Century Energy Corp: (NCEY)
    Organic Recycling Tech Inc: http://www.ortechteam.com (OGTX)
    Pegasus Wirleless Corp: http://www.pegasuswirelesscorp.com (PGWCE)
    Poseidis Inc: (PSEDE)
    Prime Time Group, Inc: http://www.primetimestores.com (PRTH)
    Private Trading Systems Inc: http://www.pvtd.com (PVTD)
    Quantum Energy: http://www.quantumenergy.co.uk (QEGY)
    Quantum Technologies: http://www.qtww.com (QTWW)
    Reality Racing Inc: http://www.realityracingtv.com (RRCG)
    Remington Ventures: http://www.rmvn.net (RMVN)
    Satellite Newspapers Corp: http://www.satellitenewspapers.com (SNWP)
    Simba Mines Inc: http://www.simbajamba.com (SBAM)
    Skynet Telematics Inc: http://www.skamp.co.uk (SKYI)
    Smart Technology Inc: http://www.smarttechnologyinc.com (STXE)
    Solar Energy Ltd: (SLRE)
    Tallyho Ventues Inc (TLYH)
    TGC Industries Inc: http://www.tgcseismic.com (TGE)
    TPI International, Inc: (TPIL)
    TransGlobal Oil and Technology: http://www.tgoiltech.com (TGOC)
    Triclean Enterprises Inc: http://www.tricleanent.com (TICLF)
    TTCM China: http://www.ttcmchina.com (TTCH)
    Turquoise Development Company: http://www.turquoisedevelopment.com (TQDC)
    Universal Delivery Solutions Group: http://www.universaldelivery.com (UDSG)
    UDS Group Inc: (UDTT)
    Viaspace Inc: http://www.viaspace.com (VSPC)
    Vinoble Inc: (VNBL)
    Vision International (VNNL)
    VocalScape: http://www.vocalscape.com (VOSC)
    Western States Auto: http://www.wsa-usa.com (WSRA)
    XsunX Inc: http://www.XsunX.com (XSNX)
    Sorry there are to many to go into the details of each one.
    Regards Rub1

  10. The problem with the resource discovery companies is that many of them are not real and are just shell companies.
    For example, I know of one company that started as a resource exploratory company on the Bulletin Board, and had maybe $2,000 in assets. It was acquired (the person who formed the shell made $150k-$200k) just so the acquiring company could become publicly traded through a reverse merger. They acquire the rights to become public, change the name, change the ticker, and start dumping stock. It bypasses the red tape to become publicly traded and gives them an outlet to sell.

  11. P.S. to Mason
    Jones soda may be a Blueberry concoction no one will drink, but it also just happens to be sold in Starbucks. Next time base your post on some facts, not on whether you like Blueberry or not.

  12. in regards to the Jones Soda being “a Blueberry concoction”, I must assume you mean all of their beverages are just a cheap quality drink. As a fan of Jones Soda, which at least in Southeast Michigan, is sold in many restaurants, coffee shops, night spots, pool halls, and the like, is a well known and well liked product. While your personal preference (or lack thereof) for the product may dictate your own stock purchases (again, or lack thereof), a sweeping generalization is not needed.
    While I personally choose to avoid penny stocks, I wouldn’t be surprised to see Jones Soda have a nice return if it became a trendy drink nationwide rather than in a few small markets.

  13. My mistake for not checking the charts before making my comment, JSDA is no longer a Penny Stock and moved from $0.25 03JAN03 to it’s all time high $11.55 17MAY06. Certainly not a return that I would consider “a blueberry concoction.”

  14. I hope this new venture doesn’t end up focusing just on individual pennytrash stories. We can take it for granted that OTCBB and Pink Sheets stocks are usually scams; this is not news.
    More interesting would be answers to the seemingly-naive question: Given that everybody who knows anything about stocks knows that these markets are snakepits, why do they continue to exist? Who benefits, and why do their interests prevail against the clear public benefits of closing them down?

  15. My favorite JSDA beverage is Bada Bing Cherry.
    For the “record,” I discovered HANS(en) in the summer of 2003 when it was trading at $5.00 per share pre-split.
    FD: this is not a solicitation to invest in either firm. As far as trying their beverages, go right ahead. They’re growing marketshare much faster than PEP(si) or Coke (KO).

  16. One stock that has been overlooked is Youthstream Media Networks (YSTM.PK) which operates Kentucky Electric Steel in Ashland, KY.

  17. My apologies, I had a brain fart and confused JSDA with LBIX. LBIX is total b.s. on HANS-hypw. JSDA is way overpriced but actually has a real product.
    FWIW, HANS is way, way overpriced itself and is going to crash BIGTIME when it starts posting earnings that do not show huge growth, which has to happen soon.

  18. As a member of the investment community I look to see what value you have to add, and how selective you are to posting comments.

  19. First of all, lets all answer the question specifically otherwise this just turns into a worthless BB chat room and from the looks of things so far, it seems like everyone is familiar with what I am saying. The questions was what BB stocks are or were ACTUALLY good buys for the long run… it is a very good question and anything other than a direct and specific answer starts to challenge the true potential for this site and this board. Let’s leave the personal stuff and the commentary for the sometimes moronic public message boards and see if we can make SS a singularly intelligent place to get information. We all seem to want that so its up to us to do it… there are plenty of other venues out there to argue about blueberry soda.
    As for my answer to the question, ADBL (audible.com) was on the OTCBB when I first found it at around 40 cents. The difference there is that it was never a question of fraud, it was a real company that came from a real exchange and just ended up on the BB because of a stock price that reflected a company who was slightly ahead of its time. That being said, it could have gone to zero and instead, it went to ten (thirty reverse split adjusted).

  20. One name that comes to mind is VaxGen symbol VXGN. They trade for 3.40 on the bb and have been threatening to get re-listed on NASDAQ for some time. They actually have a ~$800 million dollar anthrax vaccine contract with the HHS. Certainly worth looking at.

  21. The next Microsoft isn’t in some “penny stock netherworld”. It’s actually right in front of your nose. It’s Google. Or some other such company. Microsoft wasn’t some hidden gem that nobody knew about. There were a lot of people that knew Microsoft was going to be huge. And there are many companies like that today.

  22. Two posts in three weeks a blog does not make. You guys ever going to post again? Like maybe daily, or even weekly.
    At this point I can’t see anyone calling it “journalism” or if you’d like “investigative blogging” unless some actually blogging takes place soon.

  23. Given the expressed purpose of this site there will few companies identified. I will be surprised if you see more than 5 a year. Now I do expect followup entries on companies already exposed.

  24. CC
    ===
    We’re going to pay an independent fact checker to review our stories and ensure that the details are correct and the conclusions are neither false nor misleading.
    ===
    Ok sounds good
    His /her credentials?

  25. The markets are the same as casinos and horse tracks, just less transparent. The terminology and mindsets are analogous. Money is thrown at bad bet after bet. Some win big, most lose but one thing is for sure…the house always gets their cut. Mark Cuban can ride shorts to unimagined wealth.

  26. Cytolin by CytoDyn (OTCBB: CYDY) is a very interesting product/technology that may be a sleeper. As virus-based diseases mutate and threaten large populations with epidemic, this company has technology that could come into play. HIV is their first target, however, the technology can be used against other diseases (Bird Flu, West Nile, Influenza, etc).
    http://www.cytodyn.com/
    BTW, I am not affilated with this company in any way.

  27. NVEC, NVE Corp, engineers and PHD’s with MRAM patents and sensors could be large one day, heavily shorted a year ago, now having positive revenue growth in the medical fields and sensor markets.

  28. A little more NVEC, it is good DD.
    http://www.nve.com
    “NVEC the company, compared to most other nanotech valuation, should be worth about $1BN.
    That brings the PPS around $225.
    homework on NVE/FSL MRAM-MTJ-
    the “toggle” is a “Method for switching the bit cells”
    Dr. Daughton presented this paper- on an “optimized” toggle which was even better than the toggle FSL employed
    http://www.nve.com/Downloads/49MMM-Optim
    I even asked Dr. Baker where the 16Mb, MRAM cell was fabricated/came from- got “no comment”-
    the Basics of an MTJ- specifically a 1T/1MTJ cell is NVE’s IP, the method of switching does NOT change the makeup of the basic Cell- When FSL fabricates a MRAM cell with a 1T/1MTJ, there are infringing on NVE’s IP regardless of the type of method they utilize to “switch the cell”
    Also If you not the specific design of the MTJ cell by NVE with it’s components here-http://nve.com/Downloads/Boston_MRS_2004…
    see pages 4 and 16
    comparedwith page 3 of the FSL document
    http://www.freescale.com/files/technolog
    and here
    http://www.freescale.com/files/memory/do
    are NVE’s IP
    , all this stuff has been hashed and rehashed-
    and really doubt you were not aware of this
    NVE makes the Motor and FSL makes the blower, take away the blower and you still have an engine, take away the engine and the blower is useless.
    NVE actually has positive earnings .
    All other nanotech firms I referenced were in the LUX Nanotech Index and only 3 had positive earnings. They had valuation in the $BNs.
    Most of the other ones had valuations way higher than NVE with negative earnings and no products in sight. ”

  29. 4.5mm shares total
    “NVEC the company, compared to most other nanotech valuation, should be worth about $1BN.
    That brings the PPS around $225.
    homework on NVE/FSL MRAM-MTJ-
    the “toggle” is a “Method for switching the bit cells”
    Dr. Daughton presented this paper- on an “optimized” toggle which was even better than the toggle FSL employed
    http://www.nve.com/Downloads/49MMM-Optim
    I even asked Dr. Baker where the 16Mb, MRAM cell was fabricated/came from- got “no comment”-
    the Basics of an MTJ- specifically a 1T/1MTJ cell is NVE’s IP, the method of switching does NOT change the makeup of the basic Cell- When FSL fabricates a MRAM cell with a 1T/1MTJ, there are infringing on NVE’s IP regardless of the type of method they utilize to “switch the cell”
    Also If you not the specific design of the MTJ cell by NVE with it’s components here-http://nve.com/Downloads/Boston_MRS_2004…
    see pages 4 and 16
    comparedwith page 3 of the FSL document
    http://www.freescale.com/files/technolog
    and here
    http://www.freescale.com/files/memory/do
    are NVE’s IP
    , all this stuff has been hashed and rehashed-
    and really doubt you were not aware of this
    NVE makes the Motor and FSL makes the blower, take away the blower and you still have an engine, take away the engine and the blower is useless.
    NVE actually has positive earnings .
    All other nanotech firms I referenced were in the LUX Nanotech Index and only 3 had positive earnings. They had valuation in the $BNs.
    Most of the other ones had valuations way higher than NVE with negative earnings and no products in sight. ”
    http://www.nve.com

  30. CADA is super cheap. Stupid cheap. Consider this:
    -no debt,
    -$5.00E cash per share at year end
    -potential to securitize the X-Charge portfolio for over $15.00 (as in cash) w/o changing the ecomonics of the company based upon ’07E
    -yield just below 4.00% based upon ’07E
    -it is selling for cash per share if they securitize the X-Charge portfolio next year
    -”trades by appointment”, as in not much volume
    - a leader in their field (retailer transaction processing software)
    -a very shareholder friendly CEO.
    Cuban ought to privately make an offer they can’t refuse. It takes a long time to accumulate a decent position.
    Harry

  31. Story Idea:
    I have heard alot about manipulation by Market Makers.
    I have never been able to find out exactly how they work and if in fact they can manipulate a stock.

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