Small Cap Network Blog

Hey y’all. I don’t know if I’ve mentioned it lately, so here goes…if you have feedback, questions, or responses to anything we put on the site, the best way to get the word to us is by posting a comment in the blog. We can respond to them faster, and more importantly, we can share your thoughts and our response with everyone. (No need to keep anything behind closed doors, right?).

If you’re worried about having your e-mail address publicized, don’t worry - nobody can see it. If you’re worried about having your name publicized, just don’t add your last name. As long as it’s legitimate, we’ll still publish your comment (plus our response) without a full name.

Anyway, the reason I bring it up is in response to an e-mail we got about today’s newsletter on Marine Growth (MGRW) news. The note reads…

According to your blog [newsletter]: “Wyndham Worldwide (NYSE: WYN)…one of the largest hospitality-related companies in the world! They did about $4.3 billion in revenue last year. Let me just say this about that figure - you don’t drive more than $4 billion in sales for any year in any business without knowing what you’re doing.”

Do GM, Ford, Chrysler know what they’re doing? The IRS revenues are 1,000 times that and it is one of the most inefficient and inept institutions in the world. What were the sales of Enron? $111 billion in 2000. Wydham is a good inventment itself, but your writer has the analysis sense of a 15 year old.

Thanks for the feedback, including the pointless insult. It’s great that you completely missed the bigger picture from the commentary and are focusing on a comment that - in the end - really means very little to Marine Growth. In any case…

As I have said repeatedly, I don’t have the corner on investing knowledge. I’m wrong my fair share of the time. Feel free to disagree with anything I say, for now and evermore.

The only thing I ask….make sure you know what your true motivation is. If you want to share knowledge and offer opposing opinions, just state your case. If your only goal is to twist something out of context in order to feel better about yourself, I invite you to unsubscribe from the newsletter - you’re wasting everyone’s time.

I can always separate the amateurs from the pros by the way they think about investing, and what they focus on. Pros focus on ideas that ultimately make money. Amateurs focus on everything else, blame everyone else, and take their failure-related stress out on everyone else. In other words, amateurs have a misdirected agenda.

In response to the reader’s question, yes, I absolutely think GM, Ford, and Chrysler know what they’re doing. Since 1977, Ford shares are up dividend-adjusted 1306%, GM shares are up a split-and-dividend adjusted 1216% since 1962, and Toyota is up 298% since 1993. (Chrysler is no longer public.)

It is true the last couple of years have been a disaster for auto-makers. That’s not a reflection of not knowing what they’re doing; it’s a reflection of the environment.

In the same respect, I think you cherry-picked a group you knew was struggling. There are a lot of multi-million dollar companies with stocks doing considerably better. The fact that you mentioned Ford, GM, and Chrysler makes me wonder if you specifically got burned by them. Perhaps you have an agenda here…one that isn’t really related to the issue at hand. Regardless…

The IRS? Seriously? It’s not a company in the least…I can’t even respond.

Enron? Again, you’re cherry-picking, knowing Enron was a disaster. However, that has nothing to do with big revenues. I can show you companies doing practically no revenue at all, but are still complete scams like Enron was. Size and legitimacy have nothing to do with each other.

You mentioned Wyndham was a good investment. This is the biggest concern of all, as I wasn’t even presenting Wyndham as an investment idea….I was talking about Marine Growth Ventures. Did you even read our comments?

Be that as it may, you’re still free to assume I have the analysis sense of a 15 year old. I’m not going to get sucked into the game. I will, however, point out that it was the same 15 year old analyst that picked Overstock, Merck, and Tenet…our only three non-compensated trading ideas of the year, each of which have been huge winners for our readers.

I guess you missed those, huh?

Anyway, I still stand by what I said…if you can consistently generate billions of dollars per year (legitimately) in revenues, I’m going to assume you at least have enough skills and knowledge to merit my respect. That’s not to say you’re the best of the best, but I still have to give some credit where it’s due.

It’s not an uncommon issue when trading small cap stocks, but we’re getting closer to a resolution in this particular case - slowly but surely. What I’m talking about is a more reasonable spread between the bid and the ask for Marine Growth Ventures (MGRW). In other words, the difference between the price you buy it for and the price you can sell it for has been shrunk to something more tolerable - five cents.

You may recall the bid/ask just shortly after we published our initial profile was about $0.35/$0.90. A few trades went through at 75 cents, but most of the buyers and sellers weren’t able to find that ‘common ground’ price.

Now, however, we’re seeing the trading landscape turn a little more reasonable. The current bid/ask is $0.70/$0.75….a modest five cent spread. Though I’d rather see several more bids and offers near there (we only see 2500 shares on the table for both the $0.70 bid and the $0.75 ask), this is a good start.

For those of you who saw the bid/ask last week and held off on jumping in, I can’t say I blame you - I’d probably be hesitant too. The one thing to keep in mind about a tight bid/ask is this - when it comes to small cap stocks, this dynamic can change almost instantaneously.

I still say it would pay you to be ready when the liquidity is finally beefed up….and I do indeed feel it will be beefed up. I see Marine Growth Ventures as one of the most exciting ideas we’ve come across in a while, if only for the sheer number of ways they have to make money. I guess some people don’t see it yet, which is fine. Wait as long as you need to, but don’t be shocked when this thing launches like a rocket - and is possibly out of reach.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

I was wondering about this happening with a stock that only trades a few thousand shares per day, on average. In terms of size, yes, Marine Growth Ventures (MGRW) is a small cap, but with 21.7 million shares and a market cap of $15.2 million, it’s not like it’s that small. However, we’ve not seen any volume or price movement this morning. That’s very unusual for our newly-profiled companies.

I think what’s going on here is not a lack of buyers, but a lack of interested sellers. That’s ultimately a good sign, as it tells us people want to hang onto their stock, or expect a very good price if they sell them….the ‘ask’ side. The ‘bid’ side is pretty stingy too. Thus, there aren’t many buyers hooking up with sellers, because they can’t quite meet in the middle. In other words, the market depth dynamic still isn’t prompting any exchanges.

That being said, I have seen the asks drift lower since this morning’s open. I think the best ask started at 90 cents, and is now 75 cents. The best bid is 70 cents, so I think the two sides are getting close. Beyond that, most of the orders are unmarketable near current levels, though I’ve seen that change quickly.

Bottom line: I wish there was a more active market (on both sides), as I know a lot of you are trying to get in. Just leave your limit orders intact - I think we’ll find some willing buyers and sellers with a little time.

Here’s the most recent market depth chart taken from the OTCBB site. If you want to check in on the intra-day changes, here’s the link. http://otcbb.com/asp/Info_Center.asp

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.