Echilon Communications (NY)
*Disclaimer* I am long shares of Profitable Developments (PRDL). I own 13.5 Million shares of this company. This is NOT a recommendation to buy stock, this is not an invitation, or a solicitation at all. Please do your own due diligence or consult your financial advisor for market information and suggestions.
I don’t even know where to begin with this company and how I stumbled onto it, but it is clear to me that some of my greatest ideas come from other traders. My friend who is a new trader (inspired by me) pointed out to me that Profitable Developments was trading over 100 Million shares in volume, and was under a dollar. At first I was very skeptical of this company, and for every OTC or Pink Sheet stock, skepticism is practically a must. Below is an ad the company had put out earlier:
Early on I laughed at this company, and many people probably still are. After laughing I began to settle down and do my due diligence. I go through a very strict process of vetting a security before deciding to buy it, especially if it’s for a long term hold. Stocks have to pass my checklist before I buy them.
In my research I found that PRDL has listed NO current revenues. I can’t see any financials. You have to dig to find executives of the company. They have about 7.8 Billion outstanding shares. Most people would run for the hills upon seeing this.
Soon my early laughter turned into a silence of sorts, filled with curiosity, and what I believe is a deep epiphany about this company.
11 years ago this company was trading around $12.00 a share and hit a high in the hundreds in a very short amount of time, from what I see on the historic chart. Profitable Developments used to be named Stratton Holdings (STHG). To my knowledge they were the same property development company then, that they are now. The only difference is that PRDL was just a bit more liquid 11 years ago. PRDL also had a stock split December 24, 2012 and after that the price just fell into the abyss.
The question has been “why hasn’t this company gone bankrupt?” I felt that if this company was so terrible and these guys had no hope whatsoever they would have gone bankrupt and closed up shop right? All they did was change the name of the company and keep on going. The CEO of the company hasn’t always been a CEO but he has been with them along this ride for 10 years. Say what you want about this company but it survived it’s massive drops from greatness, it survived all sorts of market pull backs and it survived the 2008 financial crisis. We’ve seen mega banks like Lehman Brothers just close up shop. There is a level of grit, and perseverance I am seeing in the CEO of PRDL and that is just one of the reasons I’ve decided to invest in their company. I will get straight to the point.
Here are the reasons I’ve decided to buy (PRDL)
1) No Institutional ownership yet – this shows high potential for future growth. Institutional owners drive prices by buying large positions.
2) Large amount of outstanding shares – I believe in the future, once the company becomes profitable again, they will reduce the amount of outstanding shares and it will make the price skyrocket.
3) They are just beginning operations again. The CEO and the president previously signed several letters of intent for distressed properties, and development properties. A recent press release they put out stated that in early February they will sign their first contract in what will be a crucial milestone to acquire real estate and make good on their former letter of intent. Link: http://finance.yahoo.com/news/profitable-developments-inc-president-sign-133000002.html
4) Plenty of stocks have no revenue. Marijuana companies exploded on news of legalization recently and some of them have NO revenues. If someone asked me what a better investment would be between distressed real estate, and marijuana I would say distressed real estate each and every time.
5) People always warn of Pump and Dump in penny stocks, which obviously can be a cause for concern. I’m personally not concerned about that because I believe I’m in very close to the bottom. Not that I am depending on any Pump or Dump. I genuinely believe Profitable Developments is a company that will offer value to shareholders, but if manipulation happens I believe I am in way too early to be on the wrong side of manipulators.
6) These are not inexperienced people or newbies. PRDL has a history in real estate, this is not the CEO’s first rodeo.
7) More analysts have buy highlighted, and hold highlighted than they have sell highlighted.
8) Low Price. When I think of all the great companies out there, very few of them have ever reached $2000 a share. Not even Google has yet. This company is not in a sector as fast changing as technology, it’s in real estate. The business they specialize in doesn’t just disappear, or become obsolete overnight. The real estate market is still there, all they are preparing for is a bounce back in the real estate market. They stayed quiet, they waited, and now they are preparing executions to make good on a potential rebounding real estate market. Very simple.
I am personally not going to wait until PRDL reaches a dollar to sell my shares. If I see even .01 or .02 I will probably sell my shares but my overall point is that I believe this stock is in bullish territory. Volume has exploded recently and there seems to be renewed interest in the company.
When a company that has nothing, acquires more and more assets, the value of the company should rise, and thus so should the price of stock in the company with time. I also like the fact that everyone is terrified of a stock like this, because when those people get in, it will be way too late.
I haven’t been this confident about a company since I saw Bank of America (BAC) trading at 7 dollars.
I look at some of the big traders, and hedge fund managers and they always have a few defining moments in their careers that really define them and made them out to be the big shots they are. George Soros broke the bank of England. Paulson made billions shorting sub prime mortgages. Some of these things if we really look back and study why they executed such trades, we would realize why they took such huge bets.
This is one of mine. (PRDL) is considerably riskier and well outside my usual mode of momentum trading, but if this company does what I think it’s preparing to do, it will be one of the best trades I’ve made all year.