RE:Risk versus Reward WClark17 wrote: The speculation of where MBC ends up has become quite exciting and interesting to follow. Many have suggested (including me last week) that it will go to $0.25 when they are acquired, but we have also witnessed posters with the nerve to suggest that it could hit a dollar plus. I have been bothered by my speculation since I post last week and felt the need to warn all investors that this type of specualtive stock comes with HIGH RISK. This is why the specualtions are also suggesting high reward. Everyone should understand this as we head into the end of the month. There is a good possibility that the management could fail to complete a transation and even provided the following disclaimer in their NR:
"There can be no assurances that the Company will pursue or complete a business transaction or sale under its strategic process nor that a business transaction or sale will provide any value to all or any stakeholders."
Also, there is a very realistic possibility MBC could be issued a cease trade order by the Canadian securities regulatory authorities if management fails to meet the Company's reporting obligations by April 30, 2015. They claim to be "working expeditiously to meet the Company's obligations", but they have been delinquent in the filings thus far.
Investing in a stock under the conditions mentioned above could prove to provide a very lucrative return, but it is not much different than gambling. All involved should do their DD and be aware that they could lose their bet if things do not play our as speculated. I still hold a position in MBC, and I'm hoping it will be a multi bagger, but it is no more money than I am willing to lose at a casino.
When the smoke clears on MBC, and we are hopefully all happy. Take a look at StonePoint Energy (STO). The SP is starting to bounce off its bottom and the company has some major indicators to make it a huge oil and gas player. When the oil market recovers, you'll want to be a shareholder!! Also, over 2.5 million insider shares purchased recently - zero insider share sold. SP is only $0.06 - 0.07, so you can buy huge position for little $$. They also just communicated their interest of a share buy back.
I would say that all penny stocks are high risk and I hope we all know that. Again I prefer invest in penny stock with value than speculative. If you compare MBC to STO, lets put some other oil companies too.
The net PPE asset is a value including properties, and if we compare MBC, INA, PTA, STO than:
MBC net PPE asset = 529MM & Dept = 345MM (529MM - 345MM) / 182MM = 1.01/share but problem of cash flow
INA net PPE asset = 434MM & Dept = 375MM (434MM - 375MM) / 351MM = 0.17/share but problem of cash flow
PTA net PPE asset = 220MM & Dept = 127MM (220MM - 127MM) / 872MM = 0.11/share positive cash flow
STO net PPE asset = 3MM & Dept = 5MM (3MM-5MM) / 214MM = 0/share positive cash flow
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But, it is a basic evaluation giving you an idea of the ACTUAL value of each one. I suggest to all to do their research.