Institutional Analyst: Special Situation Research
IA's Special Situation Research, Friday 6/02/2011.
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Fairhills Capital Is Hiring.
1. Vertex Energy (VTNR) $2.25, Hits 52 Week High.
2. VertnetX (VHC) $27.69, Re-Approaching 52 Week High.
3. Trans-Pacific Aerospace (TPAC) $0.12, Getting Ready ?
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IA's Special Situation Research (VTNR, VHC, TPAC)
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Blog Version: http://restaurantstockreview.ning.com/profiles/blogs/ia-ia-adding-p...
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1. Vertex Energy (VTNR) $2.25, Hits 52 Week High.
Vertex Energy hit a 52 week high yesterday at $2.25. We added it to IA's Special Situation Research (IASSR) and the Alternative Energy Stock Review at $0.40, in August of 2010.
It is now the best performer on the IASSR list up 450%, which is remarkable, considering it traded a grand total of 22,000 shares (or about $10,000 worth) the entire week which we added it.
So moral of the story is...patience. You don't need a stock to trade millions of shares a day, to make money -- like some of the "spamming" newsletters would like you to believe -- as what goes up fast and furious, usually comes down even faster and more furious. The key is finding companies whose shares are being bought and held, not bought and flipped !
Not surprisingly, all of the technical services have gone positive in their opinions on Vertex.
StockTA now ranks it a "very bullish" short, intermediate and long term -- making it very bullish overall.
Barchart.com now ranks it a "strong buy." That is 12 indicators saying buy and one indicator saying hold.
(Where were they at $0.40 ? Oh, that's right -- bearish.)
What drives the share price of companies higher, is good corporate performance and knowledge of that performance (someone we strive to aid in) in the investment community. The most recent news released by Vertex in that regard was their first quarter, where they reported revenue for the quarter increased 53% to $20.3 million and earnings per share increased to $0.09 per fully diluted share, compared with $0.02 per diluted share in the first quarter of 2010. Still this is an unkown company on Wall Street.
An additional point of reference for the "we missed that one" crowd, is if a stock is going to go from $2 to $10 (or $20 for that matter), it is going to first hit a new high at $4 and at $6 and at $8 and...well just thought you should know.
Original write-up: http://alternativeenergystockreview.ning.com/profiles/blogs/ia-addi...
2. VertnetX (VHC) $27.69, Re-Approaching 52 Week High.
VirnetX (VHC) is the second best performing stock on the IASSR Watch List up 326% and the third best performer on the venerable Internet Stock Review (ISR) Watch List. How you like us now ?
This is remarkable (amazing even) in that it has only been on the ISR Watch List twenty-six days short of a year (at $6.50), whereas many of the other companies on the Watch List were added near the low of the bear market, in December of 2008 (let's call that five months "before" the bottom -- we were a little early, but definitely right).
Here's an eye-popping one year chart:
We recently got a significant boost, when the first major bracket Wall Street firm Cowen & Co., initiated coverage on May 27th. While VirnetX has been a good trader (volume-wise) for the better part of four months, volume picked up considerably after the buy rating:
May 26th 1,239,000
May 27th 3,118,000
May 31st 2,538,000
June 1st, 3,554,000
June 2nd 4,585,000
Cowen Notes: http://notablecalls.blogspot.com/
Note as mentioned before, the first brokerage firm to initiate coverage was Dawson James (December of 2009, when it was in the $3 range) which recently updated coverage. A five page research report can be obtained by calling John Keyser, VP Investments at 866-928-0928.
Dawson James: http://www.gainerstoday.com/Gains-Stock-62769-VHC
We additionally received the following notes (we cannot vouch for accuracy) from a friend, who attended the recent annual shareholders meeting:
"As the largest shareholder (Kendall Larsen), I can assure you my interests are aligned with yours. We are in a position where we WILL take off."
"The core patents (135 and 180) have both passed 100% reexamination by the USPTO."
"We only file the suits we are confident we will win."
"Can you assume licensing negotiations are going on?" "Yes." "Can we announce today?" "No, but will be forthcoming."
"With $73M at the end of Q1 in the bank, there is no need to raise money by selling more shares...no dilution."
Comments on the lawsuit against Siemens (SI): "I can't say how much, it's just really big."
"As to the value of Virnetx, you are only seeing the tip of the iceberg, 90% of the value is below water."
Finally, there was a interesting write-up recently by KLJJ Investments in SeekingAlpha.cm who stated, "CEO and Founder Kendall Larsen was VP of Sales at RSA Technology (EMC) in the late 90s...and has never sold a share...believes the company's patent portfolio could be one of the top 5 portfolios in the world and the market is only reflecting 10% of the current value of the company." Ending with, "...with a PE equal to growth rate, you could be looking at a potential $400-600 stock in 5 years."
Well alrighty then ! (Note, for those who like to see how far they can stretch a rubber band, there are options listed on the company.)
Options Table: http://finance.yahoo.com/q/op?s=VHC+Options
This is somewhat of a controversial stock in that the short position has increased for five consecutive (painful) months and the company has some serious detractors on the message boards.
Month Short Interest Average Daily Volume http://www.dataexplorers.com/products/data
13 May 2011 7,539,718 1,015,185
29 Apr 2011 7,033,393 1,939,152
15 Apr 2011 5,910,488 3,539,909
31 Mar 2011 4,702,223 1,877,789
15 Mar 2011 4,361,985 480,592
15 Feb 2011 4,601,701 437,342
31 Jan 2011 4,488,640 553,039
31 Dec 2010 3,973,512 599,854
Original IA write-up: http://internetstockreview.ning.com/profiles/blogs/ia-adding-virnet...
3. Trans-Pacific Aerospace (TPAC) $0.12, Getting Ready ?
We would like to urge you to pay close attention to one of our favorite clients, Trans-Pacific Aerospace (TPAC), as they get ever closer to the final testing stages of their spherical Airliner bearings from its China subsidiary, Godfrey Guangzhou Aerospace Bearings.
On May 5th, they announced that they passed independent testing of their bearings under SAE Aerospace Standards.
Bill McKay, Trans-Pacific Aerospace CEO stated, "Verifying 25,000 cycle internal liner wear at ambient temperature is an essential benchmark for us and for qualification under SAE-AS81820," He additionally added, "We still have a number of tests to do at high and low temperature and with contaminants, but it is good to get the first test under our belts."
HERE IS THE IMPORTANT PART:
Bearings made by Godfrey (China) Limited, the company's 25%-owned subsidiary, will be submitted to the U.S. Navy for official qualification testing shortly. Should the bearings pass U.S. Navy qualification testing, the China facility will become the first approved manufacturer of SAE-AS81820 bearings in China (as in the first).
Full Release: http://markets.financialcontent.com/demo/?GUID=18365449&Page=MediaViewer&Ticker=TPAC
On May 26th, they announced the passing of additional independent laboratory testing under SAE Aerospace Standards.
This time Trans-Aerospace announced they, "The bearings have now successfully passed :
Axial load tests
Bond integrity and peel strength test
Radial and axial play tests
Radial static limit load tests
Ultimate load tests
No-load rotational torque breakaway tests
Dimensional tests and
The first of six oscillation tests when exposed to fluid contaminants.
Are we seeing an acceptable level of progress here ?
After this level of testing, Bill Mackay stated, "We are very happy with bearing performance under some very harsh testing conditions. The bearings are surpassing requirements by a healthy margin, and we are confident that they will not only pass the remaining fluid contaminant and temperature tests but that the U.S. Navy will have comparable results in their testing."
Full Release: http://markets.financialcontent.com/demo/?GUID=18561352&Page=Me...
Now, stockwise...shortly after issuing our report on the company in December of 2010 (and then a report by Zacks Equity Research), the shares traded from $0.10 to high of $0.29 (a gain of 190%)-- within about a three week period, with 4 million shares trading on January 19th.
In hindsight it may have been a little too much, a little too soon (remember what we said about fast and furious) and the shares have retreated to a level which is only 20% higher, than where we issued the report, despite the company advancing admirably and right on schedule.
6 Month Chart:
January trading: http://finance.yahoo.com/q/hp?s=TPAC.OB&d=5&e=3&f=2011&g=d&a=8&b=8&c=2008&z=66&y=66
In our opinion, this represents is an excellent opportunity for aggressive investors.
Both reports (Zacks and IA's) can be found at our Airline Stock Review website. They are both excellent reports, if we must say so ourselves:
One final note with all of the negative press surrounding the many recent Chinese reverse merger blow-ups. We have spoken with Bill McKay and Ray Kwong, at great length. They are both California based, 25 year aerospace veterans who decided to get together and launch the first China based manufacturer of aerospace component parts.
This not a Chinese company which acquired a US based shell in a reverse merger. It in essence, is the reverse (a reverse, reverse ?)
Their plan was to use U.S. technology and leverage it with China's excellent quality and cost benefits, to create a final product legally qualifying to carry the "made in China" stamp.
Their plan was to complete an acquisition of the assets of a U.S. based aircraft component part design and engineering firm, which had the technology to manufacture SAE-AS81820, 81934 and 81935 self-lubricated spherical bearings, bushings and rod-end bearings which, is an $1.5 billion annual market.
Of course knowing that building a manufacturing facility to actually produce these aerospace components, which are highly regulated for safety and reliability -- could cost tens of millions, they wisely planned to engage in a series of sophisticated financial engineering steps and enlisted partners, to achieve their goals.
Once they identified an acquisition candidate with the technology, they planned (and did) to roll it into a publicly traded U.S. company they would acquired via a reverse merger and then acquire it in exchange for stock, change the name to Trans-Pacific Aerospace and then next seek to acquire a "stake" in a qualified and established Chinese owned and based manufacturing company in exchange for their technology. Which of course is not as easy as it sounds, but they did it.
With stakes acquired in both firms, the next step would be to assemble a team of qualified executives to run the business and begin to manufacture prototypes (which they did). Once the prototypes were completed, they would next begin to manufacture actual parts in the United States to be tested for reliability (which they are doing now).
So there you have it.
Disclaimer, TPAC: This press release and newsletter contain forward-looking statements concerning Trans-Pacific Aerospace within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding Trans-Pacific Aerospace's expectations for the certification of Godfrey's Guangzhou, China production facility; the commencement of manufacturing of Godfrey's initial product line of spherical bearings; continued growth of the market for component parts of commercial aircraft; and the potential sale of Godfrey's bearing products. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to delays or failure of certifying Godfrey's Guangzhou China manufacturing facility; Godfrey's inability to obtain the capital or human resources necessary to commence manufacturing of its bearing products; the inability to successfully market Godfrey's bearing products to the commercial aerospace industry; and the ability of Trans-Pacific Aerospace and Godfrey to acquire additional capital as and when needed, and those other risks set forth in Trans-Pacific Aerospace's annual report on Form 10-K for the year ended October 31, 2009 filed with the SEC on February 12, 2010 and subsequently filed quarterly reports on Form 10-Q. Trans-Pacific Aerospace cautions readers not to place undue reliance on any forward-looking statements. Trans-Pacific Aerospace does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur. A client, we have been retained by the company for eight hundred thousand restricted shares and ten thousand dollars for investor relations services.
VTNR: This press release and newsletter may contain forward-looking statements, including information about management�s view of Vertex�s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the �Act�). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex�s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex. That would be us, though we have friends who are significant shareholders in the company.
VHC: This press release and newsletter may contain forward-looking statements, including information about management�s view of Vertex�s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the �Act�). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex, its divisions and concepts to be materially different than those expressed or implied in such statements. Not a client, but we again have friends who are significant shareholders in the company.
Going Concern Statements.
We would like to point out that the majority of companies listed on the
OTC Bulletin Board have factors which create an
uncertainty about the their ability to continue as a going concern. These
concerns are typically related to financing (or lack of), competitive
environments, lack of operating history and operating at loss levels which
is typical of most start-ups.
These statement can usually be found in their most recent 10Q filings and
typically you don't have to dig to far down past the financial tables. We
like to use http://www.pinksheets.com for quick and easy access to SEC
filings. We think it would be wise for most investors to assume that all
companies listed on the OTC Bulletin Board (and many on NASDAQ) have going
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