Hot Penny Stocks to Watch

Page 1

Hottest Penny Stocks – Part II

Hot Penny Stocks to Watch


Disclaimer

Stock speculation is very risky

Do not trade with more than you can afford to lose.

Seek professional investment advice.

This is not investment advice.

No warranties, you are on your own.

This is not suitable for all investors


Penny Stocks to Watch

My favorite type of penny stocks to watch are the public shells that can be used for reverse mergers

A reverse merger is when a private operating company is acquired by a shell (non-operating) public comapany.

This is done so the private company can go public fast.


Reverse Merger Price Jumps

With the merger, the shell may go from a small market value to a large market value in a few months

For example, the shell may have a market value of from $100,000 to $500,000

The shell shareholders get to keep usually 5-20% of the new merged company

The merged company may be worth millions


Hypothetical Jump in Value

Do the math, if the shell was worth $100,000

The operating company is worth $10 million

Then the value of the merged company should be more than $10 million

So if the shell shareholders keep 5% of the total new, merged company, they have stock worth $500,000 or five times their original investment


Reverse Merger Example (chart courtesy of Stockcharts.com)


RMDM

RMDM was a speculative, sub-penny stock that took off after a reverse merger

Huge profits were made by the original holders

Note that it went right back down again For more such stocks see my YouTube video “Hottest Penny Stocks Part I�


RISKY!

While large gains can be made by sophisticated players in these stocks, they are very risky

Most OTC shells will not merge in a given year

They have little or no public information and what is there may be incomplete, misleading or even deliberately false.

Merger stocks tend to rise and fall FAST!

Never risk a lot of money in them


Where to find them

Reverse merger shells are found in the Pink Sheets and on the OTC Bulletin Board

Pink Sheet shells may not be providing public information

There is no subsitute here for educated, tedious research

Experience and knowledge can pay large dividends here – ignorance is expensive


Learn More

Subscribe to my YouTube videos

Subscribe to my blog

www. investing-performance.com


Read My Book on Amazon.com

How to Pick Hot Reverse Merger Penny Stocks


John Lux

Trader, investment banker, former OTC Market Maker and attorney Lux.Investor@ gmail.com

Copyright ŠJohn Lux 2011


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.