Hello fellow investors,
Those of you that regularly follow my blog will know that I primarily focus on the Over the Counter (OTC) Markets in order to hunt for value where the least amount of competition exists.
The problem with the OTC markets is that there is no easy or quick way to screen for investment opportunities. One must manually work through the thousands of companies to uncover value. Thankfully a solution now exists which removes a lot of the hard work.
This stock is another oddity from the Walker's Manual of unlisted stocks. Allengheny & Western Railway Company (AWRY) was founded in 1898 and has no business operations to speak of. The company simply owns a 62 mile piece of railroad line between Punxsutawney and Butler Junction in Pennsylvania which it leases out for a fixed fee.
Whilst net-nets have all but dried up on the major U.S. markets they can still be found in the land of forgotten stocks, namely the OTC markets. This is the first in a number of net-nets I've recently uncovered which I'll be writing up as time permits.
Impreso Inc (ZCOM) is a pink-sheet which is classed by the OTC markets website as Dark or Defunct, my kind of stock!
Mortgage Oil Corp (MGAG) - An illiquid pink-sheet with a 12.8% div yield trading at 1/3rd of estimated fair value.
Today's stock is another pink sheet from the Walker's Manual of Unlisted Stocks (2002-2003 6th Edition).
First things first, Mortgage Oil Corp (MGAG) isn't an oil company, it's a real estate investment company with some cash and investments on its balance sheet.
Walker's informs us that the firm was spun off in the liquidations of Mortgage Guarantee Company and Mortgage Service Co. in 1946 and 1949 respectively. The mineral, oil and gas rights that the firm once possessed were distributed out to shareholders as dividends in 2005. Since 1991 the company has been primarily engaged in investing in Real Estate Limited Partnerships and LLC's.
How exciting I hear you say!, bear with me as it gets interesting.
I recently acquired some old Walker's Manuals of Stocks including the 6th edition 2002-2003 Walker's Manual of Unlisted Stocks (These books tend to trade at prices no self respecting value investor would pay but occasionally you can find them selling at reasonable prices. I recommend periodically scouring Amazon, Alibris and Abebooks to see if any cheap copies come up for sale).
Whilst leafing through the 6th edition Manual of Unlisted Stocks I came across a number of interesting royalty trusts including Trinity Petroleum Trust (TTYP)
I stumbled upon Ethernity Networks Ltd (LON:ENET) whilst looking through companies with negative enterprise value. Amongst the usual garbage of Chinese RTO's and moribund financial firms I came across ENET. As it was listed as a technology firm I figured I'd check it out since they can often have plenty of cash sat on the balance sheet.
Network-1 Technologies Inc (NTIP) is a micro cap IP licensing company trading on the AMX market of the NYSE. Here's the firm's vital statistics at the time of writing;
My journey through the shadowlands of dark stocks continues with Beaver Coal Co., Ltd (BVERS). This stock is as dark as they come with virtually no financial information available.
I happened upon this stock whilst looking through highly priced dark stocks with high dividend yields. I almost didn't bother digging any further given its a coal company, "these companies are in secular decline aren't they?" I thought. I decided to continue digging to confirm my suspicions that this was a dead end . Okay, it was the dividend yield that kept me digging!
I have been following the work of Dan at nonamestocks.com with great interest over recent months. He focuses his attention on looking at micro/nano caps, OTC, dark and grey stocks in order to fish where there is the least amount of competition and to try and maximize his ROI. This approach seems well reasoned to me and Buffett/Greenblatt/Munger have all suggested individual investors managing relatively small amounts of money should pursue this course in order to uncover the most compelling investment opportunities and minimize their competition.
With this inspiration in mind I have been trawling through the OTC markets on the hunt for potential investment opportunities. I came across PLWN by using the OTC markets screener to try and see if I could find anything of interest. This screener does not have all the ususal price and value metrics that most screeners have so you have to get creative with it. I hit upon the idea of omitting all the OTCQX and OTCQB stocks and all Pinksheets with current information to remove stocks which might show up else where (minimize the competition!). This left me with the Pink sheets with limited or no information and Grey market stocks. In number terms this works out at 9591 stocks to look through! I then decided to use the price function to rank these stocks by price per share to find the highest priced stocks, I figured the highest priced shares would be even more illiquid and even less likely to attract any interest.
Whilst scrolling through the list I was looking out for a few things, dividend yields, boring names (As Peter Lynch suggests) and volume traded. On page 6 Pinelawn Cemetery (PLWN) caught my eye.
Pendrell (PCOA) is in the business of licensing IP rights on the portfolio of patents it holds. In 2017 the company divested the majority of its patent portfolio but still holds digital rights management patents owned through their subsiduary ContentGuard and memory & storage patents owned through their subsiduary Memory Technologies, these latter patents were acquired from Nokia in March of 2013. Since 2014 the company has entered into license agreements with several leading memory device makers and the firm generates its income through the sale and licensing of its patents, and through litigation settlements from the enforcement of its patents. The firm's current IP Portfolio consists of patents which have either already expired or will do so between 2018-2035.
David J. Flood
UK based Investor. I focus
BLOGS I FOLLOW
No Name Stocks
Svenda's Manual of OTC Stocks
Nothing But Net Nets
Clark Street Value
Value Investing Blog
Deep Value Investments
Value Stock Geek
Barel Karsan - Value Investing
Yet Another Value Blog
Streets Of Value
TES Optimal Value Investing
The Bad Investor
Adventures in Capitalism
White Chip Stocks
Light Blue Value
Global Investing Insight
Mesaba Range Value
The Market Plunger
Battleship Investing Blog
The Investment Long-List
Grahamian Value Digest
Canadian Value Stocks
Analyzing Bargain Stocks