| To: xcentral1 who wrote (7910) | 5/21/2007 8:58:42 PM | | From: LanceJ | of 8122 | | | As a major shareholder in PLNI that has held for about 3 years now, I would be lying if I said some of this recent news regarding the chapter 11 bankruptcy filing was not a surprise.
Nevertheless, I have always said that PLNI is a long term play with a hold of perhaps as much as 5 years. I think what most people don’t understand is the mentality of us long term investors. Analyzing the investing strategy of investors like Warren Buffet, Peter Lynch, and George Soros a common theme emerges: buy a stock that nobody wants when nobody wants it, and sell the stock that everybody wants when everybody wants it.
I can't count the times when I hear rookie investors say, “If only I would have bought Wal-Mart in the 80’s”, or “If only I would have bought Microsoft 20 years ago”, but what they fail to grasp is exactly what the company was like when it was selling so cheaply. They take the company they see now, in the present, and superimpose it on the past. Of course this is logically incorrect. A company that is cheap, is cheap for a reason. If that compelling reason did not exist that made it “cheap” in the first place, it would, by necessity, cease to be cheap. Wal-Mart, in the early 80’s, had some serious financial problems and with a whole 4 stores open, it was hardly a compelling investment at that time.
The secret to massive profits in penny stocks is to buy a stock that nobody wants when nobody wants it, and sell it when everybody wants it. In fact, Warren Buffet took this truth to the extreme by actually buying companies that were in chapter 11 bankruptcy and taking his own money and experience in helping to turn the company around and then selling out when everybody else was just starting to buy it.
Much of the debate concerning PLNI as an investment comes from investors who are attempting to make quick profits in penny stocks. Going for quick profits in penny stocks is like trying to cross a desert without any shoes on. You are only going to get so far before you realize you can’t go any further. Traders who try and play penny stocks for quick profits of 1 – 3 week hold times will eventually go broke, just like traders who chase penny stocks higher. But a trader has to learn these lessons for himself, anyone trying to explain this to him before he actually looses his wad is likely to be attacked. As they say, “Hope Springs Eternal”, and so an evolving crowd of amateur traders who try and play penny stocks short term will always be there. This is precisely the crowd that will attack your bullish long term stance on a stock like PLNI in public message forums. These are precisely the traders who will, in a rush to judgment, proclaim “Game Over for Long-term PLNI Shareholders”. But in reality, the chapter 11 filing actually helps keep Plasticon in the game.
PLNI going into chapter 11 bankruptcy is a great thing with the sort of financial problems they apparently have. As long term shareholders, we do not want to see Plasticon loose the ProMold facility. This clearly would have happened had Plasticon not filed for chapter 11 protection.
Does this mean that our hopes of making obscene profits in PLNI are completely destroyed? Not at all. Remember, we buy a stock when no one wants it (aka too afraid to buy it for fear of loosing money), with the goal of selling it when it comes back into favor and everybody wants it. This cycle from out of favor to in favor can take years to complete itself. While we need to follow the restructuring closely, we still have a probability of making great profits in PLNI. Granted, this new bit of information over the last week has reduced that probability some, nevertheless, that probability still exists and is one I’m willing to gamble on because I have balls of steel.
There was a post asking about First American Stock Transfer. Call Plasticon’s Investor Relations to get the mailing address now if you’d like (706 E. Road, Suite 202, Phoenix AZ, 85022), but wait! Don’t rush too quickly. We want to view the terms and conditions of the convertible preferred stock. Notice the “convertible” in front of “preferred stock”. This is very important. It leaves the possibility open that after we convert from common shares into preferred stock, we will be given the option in the future to convert back into common shares when/if PLNI trades its common shares under a new ticker symbol presumably after a plan is approved by the bankruptcy court. In fact, I have a colleague who is buying more shares of PLNI right now, in order to benefit from the $1 par value conversion to convertible preferred shares, with the idea that PLNI will probably give an option to convert the shares back into common shares at a future point in time. While I find this strategy a bit too risky for my taste, I share it only to expose some of you to what other traders are considering.
It is still too early for an investor to set in stone that he is going to have his common shares converted into convertible preferred shares until we know more about the terms and conditions of these convertible preferred shares as it becomes available and is posted on Plasticon’s website. |
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