Has Any Penny Stock Become a Big Company? (PART 1 )
in response to
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Message: Am I wrong in thinking if PTSC went from
INTERESTING COMMENTARY BY FLOYD NORRIS RE PENNY STOCKS AND MANY BACK AND FORTH REPLIES TO HIS QUESTION. YOU WILL FIND FOR EXAMPLE MILAN LAB SHARE PRICE APPRECIATED 400,000 PERCENT !!!!!!
August 16, 2008, 10:31 pm
Has Any Penny Stock Become a Big Company?
The previous post, on stealing a company, brought a claim that is common, but incorrect: that a major company used to be a penny stock. In this case, the claim was made for Intel.
Intel went public in 1971 at $23.50 per share. I don’t have complete records before late 1973, but I think the lowest per share price — based on the shares then trading — was $14.88 in 2003.
If you look at a long-term stock chart, you can get the impression Intel was a penny stock, because the chart is adjusted for splits. If you bought one Intel share at any time in the 1970’s, and put it away, you now have 96 shares thanks to splits.
The lowest split-adjusted price I could find was 16.1 cents on Sept. 17, 1974. But the actual price someone paid that day was $15.50. Someone who specialized in penny stocks, sometimes said to be shares under $5, although now they are usually under $1, would not have bought Intel at any time in its history.
Here is the challenge: Can anyone name a company that became a successful important company that was ever really a penny stock?
Addendum: I should have specified U.S. company. In some countries, such as Britain, there is no tradition that good stocks do not sell for pennies.
Second addendum: The post as printed is in error on one point, as I explain in reaction to comment Number 18. The split-adjusted low was $0.0287. But the lowest price ever seen by a customer was, as I said, $14.88.
From 1 to 25 of 39 Comments
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1. August 16, 2008 11:20 pm Link
I don’t have the time to do the research, but I’m sure you could find a top Canadian gold stock that did.
Also, I think the question has to be expanded to ask if any penny stock, at some point, was taken over and their product became a success for the new parent company—I’ll bet this has happened more than once.
— Robert Wenzel -
2. August 17, 2008 2:15 am Link
In early 1985, Apco Argentina (APAGF) traded for 1/8 by 3/8. The stock has since split 4-for-1 (last November) so it was even less than that. It’s now worth about $27 a share,
Is it important? Well….
— Eddy Elfenbein -
3. August 17, 2008 2:49 am Link
Ok, here’s a better one. Mylan Labs (MYL) was going for 75 cents a share in 1976. Since then it’s split 11 times (one 5-for-4, four 2-for-1 and six 3-for-2) for a total of 227.8125 for 1. Which means that adjusted for splits, the stock was going for less than one-third of a penny per share. The stock is now going for $13.72 which is about half what it was five years ago. Still, it’s a nice 400,000% return for its low.
— Eddy Elfenbein -
4. August 17, 2008 5:24 am Link
Fortescue Metals Group was an Australian company trading under 3 cents back in 2003, they’re now producing 100 million tonnes of iron ore a year. They might not be a giant blue chip yet but they’re on the way. Latest price was $7.50
— Leon -
5. August 17, 2008 10:24 am Link
If $5 or under qualifies. Imclone traded around $5 a share in the 90’s.
— mh497 -
6. August 17, 2008 10:42 am Link
CNQR - Traded at $0.3 sometime back in Apr 2001 and is now the darling of the street as an extremely successful Saas company trading at over $47.
— Sandeep Grover -
7. August 17, 2008 11:17 am Link
Xerox was a penny stock .
— Jeffrey Robinson -
8. August 17, 2008 4:29 pm Link
TRLG is a pure Vancouver spam fraud-turned “real” compan when their jeans took off. But the odds are so against it, easy to understand why I’ve made millions short selling penny stocks whenever they get hyped up. It’s so easy, it’s almost unfair. You can see on my blog how this one simple strategy has made 100%+ in 2008
Tim
— Timothy Sykes
http://www.timothysykes.com -
9. August 17, 2008 10:45 pm Link
Titanium Metals traded under $1 in 2002. Now its a $2B+, S&P 500 company.
ms
http://microcapspeculator.netFloyd Norris replies: Titanium (TIE) began lilfe as anything but a penny stock. It was a Solomon underwrititng in 1996, as $23 a share. The commenter is right that the share price later plunged and recovered to a high over $47 in 2006; it is now around $12.
— microcap speculator -
10. August 18, 2008 2:14 am Link
Computer Motion (RBOT)
65 cents .now over 300 bucks
Floyd Norris replies:
Mr. Kalantis, your research seems flawed to me.
RBOT was not a penny stock when it debutted in 1997. It went public at $14 a share, and climbed to $18 in 1998 before beginning a decline that took it as low as 54 cents in 2002.
As I read Bloomberg, this company was acquired in 2003 for $3.77 worth of stock in another company. That company Intuitive Surgical, has prospered, and one share of it did recently trade for more than $300.
However, after splits and all, one share of RBOT appears to have turn into 0.257135 shares of Intuitive. That is more than $75 worth of stock, which is very good, but not as good as you indicate.
Did Intuitive prosper because of this acquisition? I don’t know.
— tkalantzis -
11. August 18, 2008 2:26 am Link
SoftQuad Software, Ltd . (OTCBB:SXML), an internationally recognized internet software developer, had its start as a public company via a reverse merger into The American Sports Machine, Inc.
Initial trading of AMRP was at $.03125 per share and soared to a high of $50 per share or 159,900% six weeks later.
Floyd Norris replies: I looked this company up on Bloomberg, and this is how I read the history. (If I am mistaken, please let me know.)
That move to $50 was an unusual one, to say the least. According to Bloomberg, the stock closed at $4.19 on Feb. 17, 2000, and then did not trade at all until Feb. 29. In between, there was a 4-for-1 split, so the old price was adjusted to $1.05.
On Feb. 29, 1,600 shares traded. The high, as the commenter reports, was $50. The low was $7.50, and that was also the closing price.
There was no trading on March 1, but on March 2 there were 1.7 million shares traded, at prices in the $30’s. The volume and price declined thereafter.
SXML was acquired by Corel Corp. on March 19, 2002, for 0.519 shares of Corel for each SXML share. On Sept. 3, 2003, Corel itself was acquired by a venture capital firm for $1.42 per share. That values each SXML share at about 74 cents.
In other words, virtually no one who bought in the public market, after the promotion began, made any money at all. Was it a classic pump-and-dump stock? I don’t know, but it does not strike me as a penny stock success story for public investors, or as a company that met the stated criteria, of becoming a major, successful company.
— tkalantzis -
12. August 18, 2008 2:28 am Link
SPEA traded at $0.10
SPEA announces that they entered a definitive agreement to acquire a majority interest in the assets comprising the estate of Elvis Presley. Stock opens at $0.37, trades as high as $7.50,
— tkalantzis
symbol changed to CKXE, listed on NASDAQ.traded at high of $30.65
CKXE added To Russell 1000(R) Index. -
13. August 18, 2008 10:59 am Link
Floyd, this is a foolish excercise.
1. Can you define penny stock as I am sure you are not referring to the regulatory definition relating to securities selling below $5.00.
2. Are you talking about companies that fell to penny stock levels or companies that began as a penny and moved forward? Delta, UAL, etc… were all penny stocks listed on the OTCBB markets at one time as have been many others like them.
3. Do you understand that there are more companies trading on the OTCBB and pink sheets than either the NASDAQ or the NYSE?
4. Do you know how many reverse mergers were created from penny stocks?
I guess in the end one must question what point it is you are driving home. You track singular companies like USXP and CMKX and somehow make those companies out to be the stereotypical penny stock. In reality that is far from the truth. not every company grows to be an Intel or an Amazon but many penny stock companies prosper with jobs and technology that supports our economy. It would help you to understand that simple fact.
— Dave -
14. August 18, 2008 11:26 am Link
Floyd, OTCBB posts what they call a “graduation list.” This is a list of OTCBB listed securities that graduate from the OTCBB markets to the big boards (NASDAQ,NYSE, AMEX). By the market caps in some of these companies it looks like several have become successful for their business class.
http://otcbb.com/dynamic/tradingdata...
Floyd Norris replies: Have any become real business successes over the long term? That was the question.
— Dave -
15. August 18, 2008 12:01 pm Link
Check with the Market Technician’s Association.
Intel traded at $.015625 cents in 1974. It took 7 years for it to get to $.31 per share in 1981. Merrill and others wrote reports on this phenomena if you want to learn something.
Nearly all of the modern major companies we know today were traded at pennies in the 1960’s, 1970’s, and 1980’s.
Read the Microsoft Annual Report. After starting wtih $16,000 in revenues in 1975, they eventually did their big IPO in October, 1986. How Big? The original deal was expanded from $25 Million because it was so oversubscribed. No such size IPO would be doable today.
The ignorance of your question belies any market historical competence. There were literally hundreds of successful companies that came from the pre-BB/PS structure of the OTC Markets.
Query players like Oracle, Sybase, and more. Query the Exchanges. They tell the same story. The vast majority of these now Exchange listed companies went to the Exchange listing platforms from originally being penny stocks, except for those from Private Venture funding sources.
Floyd Norris replies: Mr. Burrell, did you read the original post on which you are commenting? The point was that Intel’s split adjusted price is not the price investors saw when they bought it.
You mention Microsoft. That is a stock that has never sold for less than $21.46 per share — a price it hit in 2006. It has had a lot of splits, but it was never a penny stock.
The original question sought a stock that actually traded for pennies, and became a major company. Can you name one?
— Bud Burrell -
16. August 18, 2008 2:03 pm Link
exobox is trading at 20 cents at the moment.
— harveydawabbitt
it is tech company that certainly has the potential to trade in the dollars if the folks that are naked shorting it would stop.
this company has been off and on the naked short list several times.
as of today it is 16 days on the list.
that is 3 days past t+13. -
17. August 18, 2008 2:25 pm Link
You’ll get more stock names if you ask what penny stocks now were once big companies instead. I can think off the top of my head of at least a dozen and some I owned on the way down.
Floyd Norris replies: And perhaps some of them will be big companies again. I should have specified that I was not looking for fallen angels that subsequently recovered.
— fxp -
18. August 18, 2008 5:58 pm Link
The price of Intel stock was 1/64th, .01625, on Aug 30 1974
Floyd Norris replies: That is not correct, according to data I can find. But it does appear that my original blog was incorrect on the stock’s split-adjusted low. According to Factiva, the lowest split-adjusted price, of $0.0287 was reached on Sept. 17, 1974. Expressed as a fraction, that price is about 1/35. By the way, 1/64 is 0.15625.
I assume there was an earlier split that I did not find in my search.
The actual bid price that day, for the shares then trading, was $15.50, according to both Factiva and to what the New York Times printed the next day. (The asked price — the price you would have gotten had you put in an order, was $17. In those days, Nasdaq really had spreads.)
On the date you mention, the actual closing bid price was $30. Intel had a very bad couple of weeks after that, losing nearly half of its value.
The fact remains that the lowest price per share — in terms of shares actually trading — that I can find was $14.88. Intel was never a penny stock.
— tkalantzis -
19. August 18, 2008 7:19 pm Link
Hansen Natural was trading in below $1 in early 1996. It wasn’t until July 2003 that it reliably stayed above $5 a share. The next five years is widely chronicled - July 2003’s price is a split adjusted $0.64 to $28.59 (Splits:09-Aug-05 [2:1], 10-Jul-06 [4:1]). Important company? Depends if you prefer Red Bull or Monster. :-)
— Kevin -
20. August 18, 2008 7:22 pm Link
90’s software roll-up Shared Medical went public in a reverse merger into a penny stock, then became wildly successful, much to the dismay of its high short base, and it was ultimately acquired by McKesson. The blogger at #8 above is right about TRLG, too.
— ladymissjess -
21. August 18, 2008 7:53 pm Link
Floyd , your readers need to know Richard Altomare is out , how about a title FREEDOM FOR ALTOMARE ?
and we could discuss Gerard E Lynch’s jumping the gun .
— tkalantzis -
22. August 18, 2008 11:41 pm Link
You’re right on Intel’s stock on September 17, 1974 (a Tuesday). The stock closed at $15.50 a share. However, there were a few more splits that you realized. All told, Intel split 540-for-1 which means the split-adjusted price was just 2.87 cents! Interestingly, Intel actually underperformed the market during the 1980s! Meaning there’s a difference between a great stock and a great company.
— Eddy Elfenbein -
23. August 19, 2008 12:43 am Link
Floyd ,Computer Motion (RBOT) I had purchased 10 000 shares of Rbot in 2002 when it was trading at 85 cents . i sold it at 65 cents (stupid me ) due to a margin call .
Intuitive bought them out, they gave you 1 share of ISRG for every 2 shares of RBOT . my 10 000 became 5000
ISRG hit 350 bucks a share last year . Did Intuitive prosper because of this acquisition? yes because RBOT held all the patents .
If i held the 5000 shares and sold it at the 350$ high …my ten grand would have been 1,7 million
long live the penny!!
Floyd Norris replies: As I read the record, there was a sxplit in there, so Intuitive actually offered about 1 current share of ISRG for every four shares of RBOT.
— tkalantzis -
24. August 19, 2008 2:58 am Link
Because of the current market environment, I think that a more interesting question would be: Which stocks, traded for pennies now, that you think would become a big company in several years from now?
— pcyhuang -
25. August 19, 2008 5:38 am Link
Lucent LU traded well under a $1 a share before recovering in price and merging.
Floyd Norris replies: Lucent was, of course, a fallen angel. It traded at almost $65 a share, before falling to a low of 55 cents. Since the merger, things have not worked out that well, either. An old Lucent share is now worth about $1.47, compared to a value of around $2.50 when the merger was completed.
— Arthur Fullerton
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