One of my core beliefs is that as companies grow the tendency is that more people own them. In other words, more people own larger companies. Going along with this philosophy, as companies grow they get more shareholders. I feel that the more shareholders a company has the more likely it will trade around what it is worth and shareholders may experience the winner's curse.
The way to take advantage of this is to own small companies priced to be small companies that are on the path to becoming larger companies. The same applies to exchanges. The larger the exchange, the more likely the company is closer to intrinsic value. I'll illustrate briefly three potential values using this framework.
Starting on the Pink Sheets, which is the lowest of the lows, is Sino Agro Foods. The rumor is that the company is going to be paying a dividend and uplisting to the OTC. Shares are currently selling at less than book value, and I don't find them excessively cheap by my absurd standards, but nonetheless they are worth more.You might be interested in the company's January 2010 presentation, which is out this week. Click here to take a look. One thing that might interest you is the intent to pay a dividend. You can barely find that in the OTC, not to mention the Pinks. This suggests that Sino means business. China Armco (CNAM.OB) is on the OTC, but in my opinion, not for long; it's moving up. This is my "grand slam" breakfast meal and part of my daily diet. If you are able to crunch numbers on the back of a napkin or envelope, I would recommend doing so here. Keep it, you might just find yourself stopping by the framing store a couple years from now or maybe this next year looking to frame your first grand slam as well.
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