Fantastic news!
As followers of this forum will know, I have been calling for this logical next step to transpire for quite some time. In fact, I think I first suggested it back in November ’18. Apparently PO3 management are readers of HC &/or as intelligent as yours truly (sarcasm intended) and have taken my input on board.
There is absolutely no doubt in my mind that PO3 will receive a strong rerating on the back of an OTC listing, with positive price action already in the lead up to the listing. North American investors will soon be able to buy the stock without having to stuff around with Aussie brokers and no doubt BP is better known and appreciated on home turf than elsewhere. In fact, rest assured that it’s BP’s contacts who’ll ultimately be selected to take PO3 to OTC. Similarly, Yanks have a better appreciation of tech than Aussies, and the power of the FRG technology should be better reflected in the market cap following the OTC listing.
Other advantages vis-à-vis the ASX are that Yank investors aren’t put off by multi-dollar share prices and a smaller issued capital. They’d much prefer a $1 billion cap company comprised of 20m shares trading at $50 than 500m shares trading at $2, which is more to the liking of Aussie punters. Add to this the fact that they’re getting plenty of bang for their buck with the USD/AUD exchange rate and we could be off to the races very soon.
The timing of the OTC is of interest to me. Why now? If I had to figure a guess, it will help in negotiations with OEMs as well as potentially pointing to a deal with an OEM/s being not too far away.
Funnily enough, I asked exactly the same question that I asked above, Why now?” in my
Magnum Opus post from just over 18 months ago. Since then, a lot of water has flowed under the PO3 bridge, with PO3 trading at 26c at the time of that post. That the same question reverberates through my mind as I read this announcement gives me goose bumps. A similar percentage move in PO3 over a similar time frame would not surprise me with the OTC an imminent event.
Another question that I’d like to see answered is how the US market maker is going to get its hands on stock. Does PO3 place a small quantity of stock? Does the company approach some larger holders and ask them to sell a few shares for the greater good? Does Dilato take one for the team and let a few of its shares go to help satiate a bit of liquidity? It’s a nice problem to have and one of the advantages of pursuing an OTC with such a tight register and small free float. Given management’s track record with a placement to BP at a 500% premium to the then price, I have full confidence in management to deliver a solution in the best interests of all shareholders.
Some of the parallels between trade over the past 7 months and trade between December ’17 and November ’18 are quite ominous.
During the earlier period, the stock range traded on low volume. The only seller of size (this is all relative of course) was taken out of approximately 70k shares on the morning of the BP announcement at around 70c. Recently, we have had a seller of approximately 21k shares (if memory serves me correctly) who seems to have just completed or has scraps remaining.
On the back of BP’s involvement, the stock appreciated about 500% initially and continuing to an approximate 1000% rise, before entering this corrective/consolidation phase. A similar percentage move in PO3 would see us trading at between $15-$30 for a cap of between $500m to $1 billion. This is still reasonably small in USD and by US standards.
I believe the OTC listing is a precursor to a major rerate for PO3. Any positive news with an OEM is going to send this stock to the stratosphere and Tukebay well into retirement.
The late Kerry Packer was quoted as saying, “You only get one Alan Bond in your lifetime, and I've had mine”. I genuinely believe that one day I’ll be able to tell my grandchildren, “You only get one PO3 in your lifetime, and I've had mine”.
PO3 is a stock that requires investors to exhibit 2 attributes:
- Patience; and
- An ability to go against your own better judgment by selling too early.
Whenever you have any self-doubt, just keep reminding yourself that management is capable and aligned with shareholder interests, and BP did not invest his money and time in PO3 because he thought it would only be a billion dollar company.
