Heys.Was just reading up on an article in The Australian that...

Heys.

Was just reading up on an article in The Australian that was from late last year. It is interesting to see what kind of criterias fund managers look for in penny stocks.

http://www.theaustralian.com.au/business/wealth/pennies-from-heaven-microcap-stocks/story-e6frgac6-1225965415006

So from my interpretation of the article, SBL at 3c at the moment is classified as:
- a dreadful penny (lower than 10c)
- a fallen star since 2004 (when $2.85)
- been heading nowhere for years (if we look at the past few years in the chart).

However things have changed. Ever since the acquisition of Konongo and the change in name from Signature Brands, we could re-classify that SBL is a newcomer with a reasonable story.

So.... what will attract investment funds to investment in SBL?

Most small cap funds will not invest in sub-10c. SBL is now 3c with the capability of hitting 10c with good announcements this year.

Greg Canavan, Founder of Smart Money, Smart Investments would class a dreadful penny for a minnow resource company if they were scratching around for resources. Canavan won't go near companies without established cashflow. SBL even though still is "scratching" around, have confirmed resources and has high potential to find more. Production will surely secure cashflow as well.

Fairview Equity Partners prefer investing in companies which have minimum of $70 million market cap. SBL market cap is ~$56 million at the moment (still undervalued).

Carlos Gil, Managing Director of Microequities says "Another rule of thumb is that if a company has been listed for five years without showing a profit - or at least a route to profitability - they probably never will. There's a lot of companies in the micro caps space whose life depends on a continuation of capital raising. We don't invest in companies without a proven business model and two years of demonstrated profitability. The first rule of making money is not to lose money." SBL unfortunately haven't been able to prove profitability and they have been raising capital.

Fairview Asset Management seeks stocks with a "good solid story" on earnings and cashflow.

On story and fundamentals, SBL is looking in a good position at the moment being so close to production. Once SBL can fly into the radar of these Fund Managers, we could possibly get more exposure which would push the share price ever higher.

All we need now is:
1. Solid production and cashflow that will prove that this company is making money.
2. Good drill results.
3. Management to avoid capital raising where possible.

If SBL can manage these, it should push the share price up, hence market cap as well. This would definitely start attracting fund managers out there. If we hit 10c, we can go much further in no time.

Please correct me if I'm wrong.

All we can do now is just wait and time will tell... I admit I'm growing impatient. The suspense is killing me.