Following PO3’s astute decision to have a dual-listing on OTC, I got to thinking about other Aussie companies that dual-listed on OTC and the effect on their price.
Background
There are a number of Aussie companies that have dual-listed on OTC, but I was looking for a comparable company (for example, FMG is not a comparable in my eyes). The one company that struck me as most comparable was Clean Teq Holdings Ltd. (CLQ).
Similarities include a billionaire major shareholder (Robert Friedland in the case of CLQ) who are also directors and water purification technology in both company’s asset portfolio. Differences include that PO3, unlike CLQ, is a pure technology play. Of course, there are other differences (and I suppose similarities), however, at least to the best of my knowledge, these are the most apparent.
Consequently, although this is not an apples to apples comparison, I do believe my analysis has some validity.
CLQ listed on OTC on 13/02/17. Funnily enough, the market was informed of this by an announcement on 8/02/17 – just 5 days before. I was unable to find any reference to the OTC in any prior report. In the case of PO3, we have been given about 2 months of a heads up. I will double back to this point shortly.
The Bottom Line
On 8 Feb. when the OTC was announced, the stock closed at 72c, up 2c on the day for a 2.85% increase. PO3, with much more runway till the OTC, jumped 55c to $3.72, for a 17.35% gain.
View attachment 1658326
CLQ appreciated slowly to around the 80c level by 23 Feb., 10 days after OTC listing, and then took off like a scalded cat, hitting a high of $1.18 on 10 March on huge volume of almost 10m shares. No doubt the report of a strategic partnership on 28 Feb. also helped CLQ reach its heights.
Consequently, PO3 appreciated from 70c to a high of $1.18 in about a month from the time the OTC was reported for a 68.6% gain. However, if we look at the market cap, CLQ had an undiluted issued cap of about 478m shares. This means that
CLQ put on up to $230m of market cap on the back of the OTC.
My Sinister Theory
I hope you haven’t forgotten about my earlier point about CLQ shareholders only being a 5 day heads up about the OTC versus PO3 shareholders who have been given about 2 months.
Now we all know that not only is the PO3 register as tight as a nun’s punani, but so too is the information flow from the company. I cannot recall PO3 ever moving prior to a report, unlike most ASX-listed companies.
Now let’s assume that CLQ doesn’t run as tight a ship as PO3 and there were people getting set prior to the 8 Feb. report in anticipation of the OTC listing. That’s what the yellow rectangle I drew on the chart demonstrates - a 1.5 month consolidation/accumulation period prior to the OTC report.
If my theory is correct, CLQ moved from about the 50c level to a high of $1.18 for a 136% gain. This would mean a
$325m increase in market cap caused predominantly by the OTC.
Of course, if there was a reference to the OTC prior to 8 Feb., my theory goes up in smoke and we’re “only” talking about a $230m increase in market cap.
Implications for PO3
If you run the numbers for PO3, a $230m increase in market cap (using an issued cap of 32m shares for PO3) equates to a
$7 increase in share price. A $325m increase in market cap would equate to about a
$10 price increase. Consequently, if PO3 follows CLQ, it could relate to a share price of
$10-$13.
Conclusion
Now this analysis may seem a little simplistic or naïve to some of you out there in HC-land, and I agree with you to an extent. The fact is that there were/are numerous other factors that affect share prices than those listed, however the fact is that PO3 is MUCH tighter than CLQ and notwithstanding Robert Friedland having achieved some phenomenal results in the mining industry, they pale into insignificance when compared to our own Bill Parfet. I’m also willing to put my head on the chopping block and say that BP is held in much higher esteem by the investment community than “Toxic Bob”.
I believe the OTC listing will be a watershed moment for the trading of PO3, and that’s why I have been a proponent for its implementation. The OTC coupled with an OEM would see this stock trading closer to $20 than $10 IMHO.
If you take a look at the Somnio Global website, you’ll see their corporate logo is Dare to Dream. When I dare to dream about PO3, the potential of its FRG technology and the caliber of its management, the possibilities seem absolutely astounding.
