PENNY STOCKS: ARE THEY USEFUL FOR ANALYSTS?

Read Don Erickson's report, Penny Stocks: Are They Useful For Analysts? here (PDF).


Penny stocks are a largely overlooked, information-sparse, and lightly traded stock. Micro-cap public companies, penny stocks are traded on Pink Sheets or Over the Counter Bulletin Boards, or OTCBB. A valuator, when dealing with these stocks, asks the questions:

1. Can these stocks be overlooked in the valuation process due to often limited and sometimes false information as well as low trading volume?

2. Are the pricing mechanisms garnered from micro-cap penny stocks even reliable to the valuator?

Despite the chaos and insanity that accompanies the OTCBB and Pink Sheet stakes, those investing still seem to like that chaos. Over 50 million dollars a year is funneled into the marketing, and as a result, there is little call for regulatory alterations (the SEC inaction giving way to a sense of a "buyer beware" mentality).

Within the chaos, however, there are pockets of sanity and rationale when dealing with the largely indefinable investment criteria, not so immeasurable for OTCBB stocks, of Pink Sheet stocks. To understand where these reasonable and sane areas of measurable investment criteria exist in dealing in Penny Stock trades concerning OTCBB’s and Pink Sheets, read Don Erickson's report, Penny Stocks: Are They Useful For Analysts? here (PDF).


ABOUT ERICKSON PARTNERS, LLC

Established in 2003 and based in Dallas, Texas, Erickson Partners, LLC is a professional corporation focused on business valuation, litigation support and valuation advisory services. The firm is headed by Don Erickson, a former tax partner and national director of business valuation for Ernst and Young, LLP. For more information please call (214) 468-8400 or visit our website at www.ericksonpartnersllc.com.