Xentel Inc. (XDM.V) – bottom fishing opportunity?

[Tara]

Xentel Inc. (XDM.V)
Investor Relations:
Caren Holtby, Email: carenh@xentel.com, Tel: 866-204-9861

They hold entertainment events, for example the Shrinners Circus and “ Hockey Hall of Fame Legends Classic Tour ”

• trading way below book value of 0.38$/share
• trading even below working capital per share of 0.20$/share
• over 450 clients , 3000 employees in over 30 offices across North America
• positive working cap of about 5.3M$ (about 0.20$/share )
• positive cash flow from operations of 1.1M$
• positive net earning in Q1 of +.01$/sharetive lately, they have a past history of positive net earnings (see retained earning cumulated thus far of over 5M$)
• Insiders own roughly 60% of the float

but of course, liquidity is a problem...

[garilou]

Hi, Tara

I made some research on XDM.

I'd have a few facts to present (maybe you can refute them), and a few questions (which you might rather not answer...)

• I found a book value/share of 0.40 (which is not a big difference with yours.) But book value is seldom considered as a good evaluation for the today's value of stock, and certainly not a good predictor for the future value of the shares. But you underlined it in red.
  
• Like the company it-self, you mentioned part of their earning report: "For the six months ended June 30, 2008, the net earnings were $592,000 compared with a net loss of $473,000 for the same period in 2007." Seems nice! But when one gets into fundamentals one must go through more then the earnings: an investor wants to know what is the value of what he is buying, because with so little volume, it's hard to bet on an enthusiastic wave of buyers!
  
  I've looked at the compared balance sheets  June 2008 June 2007. I won't go into details, but on the whole, the difference is -12.8% 
  The Current liquidity Ratio  (current assets/current liabilities) is 1.51, which looks no too bad,
  but
  the "Quick Ratio"  (cash + short term investments + accounts receivables/ current liabilities) is extremely low: close to 0!
  
• A sign of confidence, insider buying some shares (taken from Canadian Insider)?  Sometimes yes... but sometimes insiders can be very inthousiatic and full of hope! (Not to mention any other reason one insider could have to buy 0,02 cents over the "market price", if one can talk of market in this case) after 15 days of zero share traded...)
  
  
• Remember when I said your charts were not too convincing? I could not tell precisely why, but now I know what disturbed me: the lack of volume! Between the 11 August 2008 when you first presented us with this stock there were absolutely no trade until August 19 (27000 shares at 0.20 and August 20, 500 shares at 0,18),and before August 11, the last trades where on July 24, 25,500 shares traded at 0.16. I wonder if you bought this stock, and at what date and at what price? With so few trades, it's easier to try to ask one-self who bought when and how many?
  
  Do you still hold your shares?
  

In an answer that you gave,you wrote: 

I like to buy what I consider undervalued securities, then try to sum up like I did and let others know my perspective. Aren't these board for sharing information? 

I offered you my apologies for my no too friendly post, but, as respectful as would like to be, when I see you coming back 3 times in a row to stress the potential value of this stock, using big red characters, I can't help wondering if you do not have personal interest (like hoping that others will follow and put that "buying pressure" on a too risky stock.)

If you really do "scrutinize the financials", why do you mainly stress the positive, and make just a tiny negative comment:

but of course, liquidity is a problem...   

Lack of liquidity IS a problem. I have lost once all my investment in a penny stock of a very promising company, who had signed big sales contracts with China and with the US, because the company, on grounds of too little liquidity could not pay to have their financial results audited and were radiated from all markets.

Since I have been on this forum, I have seen people grateful for the gains they had made with SSP, others complaining about having endured heavy losses, asking questions about why a stock is still part of a portfolio.
I've seen people asking for info about a particular stock.
I have rarely seen someone so systematically promoting (sorry if I still use that word) specific stocks.

But I want to stress that this is my own way of thinking, and I might be the only one who gives some importance to the "appearance of no conflict of interest".
I am not starting a personal combat with you, to the contrary, when I started looking at XDM, it was because I had decided to give a positive look at your posts.

Please explain and make me be wrong.

Louise   

[garilou]

Tara,
Thank you for that prompt and very enlightening reply!

When I look for a stock, the insider trading is always one of the large weighting factors that I consider: on that point at least we agree on!

You write:

That's my way of doing, and it's obviously not yours.    

Not necessarily, or else I would not have spent so long to know more about that particular stock.
I have also a few time made money on penny stocks, I think it was a matter of luck though, because not too long after, the stock had totally disappeared.
In other cases, maybe I was not patient enough.

You write also:

You will rarely find bargains when the euphoria hits or everybody notices. 

I also tend to agree on this.

As for the lack of liquidity, you write:

I see lack of liquidity as an opportunity to discourage the weak hands   

What do you mean by "weak hands? "

This lack of liquidity, and the relatively high proportion of "account receivable" in the assets, for me are still 2 negative points.


About the volume, please let me ask another question:
If I look at the ask and bid for WDM, I can see a huge discrepancy between the bid size  and price, and the ask size and price, (which can explain the zero volumes).

How long in average do you hold to your stocks?
What happens if you wish to sell, and there is no one to buy?
If I wanted to buy now, I sure could not give an order to the market, because I would pay 0.25. On the other hand, if I give a limit price order, I'll have to leave open for at least 15 days!

Do you keep them long enough that until "if/when the company gets noticed"  by the market?
From the 26.2 millions issued shares and so little trading, and 60% being held by the insiders, when the market "discover the stock" I guess insiders will start to sell, and that would be the right moment also for you (or us) to sell too.

I'm sorry for asking so much, but I hope you will understand that it is because I want to understand more: I am open to everything, but not until I understand well enough.

It was the same with SSP strategy, it took me long to understand, and I asked lots of questions that, I think have helped other members to understand. So maybe my questions here will also help other members of this forum. After all, SSP also often owns very low priced (under $1.00) stocks.

Thank you again,

Louise

[garilou]

Gees, you are fast!

OK, I will stop giving you headaches, but I just want to thank you for answering almost all of my questions.

I'll keep reading your posts!

Louise   

[garilou]

Hi Tara,

Should I start my reply with the financial aspects, or the ethical ones?
There are lots of other "unethical" stocks on the market.
But my general feeling of SSP forum is that people posting here do have some ethical considerations, even if not often discussed.

You have been (I won't say "promoting") bringing this stock to our attention for quite a while now.

Please tell me where you can find in the financial crisis, a penny stock on the venture exchange trading at an EPS ratio of 1.5x... that will pay 22% dividend on top of it?

Yes... Very good question indeed! Really tempting.
Since you do so much research when you choose the stocks you talk about on this forum, I would still have a few other questions.
You talk of "today's "share price?
Bid - Ask: 0.075 · 0.15, and not a single trade today!
The trading range is 100%!
Please tell me:

• Why do you not say in clear words what is a "producer of cause related entertainment events?"
• What is my chance of purchasing a reasonable amount of shares at 0.09 or even 0.11 without my order being executed in less then a month?
   
• How come no one buys this stock - except maybe the insiders?

When things seems to good to be true, isn't there a chance that there's catch somewhere?

I hope that I do not sound too unfriendly again, but the markets are battle fields where every seller thinks the stock will move down, and every buyer thinks the stock will move up, and the seller thinks: "Got you! now you're stocked with something I did not want any more". It's OK when it is totally anonymous, but to post this here, again it sounds really like it you were trying to lure us into something.
Why do you feel the need of posting the same on so many boards?
http://www.pinnacledigest.com/blog/tara/xdmv-xentel-bottom-fishing-opportunity

http://www.pinnacledigest.com/forums/xdm:tsxv/xdm-eps-q2-01-q1-01-trading-around-20-cents
 
http://www.qiscapital.com/forum/display_thread.pl?id=1597

This brings me to the ethical aspect of the question.

Because before I buy, I also have some ethical considerations.
If I do not like the ethics of a company, I wait until I can short them.

I am sure that through your research you have found those few links:

State Sues Professional Fundraiser -- Xentel, Inc.
http://www.iowa.gov/government/ag/latest_news/releases/nov_2003/Xentel.html
Abstract:"
Our suit alleges that Xentel telemarketers trick Iowans into believing that the callers are themselves fire fighters, when they are not," Miller said. "We allege they trick Iowans into believing that donations will support local fire fighters, when that is not the case. And we allege they trick Iowans into believing that most or all of the money donated goes to help fire fighters, when that is not the case."


ATTORNEY GENERAL SUTHERS SUES NATIONAL CHARITABLE FUNDRAISER AND ANNOUNCES FRAUD CHARGES AGAINST
THREE LOCAL CHARITIES
Xentel lawsuit
http://www.sos.state.co.us/pubs/pressrel/xentel_charity_scam_8-30-06.pdf

EthicScan Canada Limited:
http://www.ethicscan.ca/products_services/research/psr/index.html
Abstract:
"In none of its Annual Reports goes the company disclose several government suits, actions and consumer penalties. Often these involve cases where the company retains 75-95% of all monies it raises through telemarketing."

Anyone works/worked for Xentel?
http://www.discovervancouver.com/forums/xentel%20inc%20bottom%20fishing%20opportunity/works-worked-Xentel-t88450.html&st=30&start=30

When I look at all this, I can't help to come back to my first impression - for which I once apologized - that you work for someone to promote stocks.

So for the moment, I think I will let the insiders buy back their own stock.

I know you once said I gave you "headaches". This will be another one I guess.

Louise

[garilou]

Tara,

I guess you have indirectly answered my question.

...our investment criterias are obviously not aligned.

Yes this is obvious.

...continue your life, you need not bother

You know what? That's exactly what I did!

Rest in peace garilou

Hum... I'm not dead yet!

And as often as I will be able to find the time, I will stress the unethical sides of your proposed stocks, which I won't do for all the stocks proposed by SSP, because I am a guest here.

Louise.

PS This new "Spell Check" tool is great. You probably did not learn Latin, criteria is a plural and doesn't need an "s" at the end 

[garilou]

WOW, this is too much honour for me, that your post starts with a warning for me!

let's agree to disagree

I though we had agreed on this long time ago!
I "rested in peace", but astrologically, I am a Lion, and you know what they say: "Don't wake up the lion who sleeps?"
I guess you should not have woken me up.
You seem not to understand what a forum is: a place where people discuss!
You seem to hope that you have your private "blog" here.
You warn *me* to shut up, not surprising, since I seem to be the only one willing to exchange with you.
The stock is rated ****!
So I wonder why this comforting news has not convinced any eventual buyer to bid somewhat higher?
Because clearly, all shareholder are holders!
This news was certainly not "news" to everybody, since the stock reached a certain high... on August 11th (last trade that I can see), and when the news came out, it was already priced in.

Apart from the ethics, where you have convinced me that this was old and corrected, we also agreed that the main problem with this stock was the lack of volume.
There would be lots of eventual buyers if the price went like 33% lower, close to 0.15.
Clearly, all shareholder are holders!
But isn't a stock, like everything else, only that worth what buyers are ready to  pay for it?

Nonetheless, this might surprise you again, I think this stock does have some future.

Once again, your signature is somewhat misleading:

the above is ... not to be construed as investment advice

It's your right, but don't play with useless words:ALL your posts are invitations to buy!
You are not a broker, but even if you are not paid by the company, you certainly are promoting stocks, and as such, giving "investment advice".

Why this warning. "do your own due diligence." ? 
We are grown ups, and most of us do our own due diligence.
No one should hold a private investor responsible for eventual losses.
Why don't you end your posts like all companies do:
Certain statements in this (press release) post may constitute "forward looking statements" and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such "forward looking statements". ?

Don't bother to reply, you are to busy, I know I make you tire, and that you do not appreciate discussion too much.
But I did appreciate the long reply you gave me some time ago.
What I wish, is that other people would show some interest for your posts.
OK, I go back to sleep now.

Louise

[garilou]

Tara,
First, there is a small button for private messages, you know that.
But since you decided to go openly, here I am again.

As for your criteria (and not criterias, bis), you have already exposed them lengthily if I remember well.

Why was I speaking of "private blog"?
Because apart from your own "bottom fishing opportunity?"... you never participate to other themes that are discussed here, you don't seem to give a dam for SSP.
You don't seem to read any other post (did you notice that I mentioned you somewhere else!)
So I keep wondering why you are on this forum.
Too busy calculating?
But not too busy to inform us of anything that could catch our interest in the bottom fishing opportunities that you own.
I keep track of your recommendations in a special portfolio .
Your posts arrive when the news came out, (only good news), then it's priced in, and the stock would need a small "push up".

So here is a "bottom fishing opportunity" , where you could give your insight by replying to jackerss, about HEG (TSX).
http://www.superstockpicker.com/forum/index.php?topic=1645

Would be a good opportunity to show that you are not only promoting (sorry) your own stocks, but are willing, as an senior investor, to participate and give your advice to other members of this forum.
Doesn't need to be such an elaborated report as you do for your own.

I am not a specialist of penny stocks, but if I am not the best investor, I'm also not the worst.
I have often spent lots of time to make some research to help others, [and I have been thanked for my work, openly http://www.superstockpicker.com/forum/index.php?topic=796.msg1896 and privately], even about stocks that I did not own, and had no intention to buy.

So I am really curious to read your analysis of someone else's stock.
If you are too busy with your own, you will just confirm my opinion that you are just promoting, and not trying to be a member of this community.
And maybe  then, I won't be the only one to talk with you, even if you think that I do nothing else but attack you, which has happened, and I apologized for it, but I also shown some admiration for your work too.
Why did you started a post with a special warning to me? Because you were still mad at me because I brought up ethical questions about Xentel. Had you retained from doing that, I would have stayed the "sleeping lion" I had turned to be with you.

So let's meet on jackerss's topic?
I am sure he'll be very happy! And me too.

Happy birthday, fellow Lion

Louise