hot penny stocks to watch

Hottest Penny Stocks – Part II

Hot Penny Stocks to

Watch

Disclaimer

� Stock speculation is very risky

� Do not trade with more than you can afford to

lose.

� Seek professional investment advice.

� This is not investment advice.

� No warranties, you are on your own.

� This is not suitable for all investors

Penny Stocks to Watch

� My favorite type of penny stocks to watch are the

public shells that can be used for reverse mergers

� A reverse merger is when a private operating

company is acquired by a shell (non-operating)

public comapany.

� This is done so the private company can go public

fast.

Reverse Merger Price Jumps

� With the merger, the shell may go from a small

market value to a large market value in a few

months

� For example, the shell may have a market value of

from $100,000 to $500,000

� The shell shareholders get to keep usually 5-20%

of the new merged company

� The merged company may be worth millions

Hypothetical Jump in Value

� Do the math, if the shell was worth $100,000

� The operating company is worth $10 million

� Then the value of the merged company should be

more than $10 million

� So if the shell shareholders keep 5% of the total

new, merged company, they have stock worth

$500,000 or five times their original investment

Reverse Merger Example(chart courtesy of Stockcharts.com)

RMDM

� RMDM was a speculative, sub-penny stock that

took off after a reverse merger

� Huge profits were made by the original holders

� Note that it went right back down again

For more such stocks see my YouTube video

“Hottest Penny Stocks Part I”

RISKY!

� While large gains can be made by sophisticated

players in these stocks, they are very risky

� Most OTC shells will not merge in a given year

� They have little or no public information and

what is there may be incomplete, misleading or

even deliberately false.

� Merger stocks tend to rise and fall FAST!

� Never risk a lot of money in them

Where to find them

� Reverse merger shells are found in the Pink

Sheets and on the OTC Bulletin Board

� Pink Sheet shells may not be providing public

information

� There is no subsitute here for educated, tedious

research

� Experience and knowledge can pay large

dividends here – ignorance is expensive

Learn More

� Subscribe to my YouTube videos

� Subscribe to my blog

www. investing-performance.com

Read My Book on Amazon.com

� How to Pick Hot

Reverse Merger Penny

Stocks

John Lux

� Trader, investment banker, former

OTC Market Maker and attorney

Lux.Investor@ gmail.com

Copyright ©John Lux 2011