There is a common saying, “where there is smoke there is fire” and it holds merit in many walks of life. So true is that of penny stock companies filing quarterly reports after long periods of dormancy in the OTC world. Today, there were 2 worth mentioning. MOJO Data Solutions, Inc. (OTC: MJDS) which we last saw trading at $0.05 +0.03, had put out 15 filings over the last 24 hours dating back to 2014, jumped 150% so far today on over 128k shares traded. Texas Oil & Minerals, Inc. (OTC: TOMI) saw much more love from the investment community as they were last trading at $0.0221 +0.0212 up a whopping 2,356% on over a million shares traded.
As an investor, you have to ask yourself, “Why would a dormant company spend thousands of dollars on filing their quarterly financials to bring themselves current?” The obvious answer is that the company, which probably has been quiet for a long period of time due to the fact the start up business that was within the public shell failed. Most of the time, these “vehicles” get cleaned up (debt restructured, reverse split, etc) by a lawyer, larger shareholder or past CEO in order to reverse merge in a new private company in hopes of new found success. New focus, new hope and definitely some excitement for current shareholders that wrote off the company as a complete loss.
With the filings hitting (can be seen on OTCMarkets.com >Market Activity>News>Scroll down to filings) this can be seen as the SMOKE, but the FIRE that is possibly going to happen is future plans of a reverse merger, or acquisition. This is whats exciting about investing in a beaten down shell, because you never know what type or how large of a company they may be spinning into it. Share prices can go way way up if something of value in a hot sector rolls in and the share structure doesn’t get too inflated. This is what risky penny stock investors are chancing when they buy into one of these dormant companies now filing their 10Qs and 10Ks.
Both MJDS and TOMI were winners today, now why was TOMI up so much more than they other? Good question, and most likely is due to the influence of the trader who found it and spread the word after they bought into it. For those that missed the TOMI boat, being that its already seen such large gains, MJDS still possesses some opportunity as the dollar volume an increase was much less. Stuff like this happens quite often in penny land and obviously investors are making good money using this strategy. Don’t be surprised when in the very near future you end up seeing a new business merge into either TOMI or MJDS. For those that stay long, its like a lottery ticket (some traders call them “lottos”) with hopes of a hot, highly valued business merges in.
Disclaimer: PSInvestor has NOT been compensated to mention either of the companies above, but does hold a LONG position in MJDS.