Dark Companies

[Haasje]

Hi all! I know quite a few people here have either interest in or extensive experience investing in dark companies.

 

I know Oddballstocks used to run a website with info about these companies but it turned out to be too much work to keep it up right?

 

I'm interested to make a website like that work again but looking for tips how to get these companies to send me filings fast (preferably digital ofcourse)?

 

Do I always need to own a share in the company I want to obtain filings from?

 

Which OTC directory would be the most valuable to unlock to you?

 

Are you inclined to take out a sub if the service really provides you with a rich supply of information on these dark companies and hopefully very cheap companies? (at a fair price ofcourse) 

 

 

[matjone]

It just depends.  There is a wide spectrum of disclosure on low and no information tiers.  Some of these companies regularly post reports to their website.  Some of them don't but will provide them if they are requested.  Some of these want you to prove you own a share.  Some require NDAs.  Then there's the bottom tier of scumbags who will be condescending on the phone and tell you they are private even though you own shares, and act like you are an idiot for calling.

[sarganaga]

Oddball Stocks Newsletter is still published by subscription with this type of information.http://oddballstocksnewsletter.com/ If you look at the older company specific articles on his website, you can see that Nate Tobick already does an excellent job of this.

 

I think he mentioned, either on his website or in a CoB&F thread that one of the reasons he stopped blogging about specific companies was that some of the material was being appropriated from his and other blogs by Seeking Alpha Pro Geniuses for publication behind Seeking Alpha paywalls.

 

If I were looking for more of this information than I can find on my own, I would subscribe to Oddball Stocks Newsletter.

[Packer16]

There are good number at OTC Markets.com.

 

Packer

[DooDiligence]

What does "prohibited attorney" mean?

[DTEJD1997]

What does "prohibited attorney" mean?

 

??????????????

 

Can you give the contect in which it is used?

 

I've never heard of such a thing, and I've looked at few law books & lawsuits...

[DooDiligence]

On the OTCMarkets website there's a link for prohibited attorneys but no explanation & I Googled it & didn't get an answer...

[Haasje]

Thanks for the help so far!

 

@Matjone

"There is a wide spectrum of disclosure on low and no information tiers. "

 

Ok, I was thinking the companies with the STOP Sign and the Skull were really dark and others provide some level of info?

 

"Some of these companies regularly post reports to their website.  Some of them don't but will provide them if they are requested.  Some of these want you to prove you own a share.  Some require NDAs.  Then there's the bottom tier of scumbags who will be condescending on the phone and tell you they are private even though you own shares, and act like you are an idiot for calling."

 

Thanks this is the color I was looking for. I have a little bit of experience but not much. Can they make me sign an NDA? Is that legal?

 

If they act like they are private but they are not... do I have any rights I can enforce?

 

"Oddball Stocks Newsletter is still published by subscription with this type of information.http://oddballstocksnewsletter.com/ If you look at the older company specific articles on his website, you can see that Nate Tobick already does an excellent job of this.

 

Thanks I didn't know that. I read a post by him it wasn't worth it to keep it up.

 

I think he mentioned, either on his website or in a CoB&F thread that one of the reasons he stopped blogging about specific companies was that some of the material was being appropriated from his and other blogs by Seeking Alpha Pro Geniuses for publication behind Seeking Alpha paywalls."

 

If you are talking about plagiarism I'm pretty sure SA will shut that kind of thing pretty quickly if you send them an e-mail. The spread of ideas is probably something you are after if you blog. 

 

If I were looking for more of this information than I can find on my own, I would subscribe to Oddball Stocks Newsletter.

 

Nonamestocks is another excellent blog with lots of write-ups in this space btw.

 

but duly noted.

 

@Packer

 

Thanks this is were I wanted to start specifically with the list with the stop sign and the skull. It sounds like there are other sources where I can find dark companies as well besides OTC? Which are those?

 

@Doodiligence

 

I don't know... I think these are blacklisted by OTC and if they are involved the filings aren't acceptable?

 

Thanks for the help so far? If you have any 2 cents to add plz do.

 

[NeverLoseMoney]

Thanks for the help so far!

 

@Matjone

"There is a wide spectrum of disclosure on low and no information tiers. "

 

Ok, I was thinking the companies with the STOP Sign and the Skull were really dark and others provide some level of info?

 

"Some of these companies regularly post reports to their website.  Some of them don't but will provide them if they are requested.  Some of these want you to prove you own a share.  Some require NDAs.  Then there's the bottom tier of scumbags who will be condescending on the phone and tell you they are private even though you own shares, and act like you are an idiot for calling."

 

Thanks this is the color I was looking for. I have a little bit of experience but not much. Can they make me sign an NDA? Is that legal?

 

If they act like they are private but they are not... do I have any rights I can enforce?

I've had a few companies ask me to sign an NDA. Not sure if it is legal. You're free to enforce your shareholder rights and sue them to get access to their financial information. How many investors can actually do that though? For most this would be much too costly or burdensome. I think there are also different rules for different states when it comes to your shareholder rights and enforcing them.

 

"Oddball Stocks Newsletter is still published by subscription with this type of information.http://oddballstocksnewsletter.com/ If you look at the older company specific articles on his website, you can see that Nate Tobick already does an excellent job of this.

 

Thanks I didn't know that. I read a post by him it wasn't worth it to keep it up.

I'm not Nate, but I know that he first started Unlistedstocks.net and I think he now mostly profiles these types of stocks in his newsletter.

 

I think he mentioned, either on his website or in a CoB&F thread that one of the reasons he stopped blogging about specific companies was that some of the material was being appropriated from his and other blogs by Seeking Alpha Pro Geniuses for publication behind Seeking Alpha paywalls."

 

If you are talking about plagiarism I'm pretty sure SA will shut that kind of thing pretty quickly if you send them an e-mail. The spread of ideas is probably something you are after if you blog.

I think I made that comment about bad behavior by some people on Seeking Alpha: http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/value-investing-blogs/msg279654/#msg279654

 

I disagree with the notion that this is justified because the blogger surely wants to see their idea spread. It's wrong to take something that is offered for free and then go around and charge someone for the same information as part of your SA premium offering. It's like taking freeware software and then selling it commercially as your own work. That's what I object to. I don't have the illusion that my ideas are unique. I wouldn't put something on the blog in the first place if I don't want to share the idea with readers. Others are always free to link to the posts on my blog and refer other people to them. I just do not want to see other people get charged money by some lame guy for something that I've offered for free. That's why I've become more selective about what I share. My best investment ideas I'll only post behind a paywall of my own or not at all.

 

I have personally seen some questionable stuff on SA. An example: One guy offered immediate access to newly posted ideas from ValueInvestorsClub.com (VIC) as a part of his SA premium offering. For a non-member on VIC there is a 45 day delay to see those same ideas. He said something like: Subscribe to me and you'll see them right now! I mean, how low can you sink?

 

And yes, you can e-mail SA if you happen to catch someone, but most of the bad behavior will be behind a paywall, so you won't see it if you're not a paid member yourself. SA needs to police this themselves, but there is no incentive for them to do so.

 

If I were looking for more of this information than I can find on my own, I would subscribe to Oddball Stocks Newsletter.

 

Nonamestocks is another excellent blog with lots of write-ups in this space btw.

 

but duly noted.

I think Nate does a great job in his newsletter. He has built up a large knowledge base about dark companies. I think he also has a large network of other investors in this space who are happy to talk to him and share information and ideas. I don't feel any need to subscribe to another website or newsletter about unlisted companies. In my opinion it's pretty hard to offer something that comes even close to what he is offering.

[sarganaga]

Hi NLM,

I see that it was you that made the Seeking Alpha bad behavior comment. Sorry for the mixup. I definitely agree with it.

[Guest Schwab711]

http://www.occupyotcmarkets.com/2015/otc-markets-eliminate-quarterly-legal-opinions/

 

@Doo: It's a list of attorneys or law firms that have been found to be complicit in some sort of securities violation. I think it is always determined by the SEC but I'm not sure. Most bans are due to pump-and-dumps or lying on filings.

[DooDiligence]

http://www.occupyotcmarkets.com/2015/otc-markets-eliminate-quarterly-legal-opinions/

 

@Doo: It's a list of attorneys or law firms that have been found to be complicit in some sort of securities violation. I think it is always determined by the SEC but I'm not sure. Most bans are due to pump-and-dumps or lying on filings.

 

Thanks a bunch (that link was awesome!)

 

I understood a little about pink sheets from my ownership of:

 

Nestle (NSRGY) level 1, sponsored & no 20F

Ambev (ABEV) level 2, sponsored with 20F

Novo Nordisk (NVO) level 3, sponsored with 20F

 

I realize that these 3 are very different from the majority of pink sheet constituents.

 

I like the fact that Nestle & Ambev & to a lesser extent Novo Nordisk, get lumped together with scary penny stocks!

 

Maybe one day I'll be able to hunt successfully in the reddish section of the pinks...

[Haasje]

Totally agree it is wrong to reshare VIC ideas before the 3 month exclusive period is up. I think a service like that deserves to get reported to VIC and will pretty quickly have his membership revoked.

 

Also agree it is not ethical to rewrite an idea from someone's blog without giving credit.

 

However, if someone likes one of my publicly posted ideas and writes about the company (even without crediting me for someone they used) it makes me happy the idea is shared. I do understand it if someone doesn't like it and agree credit should have been given.

 

Back on topic:

 

One thing I want to make clear is I'm not looking to do write-ups on dark companies. Sure, I'll write up one if I happen to like it for my existing newsletter but what I wanted to put together is something of a database. If possible with up to date sortable data on dark companies. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[DooDiligence]

Totally agree it is wrong to reshare VIC ideas before the 3 month exclusive period is up. I think a service like that deserves to get reported to VIC and will pretty quickly have his membership revoked.

 

Also agree it is not ethical to rewrite an idea from someone's blog without giving credit.

 

However, if someone likes one of my publicly posted ideas and writes about the company (even without crediting me for someone they used) it makes me happy the idea is shared. I do understand it if someone doesn't like it and agree credit should have been given.

 

Back on topic:

 

One thing I want to make clear is I'm not looking to do write-ups on dark companies. Sure, I'll write up one if I happen to like it for my existing newsletter but what I wanted to put together is something of a database. If possible with up to date sortable data on dark companies.

 

Can you automate the search process on SEC site with a query for form 25 & 15 filers?

 

I'm barely conversant in this but maybe one of the deeper techies here can elaborate on

 

https://www.sec.gov/structureddata

 

http://developer.edgar-online.com/docs

[SugarRE]

Does anyone know good/entrepreneurial lawyers that traffic in this area?

[Guest Schwab711]

Does anyone know good/entrepreneurial lawyers that traffic in this area?

 

There's a ton of great legal help in every state. Can you afford it is usually the question. From my very limited experience, it varies considerably depending on the state of incorporation, what you are trying to do, and how much money is at stake. Do you have something in mind?

 

If you are serious about protecting one of your shareholders' rights or want to be more informed, Cornell Law is your best friend:

https://www.law.cornell.edu/wex/table_corporations

 

Model business corporation act (these are the most friendly states to minority shareholders - public or private):

https://en.wikipedia.org/wiki/Model_Business_Corporation_Act

[oddballstocks]

Hi,

 

I appreciate the recommendations for the newsletter/research.  I do still write about these names and I maintain my own files with this information.  If anyone is interested I'm still doing the newsletter and still digging up these gems.  Instead of just providing financials I provide details on what companies are attractive, why they're attractive and continue to follow them.

 

In terms of the database.  This is a great idea that I tried in 2012.  I emailed/called/purchased shares in a lot of companies and then keyed in the financials by hand into a web app I wrote.  I built a few screeners and search tools along with a watchlist function.

 

You can view the site at unlistedstocks.net.  I was charging $300/year for access.  This seemed reasonable compared to what it would cost to assemble the library yourself.  I envisioned this system where like minded investors would upload financials and there'd be a network effect.

 

Here's what happened.  Less than a dozen people signed up.  A LOT wanted the information but had nothing to contribute.  Even more wanted to know what the best companies were to invest in without doing the search.  In the end I landed on the newsletter.  There are a few people who want to dig through this themselves.  They already have built up personal databases.  For everyone else they just want to know what's good and why.  They want the research format.

 

The issues with building a database are as follows:

-It's extremely time consuming.  Some companies provide information easily, others you need to purchase shares then bug the CFO

-Companies aren't consistent in providing information.  Some years they send things, other years they don't.

-You will be lied to. "We already send Q2" you: "I never received it." them: "Sorry, maybe the mailman lost it.  We won't resend."

-When results are good information is mailed, when they're bad it's a black hole.

-Sometimes you need to sign an NDA, then you can't redistribute.

-You need to build a normalized template, all of these companies have different accounting standards.  This needs to be done by hand.

-It's really hard to keep up to date.

 

Beyond this the information is only really interesting to those who are very deep in this space.  And I've found most of them already have their own personal libraries.  Beyond that there is a strong information sharing network.  I routinely pass reports back and forth with other investors.  Within this context it's an issue that most of those who might use this don't need it, and those who might need it have zero interest.

 

Best of luck!

 

Alternatively I know of one company that created an accounting system they sold to local accountants.  Then they anonymized the data and now they have detailed financials on private companies.  If you're intent on getting this information you're best bet is through the back door.  Sell them an accounting system or an IR system or something like that.

 

You will find quickly that there is a reason these companies are dark.  Most enjoy the dark and avoid anything that might cast light on them.  That's not to say there isn't value, there is a lot of value, but the value is there because obtaining the information is difficult and liquidity is difficult.  Just like the information sharing liquidity works on a similar basis.  There is plenty of liquidity but a lot is person to person, or you need to know the right market makers or brokers who can locate the liquidity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

[oddballstocks]

Schwab has a good point.

 

If you have the money to do this then here's what I'd do:

1) Buy a single share of every dark company

2) Sue every single one for information

 

That's the easiest method, it's very costly, but it's the easiest.  With some of these companies trying to convince them to part with an annual report is like trying to get them to give you their banking password over the phone.

 

Just go in guns blazing.  By law they will need to comply.  Unless it's a Nevada company and then you'll need to buy 25% before you get any information.

 

It might cost $3k-10k per company to do this, so not terrible if your portfolio is large, or you have a way to monetize it that's novel and unique.

[Guest Schwab711]

-You need to build a normalized template, all of these companies have different accounting standards.  This needs to be done by hand.

 

The best are the photocopies of handwritten financials where you can't tell if it's a 9, a 0, or a smudge.

[Gregmal]

Don't know if you guys follow but I should be(or so I've been told) receiving the Buck Hills annual report shortly. One of the most interesting and obscure companies I follow.

[Haasje]

Thanks DooDiligence, great idea. Not exactly what I was thinking but awesome idea.

 

Thanks Oddball for the color on your experience. Very useful and definitely making me reconsider whether it's worth it.

 

Thanks Schwab for the legal tips.

 

 

[oddballstocks]

Don't know if you guys follow but I should be(or so I've been told) receiving the Buck Hills annual report shortly. One of the most interesting and obscure companies I follow.

 

Agreed.  Easily the best annual report I receive.  The company is uninvestable (unless you live there), but awesome to follow.

 

I know someone who collects companies like this.  If a company is quasi public he makes it his goal to hunt down and acquire a few shares.

[Gregmal]

Don't know if you guys follow but I should be(or so I've been told) receiving the Buck Hills annual report shortly. One of the most interesting and obscure companies I follow.

 

Agreed.  Easily the best annual report I receive.  The company is uninvestable (unless you live there), but awesome to follow.

 

I know someone who collects companies like this.  If a company is quasi public he makes it his goal to hunt down and acquire a few shares.

 

Its definitely a daunting situation but with the right mentality, I think there is a case to be made that at worst it's a nice risk adjusted lottery ticket. Hardest thing, by a mile is finding shares.

 

My loose assumptions for investing.

 

-I have no problem never selling the shares. At the least, holding for 20+ years

-Things are so skewed to the uninvestable end, that literally anything that goes right benefits the investment

-The area is still fairly popular as a vacation destination and the assets(primarily land and timber) aren't going anywhere

-There is a super slow, but constant effort being made to renovate/build new the famous "Inn". Not their property anymore but no doubt a positive for the area

 

So you factor this in, and then unlike a lottery ticket, there is a market for this. You've currently got a moderate sized bid at $11.50. You take a haircut solely on liquidity, but it's not an outright loss.

 

Now, here's the thing. Should someone want change, this doesn't seem entirely ridiculous to pull off. The HOA fees are killing the market of the homes in that area. The HOA fees are almost entirely derived from the cost of owning and operating that golf course. What happens if someone at the company bumps their head and the next morning wakes up and decides to sell the golf course? You cut a deal where the golf course is sold and in return for a cash amount that likely exceeds the market cap, you could probably also garner a tiny royalty payment in the low single digit range based off revenue. Turn a major negative into a positive. Then you're left with running what is essentially an amusement park with 4500 acres of timber land.

 

This is probably wishful thinking, but under a best case(however unlikely) scenario 10x your money is not really out of the equation. Downside you figure from here is what, 30-40%? For a small allocation, I like this kind of setup. The Annual Meeting is in July which I hope to attend to at least garner a better feel and maybe locate where the bulk of the shares are.

[wachtwoord]

Greg, are you the Greg (greg8885) that responded to Nate's 2013 blog post about this? http://www.oddballstocks.com/2013/09/buck-hill-falls-ridiculously-cheap.html Did you grow up there? (just curious, sorry for the OT).

[Gregmal]

Greg, are you the Greg (greg8885) that responded to Nate's 2013 blog post about this? http://www.oddballstocks.com/2013/09/buck-hill-falls-ridiculously-cheap.html Did you grow up there? (just curious, sorry for the OT).

 

No that is not I. I have read Nate's blog though.