We have previously discussed the opportunity in MICT, Inc. (MICT) in our write up "MICT: Merger And Share Repurchase At $1.65" after it announced a deal with Brookfield Interactive (Hong Kong) Ltd to sign a definitive acquisition agreement with ParagonEx. The stock is moving again today after an SEC filing that shows the deal has been extended to commence by February 6. In our article "Funds are Buying Up CREG in Expectation of a Run", we talked about China Recycling Energy Corporation (CREG) and Regional Health Properties, Inc. (RHE). CREG broke out this week and RHE is starting to as well. We are up to 782 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel. You can also follow us on Twitter @StockTradePicks. We have over 3,500 followers on Twitter as well.
Below is a re-post of information on MICT and RHE from previous posts in January. We are re-posting due to the sensitive timing of the moves on these picks.
The release stated the following:
Whether or not you like the transaction and resulting company, the value proposition here is clear because of this one note.
MICT is to provide a list of shareholders to BNN for which to send the offer, so investors who want to be a part of it need to own a position before any deadlines for record holders:
MICT has 9.34 million shares outstanding, so BNN plans to buy up to 1.87 million shares at $1.65, or $3.1 million worth of MICT stock, within 15 business days. The main risk here would be believing that BNN Technology would actually be willing and able to pay this amount. The price wouldn't be at less than half of the tender offer if this wasn't the case. Shares of BNN have been suspended from trading in London, but there is enough proof to show that it has plenty of cash to complete this transaction as outlined in the release, as outlined in this news release about its cash balance:
"On Wednesday, BNN said its two independent directors and adviser Ernst & Young LLP have now reviewed and confirmed the company's cash balances around the world, totalling GBP27.9 million overall. BNN has GBP14.2 million in cash in the UK, GBP6.7 million in Hong Kong, and GBP7.0 million in China."
Despite the volatility, we believe that MICT will rise towards $1.65 as the deadline for the tender offer and business combination nears and this pullback represents a tremendous buying opportunity. We will continue to trade the stock with continued long bias until that price is hit or the deal is somehow amended.
Regional Health Properties, Inc. (RHE) is another pick that we think can do really well. It has had a few volume surges and price spikes since its reverse split at the start of 2019 and we think it is indicative of an imminent deal, similar to what has happened on LM Funding America, Inc. (LMFA) or MICT, Inc. (MICT).
We are not predictors of the future, but we do digging on SEC filings to come to certain conclusions. In November, our article titled "Investigative Report: LMFA - There Will Be a Buyout, RTO or Corporate Transaction" and follow up pieces disclosed how we thought LMFA would close a deal with a profitable company. That piece of news came out on January 17, resulting in the stock spiking to over $3 before pulling back. Given that we recommended the stock at around $1.50, readers had an opportunity to take a substantial gain. More recently, we recommended MICT at the start of the year when it was trading at $0.66 on the expectations of a $1.65 tender offer on 20% of the total outstanding shares. While the deadline has been passed and we still have had no definitive word on the status of the deal, at least the stock is trading at $0.92, so it has also been a profitable trade so far with potential for more upside if and when the BNN tender offer commences.
We give these two examples as precursors to the RHE write up because we think RHE is in a similar scenario and want to point out to readers that we have demonstrated recent success in catching these types of plays.
RHE is real estate investment company that invests primarily in real estate purposed for long-term care and senior living. It has gotten into some trouble with its overleveraged balance sheet, but one can assume that there are problems just by looking at a long term chart. RHE has a $1.9 million market cap with 1.7 million shares outstanding and 1.5 million float so we are not looking for the next Berkshire Hathaway here. RHE is well positioned both from a technical point of view as well as fundamental to go on a large spike if there is any sort of positive news, which we think is imminent.
RHE announced a forbearance agreement with a major creditor on January 7th. This eased the terms and remedies the creditor had on RHE in exchange for the following conditions:
"In addition, the A&R New Forbearance Agreement amends the Loan Agreement to require the Company to continue to retain the financial advisor as the Company’s chief restructuring officer (“CRO”) and to hire a nationally recognized investment banker reasonably acceptable to Pinecone no later than January 7, 2019 to advise management and the Company’s board of directors (the “Board”) on potential asset sale and related transactions and perform valuation debt capacity analyses.
The Company reserves the right to continue to attempt to refinance the loans in full, subject to the following conditions: (i) no later than January 14, 2019, the Company will enter into and deliver to Pinecone a term sheet approved by the chief executive officer of the Company and the CRO evidencing a third party lender’s desire to pursue the provision of a refinancing; and (ii) no later than February 15, 2019, the Company will consummate the refinancing. By January 23, 2019, the Company is to provide Pinecone a written plan for a process of soliciting bids for one or more asset sale or related transactions (the “Bid Solicitation”). By February 28, 2019, the Company and the CRO (whose responsibilities will by then be expanded to include all aspects of transaction planning, including the Bid Solicitation) must: (i) complete the Bid Solicitation; and (ii) negotiate in good faith and enter into with Pinecone an agreement that is acceptable to Pinecone, which shall require, among other things, that the Company engage in a process that culminates in (a) the consummation of one or more asset sale or related transactions and (b) the payment in full in cash of all obligations under the Loan Agreement with the proceeds thereof. The A&R New Forbearance Agreement also grants Pinecone the right to appoint a non-voting observer to attend all meetings of the Board and each committee thereof, subject to certain exceptions described in the A&R New Forbearance Agreement."
So RHE is required to actively seek out asset purchase deals or perhaps something even more substantial. Remember that this is a real estate company so it should not be too hard to find willing buyers. Unlike other long-term assets which can be subject to depreciation, properties rise in value with time so there is a good chance that the book value on these properties listed on the balance sheet may actually be understating their market value. The most important thing is the timing:
This agreement is structured in a way so that the creditor tries to get their money back as soon as possible. But based on how highly leveraged RHE's balance sheet is and how low the market cap is, the right deal could send RHE flying. RHE has $101.3 million in assets against $93.6 million in liabilities. RHE has $1.9 million market cap so it is trading well below its book value. One or more deals that take place could have substantial upside to shareholders while also paying off debt.
Disclosure: We are long MICT, RHE
2018 was a wild roller-coaster for the stock market, but a bad time in general for microcap stocks. Still, we made good money on some microcap stocks if you look at our picks over the course of 2018, both longs and shorts. As we head out of a volatile 2018 and into 2019, we have to figure out what's next. TradeMiner identifies seasonal trends and market cycles while the Penny Stock Prophet and Microcap Millionaires find the next big small cap plays in a multitude of industries.
Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:
The dividend stock report from dividendstocksonline.com
Below is a re-post of information on MICT and RHE from previous posts in January. We are re-posting due to the sensitive timing of the moves on these picks.
The release stated the following:
- The merged companies create a substantial new group, Global Fintech Holdings
- Global Fintech Holdings raised $23.5 million at $1.65 per share to finance transaction
- A tender offer to purchase up to 20% of MICT's outstanding common stock at a price of $1.65 per share shall be commenced by BNN Technology PLC
MONTVALE, N.J., Dec. 20, 2018 /PRNewswire/ -- Brookfield Interactive (Hong Kong) Ltd, ParagonEx Ltd. and MICT, Inc. (MICT) are pleased to announce the signing of a definitive acquisition agreement to pursue the strategic transactions and planned listing on NASDAQ outlined in announcements by MICT and BNN on July 2, 2018.
Summary of the Proposed Transaction
The acquisitions will create a new company, Global Fintech Holdings Ltd. (GFH), which will become the parent of these highly complementary businesses with the opportunity to achieve significant scale as a combined entity:
We believe combining these entities will create a company with a strong business-to-business (B2B) technology platform and operational expertise that will enable GFH to present a leading global multifaceted platform for trading in digital assets. The combination of these entities is expected to allow GFH to capitalize on ParagonEx's technology and Brookfield Interactive (HK)'s market relationships and technology, via a public market vehicle with access to the capital markets, to become a leading technology provider for the lottery, sports content and other gaming verticals with a strong position in the Asian markets. The strengths and competencies of GFH are expected to include:
- a premier trading platform in digital assets, offered as a Platform as a Service ("PaaS"), that is product agnostic and can be scaled into many different verticals;
- access to the Chinese market through Brookfield Interactive (HK) to monetize the lotto, sports, gaming and other markets using GFH's technology solutions; and
- potential to capitalize on its access to the financial markets to acquire revenues of smaller players at attractive and accretive acquisition multiples to address industry consolidation driven by regulatory changes.
Key Terms of the Transaction
- GFH successfully raised $23.5 million at $1.65 per share to fund the transaction (the "Financing").
- BNN Technology PLC, a 15% stockholder in MICT and majority stockholder of Brookfield Interactive (HK), will commence a tender offer to purchase up to 20% of the issued and outstanding shares of MICT's common stock, not already owned by it within 15 business days at a price of $1.65 per share, in order to increase its ownership percentage of MICT to a maximum of 35% (assuming full participation in the tender offer).
- MICT and GFH will complete a merger whereby MICT will become a wholly-owned subsidiary of GFH.
- Brookfield Interactive (HK) shareholders will transfer to GFH all of the issued and outstanding shares of Brookfield Interactive (HK), resulting in Brookfield Interactive (HK) becoming a wholly-owned subsidiary of GFH.
- ParagonEx's shareholders will transfer all of the issued and outstanding shares of ParagonEx to GFH, resulting in ParagonEx becoming a wholly-owned subsidiary of GFH.
- At or within sixty (60) days of the applicable record date, GFH will spin off MICT's interest in Micronet Ltd., a partially owned subsidiary traded on the Tel Aviv Stock Exchange under the ticker MCRNL, to its shareholders who retain shares of MICT after the tender offer.
In connection with the Acquisitions, at Closing, the parties will receive the following approximate consideration:
- Investors in the GFH Financing (assuming a $25 million raise) – 15,151,515 ordinary shares of GFH, representing approximately 8.83% of GFH
- MICT Shareholders (other than BNN's current ownership, and assuming that no shares of MICT are sold in the tender offer) – 9,048,077 ordinary shares of GFH, representing approximately, 5.27% of GFH
- Brookfield Interactive (HK) Shareholders – 58,898,810 ordinary shares of GFH, representing approximately 34.37% of GFH
- ParagonEx Shareholders – (a) $25 million in cash, (b) a senior unsecured note in the principal amount of $10 million and (c) 86,382,373 ordinary shares of GFH, representing approximately 50.36% of GFH
- ParagonEx Founders – 2,000,000 ordinary shares of GFH, representing approximately, 1.17% of GFH
All of the shares to be issued by GFH are valued at $1.65 per share, representing a GFH equity valuation of approximately $283 million.
The Business of GFH
The merger is intended to create a strong B2B technology platform with operational expertise that will enable GFH to present a leading global multifaceted platform for trading in digital assets. ParagonEx's and Brookfield Interactive (HK)'s assets and technology are highly complementary and are expected to enable GFH to monetize BNN's opportunities within China as well as expedite the growth plan of ParagonEx globally. GFH believes future growth can be driven by the combination and penetration of existing products and platforms into new and emerging markets while capitalizing on revenue acquisition opportunities in a consolidating market.
GFH's enhanced access to the financial markets, supported by a NASDAQ listing, is anticipated to facilitate the acquisition, at attractive and accretive acquisition multiples, of revenues streams of smaller companies dependent on third party software providers, as regulatory changes drive industry consolidation. These potential acquisitions offer significant opportunities for operational cost savings as a result of ParagonEx's highly scalable and robust PaaS capability.
ParagonEx and Brookfield Interactive (HK) are already developing new "play for fun" products to create new revenue streams for GFH. These online games are expected to appeal to a different, yet larger, segment of end users who are not financial traders, but who wish to enjoy playing online financial trading games.
GFH intends to establish its base of operations in Hong Kong and believes that this will enable a rapid rollout of its operations to service the South East Asia market. GFH intends to obtain all licenses necessary to conduct the business and support the operation of the group from Hong Kong.
Commenting on the proposed transaction, Darren Mercer, Chief Executive Officer of Brookfield Interactive (HK), said:
"We are extremely excited to have agreed on a combination of these highly complementary companies. Together they provide an underlying business that can be very profitable, boasting a world class technology platform with big data analytical capability, a management team with decades of experience building highly profitable technology companies and an opportunity to monetize a number of significant commercial relationships in Asia. The blend of these companies enables the combined entity to benefit from the specialisms in which each element excels and allows us to view the future with considerable confidence. I am particularly pleased to see this echoed by the support of investors in the Financing which has raised $23.5 million."
- BNN Technology PLC, a 15% stockholder in MICT and majority stockholder of Brookfield Interactive (HK), will commence a tender offer to purchase up to 20% of the issued and outstanding shares of MICT's common stock, not already owned by it within 15 business days at a price of $1.65 per share, in order to increase its ownership percentage of MICT to a maximum of 35% (assuming full participation in the tender offer).
MICT has 9.34 million shares outstanding, so BNN plans to buy up to 1.87 million shares at $1.65, or $3.1 million worth of MICT stock, within 15 business days. The main risk here would be believing that BNN Technology would actually be willing and able to pay this amount. The price wouldn't be at less than half of the tender offer if this wasn't the case. Shares of BNN have been suspended from trading in London, but there is enough proof to show that it has plenty of cash to complete this transaction as outlined in the release, as outlined in this news release about its cash balance:
"On Wednesday, BNN said its two independent directors and adviser Ernst & Young LLP have now reviewed and confirmed the company's cash balances around the world, totalling GBP27.9 million overall. BNN has GBP14.2 million in cash in the UK, GBP6.7 million in Hong Kong, and GBP7.0 million in China."
Despite the volatility, we believe that MICT will rise towards $1.65 as the deadline for the tender offer and business combination nears and this pullback represents a tremendous buying opportunity. We will continue to trade the stock with continued long bias until that price is hit or the deal is somehow amended.
Regional Health Properties, Inc. (RHE) is another pick that we think can do really well. It has had a few volume surges and price spikes since its reverse split at the start of 2019 and we think it is indicative of an imminent deal, similar to what has happened on LM Funding America, Inc. (LMFA) or MICT, Inc. (MICT).
We are not predictors of the future, but we do digging on SEC filings to come to certain conclusions. In November, our article titled "Investigative Report: LMFA - There Will Be a Buyout, RTO or Corporate Transaction" and follow up pieces disclosed how we thought LMFA would close a deal with a profitable company. That piece of news came out on January 17, resulting in the stock spiking to over $3 before pulling back. Given that we recommended the stock at around $1.50, readers had an opportunity to take a substantial gain. More recently, we recommended MICT at the start of the year when it was trading at $0.66 on the expectations of a $1.65 tender offer on 20% of the total outstanding shares. While the deadline has been passed and we still have had no definitive word on the status of the deal, at least the stock is trading at $0.92, so it has also been a profitable trade so far with potential for more upside if and when the BNN tender offer commences.
We give these two examples as precursors to the RHE write up because we think RHE is in a similar scenario and want to point out to readers that we have demonstrated recent success in catching these types of plays.
RHE is real estate investment company that invests primarily in real estate purposed for long-term care and senior living. It has gotten into some trouble with its overleveraged balance sheet, but one can assume that there are problems just by looking at a long term chart. RHE has a $1.9 million market cap with 1.7 million shares outstanding and 1.5 million float so we are not looking for the next Berkshire Hathaway here. RHE is well positioned both from a technical point of view as well as fundamental to go on a large spike if there is any sort of positive news, which we think is imminent.
RHE announced a forbearance agreement with a major creditor on January 7th. This eased the terms and remedies the creditor had on RHE in exchange for the following conditions:
"In addition, the A&R New Forbearance Agreement amends the Loan Agreement to require the Company to continue to retain the financial advisor as the Company’s chief restructuring officer (“CRO”) and to hire a nationally recognized investment banker reasonably acceptable to Pinecone no later than January 7, 2019 to advise management and the Company’s board of directors (the “Board”) on potential asset sale and related transactions and perform valuation debt capacity analyses.
The Company reserves the right to continue to attempt to refinance the loans in full, subject to the following conditions: (i) no later than January 14, 2019, the Company will enter into and deliver to Pinecone a term sheet approved by the chief executive officer of the Company and the CRO evidencing a third party lender’s desire to pursue the provision of a refinancing; and (ii) no later than February 15, 2019, the Company will consummate the refinancing. By January 23, 2019, the Company is to provide Pinecone a written plan for a process of soliciting bids for one or more asset sale or related transactions (the “Bid Solicitation”). By February 28, 2019, the Company and the CRO (whose responsibilities will by then be expanded to include all aspects of transaction planning, including the Bid Solicitation) must: (i) complete the Bid Solicitation; and (ii) negotiate in good faith and enter into with Pinecone an agreement that is acceptable to Pinecone, which shall require, among other things, that the Company engage in a process that culminates in (a) the consummation of one or more asset sale or related transactions and (b) the payment in full in cash of all obligations under the Loan Agreement with the proceeds thereof. The A&R New Forbearance Agreement also grants Pinecone the right to appoint a non-voting observer to attend all meetings of the Board and each committee thereof, subject to certain exceptions described in the A&R New Forbearance Agreement."
- On January 7, the company was required to hire an investment banker to assist with any asset sale.
- By January 14, RHE was to deliver a term sheet to the creditor that proves third party interest in refinancing.
- By January 23, RHE was to have a written plan ready for a process of soliciting bids for one or more asset sale or related transactions.
- By February 28, the bid solicitation is to be completed with one or more deals on the table.
This agreement is structured in a way so that the creditor tries to get their money back as soon as possible. But based on how highly leveraged RHE's balance sheet is and how low the market cap is, the right deal could send RHE flying. RHE has $101.3 million in assets against $93.6 million in liabilities. RHE has $1.9 million market cap so it is trading well below its book value. One or more deals that take place could have substantial upside to shareholders while also paying off debt.
2018 was a wild roller-coaster for the stock market, but a bad time in general for microcap stocks. Still, we made good money on some microcap stocks if you look at our picks over the course of 2018, both longs and shorts. As we head out of a volatile 2018 and into 2019, we have to figure out what's next. TradeMiner identifies seasonal trends and market cycles while the Penny Stock Prophet and Microcap Millionaires find the next big small cap plays in a multitude of industries.
Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:
The dividend stock report from dividendstocksonline.com
The dividend stock report from Dividend Stocks Rock
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
And try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Goldmasterinvesting.com Ocean Of Gold Report for the top 15 gold mining companies
Trader Review
The Trader's Academy Club
The Wealth Builder's Club from beatthemarketanalyzer.com
MyBB: A Forum For Investors and Traders
Spartan Trader Forex Academy Live Daily Trading Room
And try the Z Code System if you're looking for other ways to make money systematically outside of the stock market.
Bitcoin has gone from a concept worth pennies a few years ago to worth thousands of dollars. It may appear to some who are late to the game that the opportunity to get rich is gone. However, there are still plenty of ways to make some money trading in bitcoin and other cryptocurrency. Here are some links to valuable reports and strategies:
The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
The Cryptocurrency Codex from the Cryptocurrency Institute
Secrets To Unlimited Free Bitcoin
The Crypto-Currency Evolution eBook
Bitcoin Complete Guide for Dummies
The Bitcoin Miracle Guide
The Bitcoin Cheat Code Book
The Crpytocurrency Course
Bitcoin Investing Live
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