There is an adage in technical analysis that states volume precedes price. If that is true, then New Concept Energy, Inc. (GBR) looks primed to go on a massive run. We first called GBR on April 2, and the stock has moved up from $2.06 to $2.35 since. In addition to the positive technicals, there is an industry catalyst as the price of oil has been on the rise. There is an upcoming election in Alberta, Canada that is expected to go in favor of the oil industry that is positively impacting oil stocks north of the border while another oil nanocap, Yuma Energy, Inc. (YUMA), recently had a significant spike. Houston American Energy Corp. (HUSA), Camber Energy, Inc. (CEI) and SAExploration Holdings, Inc. (SAEX) remain on watch. What makes GBR stand out from all of them is that it has one of the strongest fundamentals within the nanocap world; it is not in a perpetual dilute and reverse split phase. That makes it fairly safe as a multi-day hold while we wait for the stock to skyrocket once volume picks up again. We are up to 850 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 3,800 followers on Twitter as well.
Let's take a look at a chart going back to 2004 to get an idea of what we mean by GBR not being like a typical nanocap that dilutes long term shareholders into shreds:
GBR's chart looks like a heart rate monitor, spiking up to $10 and falling back to $1-$2 over the last 15 years. However, when you compare this chart to a ski slope chart like HMNY, TOPS, RGSE, INPX, CHFS, RWLK and many other popular small float stocks out there, this chart actually looks very, very good in comparison. Even the aforementioned industry peers like YUMA, HUSA, SAEX and CEI have charts that look like this to varying degrees:
We see that over the last five years, GBR has increased 35% while HUSA is down by 48% and the other three are down in excess of 99%, completely destroying long-term shareholders. In comparison, GBR has been a fairly safe hold or a good stock to trade. GBR hasn't fallen from a split adjusted price of $10,000 or higher from years ago because it does not have a history of reverse splits and massive dilution like these other ones, and does not have toxic financing. That means shareholders waiting for a spike can buy and hold overnight without the worry that a toxic financing with warrants or below-the-market convertibles is looming, crashing the price overnight. Look at DPW for a recent example of reverse split and dilute that has been very bad for investors who held in March. Or even OPTT which had a one day run to as high as $16 but then crashed to a little over $3 last week after announcing a very dilutive offering.
To say that GBR does not dilute at all is not completely true. But the way it has done it is a lot more favorable to shareholders. The amount of shares outstanding recently grew from 2 million to 5.1 million after the company announced issuance of 3 million shares at $1.50 for $4.5 million as part of a strategic investment announced last May when the stock was trading below $1.50. But this is much different than a typical financing. This is a straight equity investment. It helps the company maintain listing on NYSE by meeting minimal capital requirements and allows it to improve working capital to the point that it is able to look to funding new projects:
"On December 4, 2018, New Concept Energy, Inc., a Nevada corporation (the “Company” or “Registrant” or the “Issuer”), issued share certificates for 3,000,000 shares of Common Stock to Realty Advisors, Inc., a Nevada corporation (the “Investor” or “RAI”). Such 3,000,000 shares of Common Stock were issued pursuant to a Subscription Agreement and Letter of Investment Intent, dated May 22, 2018 (the “Subscription Agreement”), which issuance was approved by the stockholders of the Company at a meeting held on October 10, 2018, following the solicitation of proxies pursuant to a Notice of Annual Meeting and related Proxy Statement, each dated September 4, 2018, distributed in accordance with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and following approval by the NYSE American on October 29, 2018. The 3,000,000 shares of Common Stock of the Company were issued without registration, based upon the exemption afforded by Section 4(2) of the Securities Act of 1933, as amended.
The Company received a total of $4,500,000 in cash ($1.50 per share), which increased the capital stock account of the Company. The Company expects to utilize the net proceeds from the sale to pay for existing trade payables and current liabilities from the Company’s activities during 2018 and to fund the first development well in a four-well package at an estimated cost of $370,000 per well. The balance of funds is expected to be utilized in the future to pay for possible future acquisitions and/or drilling of development wells on acreage held by the Company and its subsidiaries. In the interim, the Company expects to invest such net proceeds and hold same as working capital for the Company. See also Item 3.02 of Registrant’s Current Report on Form 8-K for event of October 10, 2018.
At the time of consummation of the transaction described in Item 3.02 above involving the issuance of 3,000,000 newly issued shares of Common Stock, RAI held 60,000 shares of Common Stock of the Company, which increased the ownership held by RAI to 3,060,000 shares out of the new total outstanding of 5,131,935 shares of Common Stock, which resulted in the technical change of control of the Company, as RAI now controls approximately 59.6% of the outstanding shares of the Company."
RAI ended up taking a controlling stake in GBR. RAI is managed by Mickey Ned Phillips according to this SEC filing. GBR's management team of Daniel J. Moos and Gene S. Bertcher have both worked with Phillips before in other investment funds and are officers of this one so this deal is obviously in friendly hands. Because this financing is in friendly hands, that means the float is still a ridiculously small 860,000 shares, making GBR an excellent candidate for crazy spikes.
While the company has a fresh $4.5 million cash injection, there is plenty of evidence to show that dilution is done based on recently released Q4 results:
"New Concept Energy, Inc. (NYSE American: GBR), (the “Company” or “NCE”) a Dallas-based oil and gas company, today reported Results of Operations for the fourth quarter ended December 31, 2018. During the three months ended December 31, 2018 the Company reported a net loss of $55,000 or ($0.005) per share, compared to a net loss of $2,851,000 or ($1.39) per share for the same period ended December 31, 2017
For the full year ended December 31, 2018 the Company reported a net loss of $484,000 or ($0.21) per share, compared to a net loss of $3,246,000 or ($1.59) per share for the same period ended December 31, 2017."
GBR only lost $55,000 in Q4 and $484,000 on the year, so this low cash burn will ensure that the $4.5 million cash injection is more than enough for the time being. There is plenty of room for an acquisition, which means news could be coming at any time that drives volume into this low float stock and spikes it in similar fashion to one of the many times we have seen before in the above chart.
Fundamentals show that GBR has a history of being a well above average quality of company for its $12 million market cap. Now it's time to look more closely at the chart:
We have seen three major spikes that resulted in more than a doubling of the stock price in days going back to 2014. Note carefully the five green bars that we have highlighted in which volume precedes price. In 2014, there was a 2.5 million share buy on April 25 accompanied by a small spike. The volume innocently tapered off from there before the stock skyrocketed to over $5 in June.
In 2016 we saw a similar but more pronounced pattern. On June 28, the stock shot up over $3 but settled at $2.38 on 7.8 million volume. The stock stayed around $2 on low volume for another three weeks before shooting up over $6 on July 22.
In 2017 there was a spike in volume in April with not much follow up. But in 2018, we saw the craziest move yet. On another June 28, the stock opened at $3.60 but proceeded to crash to its day low of $1.72 on selling for pretty much the entire day. Volume was 9 million that day and bears were confident that the stock price would crash based on the price action throughout the day. What happened over the next two days was a move from $1.69 to as high as $12.75 before another drop. There was a follow up spike in September that didn't last, perhaps it was too close to the previous one as the major moves happen several months apart.
Based on the insane trading ranges of GBR, we advise traders to come up with their own sell price. But in terms of buying, we believe that a buy and hold now will result in a very profitable trade in the near term. The price of oil has been increasing throughout 2019 and is the highest it has been since November. That, combined with the potential for news of a partnership or acquisition from the money received in the financing at any time makes GBR ripe for another major spike. Volume precedes price.
Disclosure: We are long GBR
2019 got off to a reasonable start for microcap stocks as the market in general was bullish for the month. There were a lot of stocks that spiked 100-500% in a matter of one or a few days. As we look towards the rest of 2019, we have to figure out what's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.
There are also some good books available on microcap stocks and day trading such as:
Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks
Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of
How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology
A Beginner's Guide to Day Trading Online (2nd edition)
Stock Investing for Beginners: Marijuana Stocks
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
Let's take a look at a chart going back to 2004 to get an idea of what we mean by GBR not being like a typical nanocap that dilutes long term shareholders into shreds:
GBR's chart looks like a heart rate monitor, spiking up to $10 and falling back to $1-$2 over the last 15 years. However, when you compare this chart to a ski slope chart like HMNY, TOPS, RGSE, INPX, CHFS, RWLK and many other popular small float stocks out there, this chart actually looks very, very good in comparison. Even the aforementioned industry peers like YUMA, HUSA, SAEX and CEI have charts that look like this to varying degrees:
We see that over the last five years, GBR has increased 35% while HUSA is down by 48% and the other three are down in excess of 99%, completely destroying long-term shareholders. In comparison, GBR has been a fairly safe hold or a good stock to trade. GBR hasn't fallen from a split adjusted price of $10,000 or higher from years ago because it does not have a history of reverse splits and massive dilution like these other ones, and does not have toxic financing. That means shareholders waiting for a spike can buy and hold overnight without the worry that a toxic financing with warrants or below-the-market convertibles is looming, crashing the price overnight. Look at DPW for a recent example of reverse split and dilute that has been very bad for investors who held in March. Or even OPTT which had a one day run to as high as $16 but then crashed to a little over $3 last week after announcing a very dilutive offering.
To say that GBR does not dilute at all is not completely true. But the way it has done it is a lot more favorable to shareholders. The amount of shares outstanding recently grew from 2 million to 5.1 million after the company announced issuance of 3 million shares at $1.50 for $4.5 million as part of a strategic investment announced last May when the stock was trading below $1.50. But this is much different than a typical financing. This is a straight equity investment. It helps the company maintain listing on NYSE by meeting minimal capital requirements and allows it to improve working capital to the point that it is able to look to funding new projects:
"On December 4, 2018, New Concept Energy, Inc., a Nevada corporation (the “Company” or “Registrant” or the “Issuer”), issued share certificates for 3,000,000 shares of Common Stock to Realty Advisors, Inc., a Nevada corporation (the “Investor” or “RAI”). Such 3,000,000 shares of Common Stock were issued pursuant to a Subscription Agreement and Letter of Investment Intent, dated May 22, 2018 (the “Subscription Agreement”), which issuance was approved by the stockholders of the Company at a meeting held on October 10, 2018, following the solicitation of proxies pursuant to a Notice of Annual Meeting and related Proxy Statement, each dated September 4, 2018, distributed in accordance with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and following approval by the NYSE American on October 29, 2018. The 3,000,000 shares of Common Stock of the Company were issued without registration, based upon the exemption afforded by Section 4(2) of the Securities Act of 1933, as amended.
The Company received a total of $4,500,000 in cash ($1.50 per share), which increased the capital stock account of the Company. The Company expects to utilize the net proceeds from the sale to pay for existing trade payables and current liabilities from the Company’s activities during 2018 and to fund the first development well in a four-well package at an estimated cost of $370,000 per well. The balance of funds is expected to be utilized in the future to pay for possible future acquisitions and/or drilling of development wells on acreage held by the Company and its subsidiaries. In the interim, the Company expects to invest such net proceeds and hold same as working capital for the Company. See also Item 3.02 of Registrant’s Current Report on Form 8-K for event of October 10, 2018.
At the time of consummation of the transaction described in Item 3.02 above involving the issuance of 3,000,000 newly issued shares of Common Stock, RAI held 60,000 shares of Common Stock of the Company, which increased the ownership held by RAI to 3,060,000 shares out of the new total outstanding of 5,131,935 shares of Common Stock, which resulted in the technical change of control of the Company, as RAI now controls approximately 59.6% of the outstanding shares of the Company."
RAI ended up taking a controlling stake in GBR. RAI is managed by Mickey Ned Phillips according to this SEC filing. GBR's management team of Daniel J. Moos and Gene S. Bertcher have both worked with Phillips before in other investment funds and are officers of this one so this deal is obviously in friendly hands. Because this financing is in friendly hands, that means the float is still a ridiculously small 860,000 shares, making GBR an excellent candidate for crazy spikes.
While the company has a fresh $4.5 million cash injection, there is plenty of evidence to show that dilution is done based on recently released Q4 results:
"New Concept Energy, Inc. (NYSE American: GBR), (the “Company” or “NCE”) a Dallas-based oil and gas company, today reported Results of Operations for the fourth quarter ended December 31, 2018. During the three months ended December 31, 2018 the Company reported a net loss of $55,000 or ($0.005) per share, compared to a net loss of $2,851,000 or ($1.39) per share for the same period ended December 31, 2017
For the full year ended December 31, 2018 the Company reported a net loss of $484,000 or ($0.21) per share, compared to a net loss of $3,246,000 or ($1.59) per share for the same period ended December 31, 2017."
GBR only lost $55,000 in Q4 and $484,000 on the year, so this low cash burn will ensure that the $4.5 million cash injection is more than enough for the time being. There is plenty of room for an acquisition, which means news could be coming at any time that drives volume into this low float stock and spikes it in similar fashion to one of the many times we have seen before in the above chart.
Fundamentals show that GBR has a history of being a well above average quality of company for its $12 million market cap. Now it's time to look more closely at the chart:
We have seen three major spikes that resulted in more than a doubling of the stock price in days going back to 2014. Note carefully the five green bars that we have highlighted in which volume precedes price. In 2014, there was a 2.5 million share buy on April 25 accompanied by a small spike. The volume innocently tapered off from there before the stock skyrocketed to over $5 in June.
In 2016 we saw a similar but more pronounced pattern. On June 28, the stock shot up over $3 but settled at $2.38 on 7.8 million volume. The stock stayed around $2 on low volume for another three weeks before shooting up over $6 on July 22.
In 2017 there was a spike in volume in April with not much follow up. But in 2018, we saw the craziest move yet. On another June 28, the stock opened at $3.60 but proceeded to crash to its day low of $1.72 on selling for pretty much the entire day. Volume was 9 million that day and bears were confident that the stock price would crash based on the price action throughout the day. What happened over the next two days was a move from $1.69 to as high as $12.75 before another drop. There was a follow up spike in September that didn't last, perhaps it was too close to the previous one as the major moves happen several months apart.
Based on the insane trading ranges of GBR, we advise traders to come up with their own sell price. But in terms of buying, we believe that a buy and hold now will result in a very profitable trade in the near term. The price of oil has been increasing throughout 2019 and is the highest it has been since November. That, combined with the potential for news of a partnership or acquisition from the money received in the financing at any time makes GBR ripe for another major spike. Volume precedes price.
Disclosure: We are long GBR
2019 got off to a reasonable start for microcap stocks as the market in general was bullish for the month. There were a lot of stocks that spiked 100-500% in a matter of one or a few days. As we look towards the rest of 2019, we have to figure out what's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.
There are also some good books available on microcap stocks and day trading such as:
Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)
The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks
Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of
How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology
A Beginner's Guide to Day Trading Online (2nd edition)
Stock Investing for Beginners: Marijuana Stocks
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.
For those who are interested in trading bitcoin and other cryptocurrencies, here are some links to valuable reports and strategies:
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