HC2 Holdings Inc (OTCMKTS:HCHC) Hesitant Under the New Ticker
With so many development stage companies on the OTC Markets, it is sometimes hard to find an enterprise that has commercialized its products and is generating revenues. The majority of penny stocks that we deal with on these pages are also experiencing some serious financial difficulties and there are quite a lot of questions around their ability to survive in the long run. In some aspects, HC2 Holdings Inc (OTCMKTS:HCHC) is one step ahead.
HCHC advertises itself as a leading provider of a number of telecommunication services and there is even a Wikipedia entry dedicated to the company (although it’s still listed under its previous name – Primus Telecom).
Not surprisingly, if you take a quick look at the latest 10-K, you’ll see that the figures in it look a lot better than the ones presented by other OTC-listed companies. Here’s what HCHC had at the end of 2013:
- cash: $9 million
- current assets: $74.9 million
- current liabilities: $31.7 million
- yearly revenues: $230 million
- yearly net income: $111 million
You can see that the company’s financial situation is not that bad at all. There’s plenty of cash, the liabilities are kept in check, and the positive bottom line is something penny stock investors don’t see every day. This brings us on to a very interesting question: “Why isn’t anyone paying attention?“.
As you can see from the chart at the beginning of the article, the ticker is fluctuating between the $3.50 and $4 per share mark, but so far, it’s refusing to embark on a more consistent run. What’s more, although HCHC logged a dollar volume of more than $500 thousand yesterday, the excitement is nowhere near as huge as the one surrounding other penny stocks that seem to be propelled by nothing more than hype.
If you do some research, you’ll probably be able to spot the problem. It seems that despite the relatively stable financial situation, there are still some questions around HCHC‘s future.
A closer look at the annual report reveals that during 2013, they sold a lot of their operating segments which has, in turn, resulted in a 23% decline in revenues year-over-year. The net loss from previous years has been converted into a net income, but this is only due to the sale of discontinued operations and the management team tell us that they can not guarantee profitability for the future periods.
Then there’s the restructuring that the company has gone through over the last couple of months. Up until November 2013, HCHC was traded on the New York Stock Exchange under the symbol PTGI. The management team decided to transfer the stock to the OTC Markets in order to cut down on the expenses and in February, for reasons that are not very well explained, they decided to change the name and ticker symbol.
The uncertainty around the company’s future under the new name has led to some articles (such as this one) in which people speculate on assets acquisition deals that might be signed in the future and on the potential involvement of a certain Philip Falcone (who, by the way, had some problems with the SEC a few months ago).
The lack of any official announcements, however, means that investors are left in the dark, at least for the time being. This, we reckon, is a good enough reason to do a lot of due diligence before putting any money on the line.
