Read this post. It's long... but quite interesting.By: stervc
21 Dec 2004, 11:12 AM EST
MLON*Parallel Valuation* please review…
Once again, I love the news that MLON keeps putting out. Although there are some things about MLON's validity that might be questionable, there are some things that we must consider that are less questionable or even at all to some. I do think I see where they are getting their logic of MLON being worth .10 to .15 cents. These are only my thoughts as to what I see as some options for consideration. I will end this post with some thoughts on how I interpreted the latest press releases (PRs) and the power behind the possibility of a cash dividend to make sure you understand if released in the upcoming PRs from MLON.
Before reading any further, understand that I am not saying whether or not I believe in MLON. I am just saying that it doesn't matter what I think. We must "mostly" realize that it doesn't matter what “you” or I think about MLON or any other stock. It's what the market thinks about MLON or the stock at hand. The average investor does not invest in a company from actually going to visit the company first hand or talking to them, but instead from the standard form of literature available to the public for viewing through PRs, filings, etc. This is how the masses decide whether to invest or not in a stock. These groups of investors usually invest not based on facts alone (if they exist), but also on potential that is brought out by the company (or others) for all to consider.
With that said, MLON has put out the most powerful PRs that any penny stock has ever put out during my entire tenure of investing since the 1990's in my opinion. Because of such, I must say that I do believe in MLON enough to take the risk for what it has to offer us investors. If it was truly a pump and dump, I think we would have already been back at .0002 cents by now.
What is happening here with MLON is something that I was suspecting to happen with CMKX. Yes, the price going up is good, but I was referring to something I made up called Parallel Valuation (PV). When you get some time and after first finishing this post, come back to read the link below to see how it was derived from my old CMKX/SGGM thoughts for a further understanding. http://www.ragingbull.lycos.com/mboard/boards.cgi?board=CLB01219&read=109280
Parallel Valuation (PV) is when we have a "dividend exchange" taking place to create this new type of valuation. This dividend is two-sided and not one-sided as like most dividends. This causes a valuation to be placed on each of the stocks exchanging dividends from the price of the other. This correlation exists because of the two companies exchanging dividends in each other and not just one company giving the dividend to the other without the other not receiving a dividend in return which is usually the norm.
Due to the exchanging of dividends each stock will trade as a subsidiary under each other causing a direct correlation in valuation even past the date of record for the dividends. So, the increase and decrease of a stock would have a direct correlation with the price of the other.
In discussing Parallel Valuation, let's focus on just one of the recent major deals that have recently transacted with MLON:
The acquiring of 3,000,000 shares of Equity Retirement Distributors Canada Ltd. (ERDTF.PK) in exchange for 500,000,000 newly issued MLON shares subject to SEC RULE 144. http://www.knobias.com/individual/public/news.htm?eid=3.1.765058a16230e655e890e7a90938c57cfd1fe83d565c2b96a1723f0d8db71629
Let's look at the agreement between ERDTF which we will use the closing price of $19.00 for ERDTF and of .0023 cents for MLON on the day of this transaction this past Friday, 17 Dec 04.
** 3,000,000 shares of ERDTF x $19.00 per share = $57,000,000 in value
** 500,000,000 shares of MLON x .0023 cent(s) = $1,150,000 in value
That means that somebody believes enough in MLON to tell them that if MLON gives them $1,150,000 in their value, they will give them $57,000,000 in its value and do so because they feel that they are doing so at a discounted rate. Nobody does a deal under the assumption that it is transacting its deal at a premium. This means that our shares of MLON are significantly undervalued until its $1,150,000 value reaches the value of $57,000,000 value of ERTDF. This is the point of equilibrium.
Now the question would be: How do we determine a fair price to purchase MLON for a fair risk until it reaches that point of equilibrium that's compatible with its dividend exchanged stock, ERDTF? There are a few ways to see this. Let's see…
As of Friday, 17 Dec 04 we’ll use since the day of consummation for the deal:
The point of equilibrium for the price of MLON is what we are trying to determine for knowing when MLON will reach such with ERDTF at $19.00 per share. The base total to use here is $57,000,000 as the point of equilibrium as derived from the example above. Let's solve for "X" to see how we must view this to see where MLON should be bought up to for reaching the point of equilibrium.
Key Variables for Resolution
X = Equilibrium price of MLON
Shares of MLON Exchanged = 500,000,000
The Equilibrium Value of ERDTF = $57,000,000
Solve for X,
500,000,000 x X = $57,000,000
X = $57,000,000 ÷ 500,000,000
X = .114 cents
This means that 500,000,000 shares of MLON at .114 cents is where the equivalent value of (500,000,000 x .114 = $57,000,000) needs to be to capture equilibrium with the value of ERDTF at the time the deal was completed (or made known to the public). If the point of equilibrium is .114 cents from these thoughts, this means that any shares of MLON bought under .114 cents is considered undervalued.
I think this is how the company is seeing the value in itself. This means that the value of MLON is .114 cents from the ERDTF deal alone. From the Western minerals/PRMN deal, I calculated it to be .01 to .02 cents with using the same logic for solution as above. This gives MLON even more value giving MLON the official justification to show why they think they are worth .10 to .15 cents. Keep in mind this does not include the 10,000,000 shares of RRBK at $14.75 per share that they own or the $45,000,000 in assets or any other previous or future deals that they have on the table for continued enhancement of MLON valuation. RRBK link from Money…made: http://ragingbull.lycos.com/mboard/boards.cgi?board=MLON&read=19843
I think this is why they see that they will start entertaining offers at .10 cents per share.
So, why is Mario doing all of this hyping as many have termed it? Well let's see. The market is one big pool of a Network Marketing concept meaning that it reacts because of "word of mouth," getting the word out for people to buy shares in your stock. If you released huge news and nobody even knew of your existence, your stock would not move. Stocks do not trade in the market to not get investor attention, but instead because of trying to gain investor attention.
The way the attention is being built to a climax with MLON to bring and enhance investor confidence is very well orchestrated. All they have to do is deliver the “key” substance as it appears that MLON is building key announcements to be made at the price obtainment of .01 cent.
Since the Float is low with ERDTF, it wouldn't take much buying power to make it run even higher enhancing the value of MLON along the way. Money could be strategically placed into ERDTF to enhance the Parallel Valuation in MLON to get it jumpstarted towards rectifying the covering process, if any naked short problem exists. This would give us two floats, the legitimate and illegitimate floats. If enough of the "illegitimate float" have been absorbed (or eliminated), then MLON could run a lot higher and faster to enhance the Parallel Valuation more than what ERDTF would do because of the larger consideration for percentage gains. There is actually more to this which is actually too much to explain for now. Heck, this post is already gonna be long enough long enough. LOL
As you can see, MLON would be significantly undervalued and an immediate proportioned valuation should be placed into MLON as compared to the price of ERDTF because of Parallel Valuation. Let's make better sense of this for a better understanding.
1 share of ERDTF would cost you $19.00 per share. To get a better understanding of the power of Parallel Valuation, we must determine how much an equivalent price of MLON shares would be for that 1 share of ERDTF.
ERDTF shares exchanged = 3,000,000
MLON shares exchanged = 500,000,000
500,000,000 ÷ 3,000,000 = 167
This means that the 167 number is the MLON share price multiple to use to determine this other point of equilibrium to see how it relates to Parallel Valuation. This means that 167 shares of MLON theoretically equates to 1 share of ERDTF. To further explain the importance.
1 share of ERDTF @ $19.00 = 167 shares of MLON @ .0023 cent(s)
1(ERDTF) x $19.00 = 167(MLON) x .0023
$19.00 = .3841
Price paid for 1 share of ERDTF = $19.00
Price paid for 167 shares of MLON = .38 cents at .0023
This is like you giving me .38 cents and me giving you back $19.00 in return. This means that MLON should be bought up to where the price of MLON x 167 equates to $19.00 for the 1 share of ERDTF. That would be the .114 cents that we talked about earlier. As you see that .114 cents x 167 would roughly give you the $19.00 per share equivalency of ERDTF. This is another way of determining the point of equilibrium. MLON would be considered under valued until such .114 cents point of equilibrium has been obtained.
Because of the logic with Parallel Valuation, the price of one should be directly correlated to the price of the other. Because of the Float of ERDTF being absorbed or nearly gone in my opinion, it would not take much for the price of ERDTF to remain stabilized at the $19.00 per share price range. The thought is that ERDTF would not come down to the level of MLON, but would force MLON to reach an immediate increase in share price and an immediate increase in valuation.
Receiving a dividend in ERDTF would be very explosive in itself. This thought of Parallel Valuation through a double dividend exchange would force ERDTF and MLON to trade under each other as a subsidiary even after the pay date of the dividend. This forces one to always bring along the other in valuation.
I hope I have shown how we should at least give MLON consideration for just might having a chance of having something that might be worth .10 to .15 cents to see how they might be viewing things. Still, the verdict is out and it well should be because of MLON if for nothing else being in the penny stock world, especially the pink sheets. Well over 90% of the penny stocks fail, but almost all of them present an opportunity to trade until they prove that they are worth being considered an investment. This is what we await from Mario to further enhance investor confidence. So far it is growing tremendously, but yet still some hunger for more validity. Mario and crew know this in my opinion.
I respect those who do not believe in MLON and I understand why, but I tried to reflect my thoughts based upon what they have given us to absorb as public info. I make this post on the premise of showing how I think the market could be viewing MLON for investing/trading with rationale to support my thoughts. Again, it doesn't matter what I, you, or any one or few persons emotionally believe about MLON concerning its info being factual to a certain extent. It matters what the "MARKET" believes about MLON or any stock.
Example: Back in the 90's XLA was considered one of the biggest scams on the AMEX and it traded as high as or near $200 per share (I can't remember the exact price), but I traded it from the pennies all the way up and down. It didn't matter what I thought. The market felt different. I took in the good and bad and really appreciated the info from both sides to assist in me making my decisions to trade/invest. Just this past Nov 04, XLA had just gotten delisted from the AMEX. So is it a scam? I still don’t know and won’t waste major kinds of time in finding out. Back in the day about XLA, the market felt differently. So I rolled with the market. Why???
Because you have got to understand that the whole market is corrupt and since none of us work for any of these companies, we will never know their true intentions. So don't get too caught up trying to discover their true intentions although still always query to at least know where you should stand with the company. We'll never know what’s in their hearts. Not all stocks are corrupt though, but the overall market is. So don't focus so much on one stock being corrupt until you learn how and why the entire market falls under this umbrella. You have to know this before entering the market to trade/invest to understand how you should accept the risk and faith you put in a stock.
This is really deeper than what we probably don’t have the time to discuss for now so we won’t. We must all learn to remove some key emotions to think rational from logic. We all have been guilty of allowing our emotions to overcome the reality of logical reasonings and facts. It happens to us all!
The market is the playground for the rich and how the rich gets richer and the poor gets poorer. There are many options for the poor to become wealthy/rich if they are positioned at the right places at the right time. This is where I try to help people knowing that some will lose while some will win. In the market, everyone can't win. That’s the nature of the beast. When someone is buying, someone is selling and vice versa. Once you buy a stock you are no longer a buyer. You then become a seller. This is the arena we must come to understand. Kind of like "when in Rome, act like the Romans." Back then Rome was dangerous for many reasons as like market. Still, every now and then a situation exists where everybody can win.
If Mario can pull off many of these things released in his PRs, then everyone will win. So OK, back to MLON. LOL
Although the verdict is still out on the validity of the info released about MLON, as the price somewhat reflects it, I will continue to take the risk that Mario will win enough of the market over to create enhanced share price of MLON. It is totally obvious that some others more than Mario is on a mission for success too that are part of his TEAM. So I will join them in leveraging my risk too as a shareholder.
What I think MLON is doing is building everything to a climax to make sure they have all eyes on them to attract investor attention to move the stock to the .10 cents price range. I think that they will be buying up shares all the way up to the .02 to .05 cents level to keep the momentum going.
Again, we must always keep in mind that since MLON is a penny stock, especially a pink sheet stock, the validity of MLON will always warrant the challenging of someone out there who chooses not to believe. I am not saying whether or not I fully believe, but I am saying that it doesn't matter what I or a few believe. The market dictates the flow of movement, the masses. Remove emotions and think rational and you will see what you need to do with not just MLON, but with any future stocks you consider risking.
Let's look at a few other key things that I think should at least be given some thought from some of their PRs. I think I see what they are seeing about these .10 to .15 cents thoughts.
"Mellon Research, Inc. Consortium of some of the Wealthiest Investors" http://www.knobias.com/individual/public/news.htm?eid=3.1.f3247c8909e521764d132282a7732bba5f0d0c211f8e9c895e19d8a1310e5bc8
Mario told a group of investors at the Roadshow that the share buyback has not started yet and was dependent upon him receiving the $10,000,000 that he was trying to obtain to perform the share buyback. Within the above PR is an indication that he will be given the $10,000,000 to invest into his own company.
Because of the now obtained $10,000,000 to buy back shares, I don’t think Mario will be dumping any more shares. I am guessing that he was dumping shares somewhat into the run to have funds to pay for certain business transitions amongst other things as a safety precaution if for some reason the $10,000,000 didn’t come through. I am thinking that he stopped as of this past Friday, 17 Dec 04 now that I believe it is secured.
In the link below, Mario PR-ed that he will be buying back one-third of the outstanding shares to reduce the number of dividends issued to the shareholders before completing the audit up to and including the 10k report. http://www.knobias.com/individual/public/news.htm?eid=3.1.97895d055bed0818716f53f2e6429cb416b196fc3a7f2f8f56f1539899052c2e
Also, earlier Mario PR-ed that he will be buying back 450,000,000 shares off the open market. He will personally do this to dry up the float and when the float is gone, the float is gone. It doesn't matter if the float was 5 million, 10 million, 100 million, or 1 billion shares. When supply equates to "zero" then it will trade the same as any high or low number existing for the float. If I had to guess, from looking at the trading volume over the past few days, I would have to say that the float is either gone or nearly gone. Zero supply means huge and accelerated increases in the bid to enhance selling to get shares to replenish lack of supply.
Even more for consideration, 450,000,000 shares is one-third of 1,350,000,000 shares. So either the OS is either 1,350,000,000 shares or he will be now buying back way more than 450,000,000 shares. Either option is another plus in favor of the shareholders.
Many have been led to believe that MLON had already bought back the 450 Million shares in its stock and was the primary reason for the increase in price. The recent confirmation of the closure of the $10 million confirms that they are just now getting these funds to buyback shares. When they stated that they will begin their buyback weeks before and after the New Year that means now. This confirms that they will begin buying up shares at higher prices to get us to at least the "pennies" in my opinion. Because of how low the float is MLON will be forced to pay a premium too. This is another huge show of confidence since they didn’t remain quiet and loaded up before releasing any power PRs.
He also is showing that he will be forcing candidates interested in buying a huge position in MLON to do so off of the open market until it reaches .01 cent which is great because this puts them in a position to compete for shares themselves to increase share price appreciation. As we now know, the 450 million share buyback did not start during the initial run-ups in price like I and many had thought.
Since MLON is probably the majority shareholder, any candidates that are interested in buying out MLON will not be able to gain a controlling interest since MLON will be owning at least one-third and more of the OS. This is why they can’t just buyback shares to take over MLON from the open market. MLON will file an official accountability of being the majority shareholder. A tender offer will be the only way to execute gaining control over the company.
Something else in the first PR above:
"We will provide solid evidence to the public concerning our estimated selling price when our firm becomes fully reporting in early 2005."
What this does is buy them some time in my opinion just in case the SEC feels as though they are being to aggressive with their marketing strategy with MLON. This gives them until mid Jan 05 at the latest to begin reflecting more details and facts. This gives them breathing room and keeps the SEC off their backs because they are generating their own suspense to allow for things to materialize. Stating publicly that you will be releasing details in the Wall Street Journal is something that should not get ignored either and is another huge show of confidence from the MLON too.
Because of how powerful the PRs are, many are seeing this as an "it's too good to be true" type of deal. Whether or not any of their deals come into fruition has yet to be seen, but I commend them thus far for what appears to be them sticking to their guns.
As for these comments:
We are proud to provide another significant dividend to shareholders of record. December 17, 2004 to Mellon Research shareholders once our stock has reached at least 1 cent per share in value. This dividend will be given (Equity dividend from Mellon Research, Inc. from a Public offering in one of our companies). The dividend will be provided on or before the completion of the internal audit.
AND…
Based on the number of calls we receive and e-mails, Mellon Research will determine whether we will provide a cash dividend tomorrow or a stock dividend to its shareholders of record.
These comments lead me to think that we will be getting either a stock dividend in an upcoming future IPO or a cash dividend. Heck, this is much of what many of us had speculated on about other stocks. It’s very surprising to actually see it being announced as a factual option and not spec-o-lation. (LOL – Inside joke.)
I think as we get to .01 cent, they will be bringing out key details that will make major investors want to buy the 250 million shares at the20% discounted bid rate price as they mentioned too in another PR. They state this as something they know for fact as many will relish the opportunity to do so in the near future. This could be another huge subliminal hint that they know what they have and when they will release such to bring in the transitioning of little investors to major investors. This .01 cent number could be the amount of a cash dividend that is being considered.
If I am guessing, it appears that they are serious about believing in their worth. A cash dividend would secure their worth and this is something that I think that they are aware of too. A cash dividend allows MLON to capture immediate valuation. Let me further explain for a better understanding. Let’s just use the thought of us receiving a .01 cent cash dividend to show how MLON will be given immediate valuation since that .01 cent keeps popping up as a goal.
If we were to receive a .01 cent cash dividend from MLON, this would mean that if you bought shares of MLON at .01 cents, you would still be given a 100% return on your money from the .01 cents cash dividend paid to shareholders.
Now consider that if you bought MLON at .02 cents, you would now get 50% return on your money spent from a .01 cent cash dividend. In continuing…
… MLON at .05 cents guarantees you 20% return on your money.
… MLON at .10 cents guarantees you 10% return on your money.
I hope you see the pattern here. I show you this to help you see that MLON is a shoe-in for the pennies if they announce a nice size cash dividend or even a small one.
Heck, some of you heard me say this before that the rate of inflation is 3% per year and buying MLON at .25 cents would get you more than the rate of inflation. A cash dividend as in the example above would convert MLON from a short term play to a long term play in my opinion.
All of these events transpiring with MLON makes me believe that this is the next leg up in my opinion. This is where the transition from those who stop believing in MLON to those who now or continues to believe in MLON kicks in. Whichever side has the more supporting its belief wins the up or down in share price. A new base is established as more and more news of power is released increasing the amount of those who believe.
As for the momentum with MLON, personally I would not get caught up in trying to trade it. You can get caught trying to chase it, but for the experienced ones I’m sure you will do well. The daytraders are not always a bad thing because they will bring enhanced volume that will bring more investor attention. Because of the lack of the supply of MLON shares, the volume should always continue to graduate MLON to the next levels. The strong will survive and do well in my opinion, but I personally won’t risk trading it.
There were many people that bought many shares in the .0002 to .0009 cent(s) range and many will be taking profits all the way up and down so do not get discouraged when you see any dips. A bird in the hand is worth more than two in the bush. Many were still in during the initial/early decreases from the earlier pops as seen by how quick the price drops on the amount of volume transacted to bring the price down versus the amount that was transacted to bring the price up.
Again, don’t focus so much on what I think or what you think, focus on what the market thinks. I would not have thought that that guy who started that multi-billion dollar company from his garage would not have made it either, but the market felt different. And now look what it has matured in to. Guess who??? Hint: It’s a major market company that people bashed and laughed at in the beginning too. You actually have a few answers to select from.
I’m not saying that MLON is the next Intel, Microsoft, etc., but I am saying that this might be an investing moment that might be worth capturing. How valid the info being released by MLON is up to them to put finite confirmation on their info released. I still say that they are building something of a huge magnitude to a climax to make sure they have enough investor attention to capture a huge portion of the market. Will they complete their goals of growth as they seem to be planning? This is the risk we all take in the market with any stock. Some are just higher than others. The above are only my opinions and thoughts as to how I perceive things. I hope we all become prosperous with our investment in MLON!
All is well! http://www.sterlingsclass.com/
;-)
Sterling
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