HC2 Holdings, Inc. (OTCMKTS:HCHC) Holds Well, but Still No Clear Direction
It’s time to revisit HC2 Holdings, Inc. (OTCMKTS:HCHC) since it appeared at the end of April with the new name and ticker. Even at a relatively high price, HCHC managed to incite enough buying interest this Tuesday, with a daily growth of net 3% on rather robust buying volumes of $1.09 million. HCHC had quite the daily fluctuation, but calmed down at $3.90. 
The only problem for this otherwise robust company are the relatively small trading volumes, and the high price which precludes easy entry of new investors. Also, there is no guarantee that the sideways drift would turn into a climbing trend, or that this OTC company would be immune to sudden drops in price. Still, HCHC is a company of a different quality, as it is easily seen from its financial information:
- cash: $9 million
- current assets: $74.9 million
- current liabilities: $31.7 million
- yearly revenues: $230 million
- yearly net income: $111 million
So it comes as a surprise to see deeply negative comments on investors’ forums. HCHC is indeed fighting hard to stay afloat in the telecoms sector, where technologies constantly change and a company may easily whither, even if it had initial success. Also, there is little chance for hype, new products or other soft interventions that could create a boom in the stock price. So HCHC remains a risk, perhaps with some long-term potential. But the biggest hope of investors would be a buyout, as a small company would struggle in this market.
Recently, HCHC completed a stock purchase agreement with SAS Venture LLC, acquiring 2.5 million shares of the company for a consideration of $78,750,000 in cash. We don’t know how the deal will affect the buyer in the future, but at least in the short term, the news preceded the spike in buying and served as a beacon to call investors to this stock.
Still, there is no email promotion, and HCHC only reveals basic corporate updates of its activities, without a concerted effort to impress with promises or outlines of future strategies. HCHC is a big exception where the marijuana business is now the new identity for most OTC companies.
Speaking of exceptions to that rule, we had several movers in the past days. One was a pharmaceutical contender, MRI Interventions, Inc. (OTCBB:MRIC), a producer of imaging technologies and procedures for neurosurgery and cardiac surgery. Unfortunately, MRIC sank as it could not impress enough buyers with positive development news. For now, MRIC hangs around the $0.92 levels.
Engineering group Monarc Corp. (OTCMKTS:MONA) is the other exception, which despite a rather solid business model still goes through painful fluctuations. MONA jumped quickly to $10 only to crash toward $5 and regain some of the positions.
If you are looking for an alternative to the cannabis hype, be aware that no business model guarantees stock stability, so plan the size and timing of your investment accordingly.
