Here is the 6-month chart:
Notice the similarities in the chart pattern in November of 2007 and April of 2008.
That pattern brought the stock from $15 to over $22 on initial jump, followed by a larger move to $28. RSI is at the same level and going up. MACD remained in the positive territory and continues on the bullish trend. Last couple of days I began noticing a bid finally being supported with a decent size. I will continute to reiterate that $13-$15 level for HRBN will be laughable 12-24 months from today. Even for the short term, stock is becoming to look very attractive based on the chart alone.
On the company developments, I'm still waiting for an additional financial details on the acquisition they made - in terms of the financing and the dillution for the shareholders. On another note, we should see 1Q earnings next month, and the acquisition will be included in the earnings.
2) Asia Automotive Acquisition (AAAC.OB) - or what we should call it now: Tongxin International.
Well, the long wait is over. Honestly, it took a lot longer than I expected originally, but they finally came through with the merger. 85% of shareholders voted for the merger (80% was required), and thus no emergency buyout was needed, which helps, since the will need this cash to pay for the acquisition. I never expected stock to jump on the news of completing the merger, and the action today was exactly what I expected. As a reference, APWR (former CSCA) acted in the similar manner first few days after the merger, only to jump much higher later.
There are many catalysts ahead for the company: Nasdaq listing (which should come very quick, I believe), news of additional acquisition (as outlined in their presentation), PRs from the new company, and finally fantastic earnings showing what the company is all about. All these events will put this company on the radar and should gain market trust pretty quickly.
Another important thing - warrants. Calling warrants in brings cash to the company. They can call the warrants in when the common trades above $10 for 20 out of 30 consecutive days. Almost every company that went through this kind of merger (that I'm aware of) gets to call-in price. That is one of the reasons the stock will trade north of $10 in the short term.
Good luck to all!
4 comments:
At this point in time with the acquisition finally approved, what would you recommend as a better buy for AAAC? The warrants (AAACW) or he stock (AAAC)? Thanks
At this point, the only thing matters is how much capital you are willing to invest in the stock. Since warrants are now caught up with the stock ($5 difference), it doesn't make them undervalued compared to the stock. I prefer warrants, since I can buy more with less capital, than I would need in order to buy a stock. I believe it's very safe investment: Over 85% of investors voted "for" the merger, instead of opting to take the cash. That shows confidence.
So correct me if I'm wrong but if the common stock (AAAC) trades north of $10 for 20 consecutive days, they can call the warrants. Does that mean that the price we will receive for these warrants will be $5 (if the common is $10)? Does that mean that the warrants can only give us a maximum of double their current value being that the current price is approximately $2.50?
Double is not a bad thing in the market :) Besides, there is always an option to convert to a common, if you think that the stock should trade much higher.
Few more things:
Company doesn't have to call in warrants immediately after the conditions are satisfied; although, it's in their interests to do that to receive cash.
There are two examples that I can provide:
YTEC - called in warrants immediately after conditions were satisfied.
APWR - called in warrants, when the stock was trading at $16+, way after the conditions were satisfied.
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