Winning Brands posts accurate disclosure of its float on a regular basis, verified by the stock transfer agent. By this means, we all have the basis of determining whether the market capitalization of the company is realistic. At current pricing, our market cap is approximately $4.5 Million. Is this the appropriate figure? What is a company worth?
Clearly, many public companies are valued by “the market” to have a net worth that is based on the company’s possibilities, rather than on its current financial statements. This is particularly true of young public companies, whose potential is still mostly unproven because they typically have more talent than experience as a company and as a brand. The junior public market is a proving ground of aspiring enterprises and this is what makes the American economic system the most dynamic in the world. Nowhere else has it been possible for so many great beginnings to occur. If the only companies worth investing in were already successful, then how would investors ever experience truly significant capital gains that only come from breakthrough events?
Going by the standard of the critics of aspiring junior enterprises, there should be no emergent companies – only existing success stories. There would be no trials and tribulations, only endlessly increasing quarterly profits for brands that were already household names. In that world, there are only blue chip stocks which mutual fund managers choose for our retirement plans. Perhaps the ideal, for extra safety, would be to have a diversified Dow Jones Industrial Average portfolio that mirrors that index as a whole. All those great industrial company investments would surely be a good bet. In all of the history of the DJIA, there has only been one single day in which the value of these securities, as a whole, increased by more than 15% on a single day. And on a single day in 1987, the percentage value of the DJIA fell by more than 22%. People can have losses in senior markets too. Clearly the DJIA is only the tip of the iceberg of the senior public markets. What is the realistic long term view of all of the stocks on such exchanges?
The Global Investment Return Yearbook provides this interesting perspective of the big picture regarding such investments:
… of the 17 GIRY countries, the best performing equity markets over the very long term are Sweden and Australia, with annualised percentage real returns since 1900 of 7.9% and 7.8%, respectively, compared to a world average of 5.8%. Ireland had a real annual return of 5%The core of the Yearbook is provided by a long-run study covering 107 years of investment since 1900 in all the main asset categories in Australia, Belgium, Canada, Denmark, France, Germany, Ireland, Italy, Japan, the Netherlands, Norway, South Africa, Spain, Sweden, Switzerland, the United Kingdom, and the United States. These markets today make up over 92% of world equity market capitalisation. With the unrivalled quality and breadth of its database, the Yearbook has established itself as the global authority on long-run stock, bond, bill and foreign exchange performance.
5.8% average. I point this out because it is important to remember that over the long term, the traditional, “senior”, markets provide excellent liquidity but moderate gains. The purpose of the junior public market is to permit speculative, high risk participation in new ideas that may or may not succeed. If they don’t succeed (and most don’t) then the speculative investor has not benefited. If they do succeed (and the few that do, can succeed spectacularly), then the gains can be great in those few cases. It is up to the individual investor to determine their own personal comfort level with the risk involved – but the risk is there. There is nothing wrong with the risk. It is no failing of the company that it is in the least certain, but most promising stage of its life. It would be ideal if only those investors who accept this basic fact participate. Winning Brands goes to great lengths to point this out to prospective investors.
This reality check is highly relevant to the subject of dilution. Poorly informed persons make the misleading argument that achieving an attractive capital gain is determined by the size of the float, or outstanding shares available for trading. In their simplistic model, the lower the O/S, the better. They argue that the opportunity for capital gains is higher in this case. Actually, that is not the case. Capital gain is the difference between the purchase price of a stock and its higher sale price. With a low O/S, the market capitalization of a company is divided by a smaller number of shares, and therefore the purchase price is higher too. This means that a much greater absolute increase is required for any given percentage increase.
So, for example, if Winning Brands had only 1 Million shares outstanding, then everyone purchasing a share would have to pay much more per share. Under current circumstances, it would cost approximately $4.50 to purchase a single share. To experience a 100% capital gain, the share price would have to grow by another $4.50 to $9.00.
If on the other hand, an investor who purchases a share of Winning Brands at $0.0025 is to experience that same 100% capital gain, the share price needs only to go to $0.0050, ie. a quarter of a cent increase. The investor’s $1,000 investment has gone to $2,000 in either case, for a $1,000 capital gain. The capital gain is not determined by the O/S. The most important factor determining the prospect of a capital gain is the likelihood in the change of the perceived market value of the corporation in dollar terms, ie. the market capitalization, or “market cap”. The key factor determining growth of market cap is a determination of whether the market cap is currently under-priced relative to its likely value if the company achieves its goals. Dilution is a problem if the capital raised is not used to increase the likelihood of a higher market cap. Responsible dilution is neutral in its effect. Winning Brands dilution has resulted in a better brand, more experienced, talented staff, better retail contacts, new trademarks, R&D , higher consumer awareness through advertising and the begining of the reduction of debt.
In the case of Winning Brands, this means that the most basic question is this: “What is the likely value of the company if it secures a business relationship with America’s top three retailers in its category and grows in sales volume accordingly? (A single national U.S. retailer in our category can easily receive approximately 15 million shoppers per week, or 15 times the corresponding figure in Canada). Under those circumstances, would Winning Brands’ market cap stay at the current $4.5 Million level? $9 Million? $45 Million? The answer to this question will be found within individual investors across the marketplace, and the net effect of their collective buy/sell decisions will deliver the verdict. Regardless of what some people say who prefer simplistic answers – there is no “correct” figure. However, there are precedents, and as a general rule, a company whose commercial activity increases 15-fold is not likely to stay at the same valuation of its pre-expansion state.
Tadalista 5 has gained the popularity of the cash on delivery option, a levitra online lot of people are being concerned on the use of certain pills. Sinrex and Marathon 21 is the best alternative for cialis professional effects shop at link. Sildenafil improves erection 8 out generika viagra cialis of 10 suffer with impotence. Many Online Phramacies have become pharmacy cialis very sophisticated in terms of dosage. So, in view of the foregoing, what is the likelihood of Winning Brands actually securing the accounts we desire? I ask myself that question constantly, as I work hard with my colleagues to continuously foster conditions by which this can and should happen. The worst thing that I could do for you is to give you a guarantee or assign a speficic percentage chance to this, along the lines of 50/50, 80/20 or 99%, etc. The fact of the matter is that the decisions are being made currently by buying professionals who do what they feel is right for their huge companies. They are dealing with a broad range of issues, many of which are not even revealed to the prospective suppliers. Any step for them involving unknown factors is a risk. It takes a special kind of buyer to weigh the risks and achieve growth through innovation, but not too much innovation. It’s not easy.
There is, however, one thing that I am absolutely certain about – 100%. That is the wisdom of such a positive choice, if the buyers make it, in our case. Winning Brands will be a terrific partner to those great companies. Our lead product is clearly a winner amongst those consumers who use it. These consumers include a growing number of Americans living in all regions, representing diverse lifestyles. We have a minuscule rate of complaints or dissatisfaction. By far the majority of our contact with consumers is an affirmation. In various ways they express the simple joy that a stain rescue situation has brought about. There are millions of such stains occuring daily for us to satisfy.
I have looked into the eyes of each of the executives responsible for this decision and shared the reasons why their stores, as great as they are, still do not offer the product which their consumers deserve to find on the shelf in this category. It’s a terrific feeling to know that this truly is the case, not merely a sales pitch. The truth of the matter is that in all of our experience, Winning Colours Stain Remover is the World’s Most Versatile Cleaning Solution. Why would the top retailers not bring a Word’s Best product to America’s consumers? The proposition is really just as straightforward as that. The fact that it has taken us several years to earn the opportunity of making this statement directly to these buyers is nothing more than the reality that these people are extraordinarily sought after, with limited time, and limited “openings” to slot new, unknown, brands into the mix – and have only now started to feel that the worst American recession since the 1930’s may be showing signs of recovery.
Breakthroughs of the type that we are preparing for can and do happen. This is what makes the ownership of Winning Brands Corporation shares at this point so attractive in my opinion. We have a low market cap relative to the size that would be justified if we made this breakthrough. The chances for such a breakthrough are more realistic now than ever. The logic of such a breakthrough is based on common sense and leaves everyone a winner.
There are very few entrepreneurial teams as dedicated to seeing this happen as your team at Winning Brands. I am not the only one in the office tonight, Saturday February 19th, at 10:00 pm. Our group is “on”. We are ready. We can hit the ground running with these retailers. All they need to do now is say yes to the opportunity. We now have the operational experience to match our talent – and a proven product that is a perfect fit for those retailers.
My view is the 2011 will see continued overall debt reduction, substantially improved sales, a verifiably increasing network of retail locations, new product fans from coast-to-coast, and a considerably expanded base of shareholders who will have been introduced to Winning Brands through new investor awareness initiatives to spread the word of our new listings if/when they happen.
Cheers, Eric
P.S. Preparing for the office this morning at the crack of dawn, looked like this, at my house. (Apple QuickTime Video Clip) Motivation can move mountains (and cars through snow banks!)
