Sunday, February 13, 2011

Early Stage ASX Shell Plays (part 1)

Following up on my Introduction to ASX listed shell plays post it is time to explore a few of these plays that are in the very early stages with almost no interest and volumes traded.  These are the plays that will take some time but offer higher returns for those that are patient!

I originally posted about this company in September and not much share price action has happened since, which goes to show that they are all not winners and early stage plays can be a long haul.  The company has a market cap of about $2 million with about $1.3 million in cash on hand.  Tony Pitt was appointed to the board in June last year and was looking at vending in commercial real estate assets and as a result almost pulled off a merger with Becton Property Group (BEC).  The deal subsequently fell apart and Tony Pitt left the company but retained his shareholding.  Since this the company has reinstated its plans to seek a new business for the company.  I think this was a good turn of events as real estate is not entirely interesting in comparison to resources projects.  It is interesting to note that Ian Murie serves on the board and is also tied up with Acuvax Limited (ACU), a company I recently posted about that has a high chance of backdoor listing a resources project.  OLE last trades at $0.003.

Freshtel is a company that had business in VOIP technology.  The company has been restructuring for the better part of a year now and this has included selling off their UK VOIP assets which were running at a loss.  The company has some debt and in November stated that it had sufficient royalty income to maintain the shell.  It is currently capped at $2million but only has just under $180,000 in the bank.  It is a bit worrying that they failed to lodge their quarterly on time and were suspended as a result (only to lodge soon thereafter).  We havent been given any hints as to what may be vended into the shell however we do know that they 'continue to investigate and search for an appropriate business to back into the listed shell and thus give shareholders an improved future with Freshtel'  Things arent moving too quickly at Freshtel and the stock last traded at $0.003.

This company is as pure as a shell play can be.  The company has no debt, no business and is sitting on cash.  The company used to invest in companies listed on the exchange in India however suffered from the share price always being under the value of the securities in it's portfolio.  The company decided to liquidate it's portfolio and return capital to the shareholders.  It held on to some cash until it's register was raided, a meeting convened and the new shareholder nominating it's own directors and then taking control of the company.  I've covered this company before so you can read up further here.
This particular company is one of my preferred picks because with the cash it has on hand there is very limited downside.  The net tangible asset backing is $0.0614 per share whilst it's shares traded at $0.044 so there is some good value here.  The new directors also have good experience with shell companies.  The last update (which I recommend you read) provided by the company was on 30/11/2010.


  1. Have you looked at SFP?

  2. Hi Anonymous, I've heard of SFP but haven't looked into it closely. Appears that they are still assessing their existing syringe business quite a lot first. Having said that EIO also stated that regarding their toy business. Looks like EIO is now focusing on the Nigerian iron ore anyway!