Saturday, October 27, 2007

Seaway Valley Capital Corp (SWVC.OB): Is it time to buy?

And so it seems that too many people were affected by the unfortunate crash of SWVC last Tuesday. If you were one of them, and you decided to stay in, kudos to you, since Pickle Stocks has a rather positive perspective to share.



It is not easy to understand a company that runs so many businesses at once. It seems that even Pickle Stocks' own colleagues on the street have hard time understanding what Seaway Valley Capital Corporation does. When we first heard of what happened last Tuesday, we just knew that the market overreacted. Here's why:

Too many day traders, Mozart.

It's as simple as that. Day traders generally don't have a clue about the stock and the company they're trading; they're in, they're out.

Seaway Valley Capital Corp. In decarbonization business? or retail?

Simply put, it's in the business of buying and selling other businesses. Seaway is basically owned by one person, Mr. Thomas W. Scozzafava, who is the CEO and the only member of the board of directors. He owns 83.8% of interest in the company. That's a lot of shares for Mr. Scozzafava.

What really happened on Tuesday:

When Seaway filed the 8K, and announced completion of merger between Seaway and Wisebuys, a lot of people were confused. First it was previous shareholders of GS Carbon Corporation (GSCR.OB) -- which was acquired by Seaway in August -- who saw that the decarbonization company they had invested in was now branching out to retail business; this is a bit confusing, to say the least. Then, other investors were weary of the fact that WiseBuys would drain a lot of resource from Seaway, especially with the acquisition of Patrick Hackett Hardware Company by WiseBuys. Concerns that Seaway might dilute its shares in order to raise more capital to support the acquisition abound on many online investment forums.

Verdict

All that aside, understanding which business Seaway Capital Corporation is in helps us see the company from a new perspective. They're in the business of buying other businesses, not running them. Also of note, Mr. Scozzafava was directly involved in the development of WiseBuys back in 2002. No wonder why -- Seaways is Scozzafava is WiseBuys. Does it help that Mr. Scozzafava owns 83.8% of shares? Maybe, unless he uses his power to dilute common shares.

Pickle Stocks hopes to see a lot more news of acquisition coming out of Seaway in the near future, since they're in the business of that. As long as they continue to do so, there will be many points of exit and re-entry. Has it hit the bottom yet? We'd advise that you observe the market for a few more days, but one thing's for sure: they got rid of a lot of fat (day traders, etc.) on Tuesday. Most certainly, the next big wave will come from the news of Hackett acquisition, so keep an eye out for that.

2 comments:

Anonymous said...

Keep covering this stock! It's worth the blogspace and should appeal to many investors.

Thanks for the nice writeup.

Anonymous said...

please write a follow up'

much to come in march...
10-k & ludlow rating..
LOI's..

SWVC new years resolution to make $