Ellixor Financial Investments

Ellixor - investment picks for microcap stocks.

Saturday, June 03, 2006

Shell Companies

The way to get rich in the stock market is to by low and sell high. Sounds easy, but not many people get it right. However, here is my recommended strategy. Publicly traded shell companies. The way this works is you buy a few publicly traded shell companies. The trick is to look for shells that are controlled by parties that have had success in the past, this is not easy becasue it is not always apparent who is rreally in control of these companies.

Let say we have purchased a shell company, now what? How will the shell's value increase so I get rich? Here is how: Lets say I have a business venture and I want to go public because it is easier to raise money in public markets. This is especially true for resource based exploration and development companies. I essentially role my project into a shell company, the shell company issues me a controlling interest in shares in return. The former shell company no has operations or at least the prospect of future operations or ability to discover a resource, or whatever. In theory, the stock will be in demand by speculators and other high risk players and the price will increase. Those who held the stock prior to the reverse merger will cash out and make money on the stock that they bought for pennies a share.

Note that this strategy is not without risk. The shell may never go anywhere and may even get delisted if the management cannot raise money from time to time to meet the exchanges minimum requirements.

On the plus side, there is a lot of exploration going on for resources and going public using a shell is easy for these private companies looking to go public.

A couple of shells to consider, Lyra Resources Ltd., Previa Resources, Alcor Resources Ltd.

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