Wednesday, April 05, 2006

AOOR - Apollo Resources

This is an extreme speculation, based on a story that first appeared on Briefing.com late Wednesday afternoon and is now circulating on the message boards.

The story (read: opportunity) surrounds a pricing anomaly that apparently exists between two publicly traded companies. AOOR with a market cap of $55M owns 70% of EBOF which has a market cap of $400M. If this is accurate, then AOOR, which closed today at $0.69, includes about $2.74 of EBOF stock. This pricing disparity creates the potential for AOOR to quickly move toward that $2.74 value.

Here is the Raging Bull post that quotes Briefing's analysis:

from briefing.com: 15:18
AOOR Apollo Resources – An undiscovered play on bulletin board runner Earth Bio. (0.56 +0.06)


We believe that it's gone almost unnoticed (and it was unnoticed by us until today) that AOOR, an integrated natural gas and biodiesel company with a market cap of about $54.4 mln, owns the majority of Earth Biofuels (EBOF) of BioWillie fame, a stock that has more than doubled since we first wrote it up on March 15, and now has a market cap of more than $400 mln, based on about 180 mln shares out. We found the information in AOOR's most recent 10k, and called the companies to confirm the information. Executives just got back to us and confirmed with us over the phone that AOOR owns the majority of EBOF. The ownership works out to be roughly 70% of EBOF. BriefingTrader Note: Assuming no value for AOOR itself, 70% ownership of EBOF at its current stock price would imply a current value for AOOR's stake of around $280 mln, or more than 5x AOOR's current cap.


I established a core position Wednesday just before the close but before I could check out the story for myself. If everything holds together AOOR may run out of the gate Thursday morning at the Open. How far it will run and whether it will allow for a good entry is uncertain.

But you can bet (read: bet) that I will be playing in the mud in the morning.


A

8 comments:

Anonymous said...

I went looking for alternative energy stock about three weeks ago and found this stock. Very interesting play. It has conventional gas/oil plays and into bio-diesel (which I think is a better play than ETOH)and building large new plant. When I looked at this stock it was trading at .33; it more than doubled and then dropped back. I opened a position last week. Besides Willie Nelson, Morgan Freeman bought millions of shares and sits on the board of directors. With the convention gas/oil plays it has a good base, seems to be a fairly safe play.

debby

Allan said...

I went looking for alternative energy stock about three weeks ago and found this stock.

Keeping secrets from the rest of us?

Just kidding, Debbie, nice find. Haven't found anything wrong with the scenario described above, we'll know more in the morning, seeing how it does.

A

Investing Monkey said...

AOOR does seem undervalued, although I'm still new to this stock thing and have been playing large caps mostly.

Although I'm kinda missing where they get the 200 mln market cap for EBOF, I only see 54.79M for a market cap in one place and 280M in another. or is something just not right yet since I think EBOF used to be meadows springs but back in september they did a trade to own 88% of meadows springs for 80% of earth biofuels.

anyway if I were to make a tiny entry (like 2k shares) what you think would be a good entry point.

Anonymous said...

I believe the reasoning is erroneous because of the following..

1. AOOR's O/S is 180M shares and
2. EBOF's O/S is 24M

So EBOF's Market Cap is $58M (correct as hsown in Yahoo financials).

Could be a pump and dump!

Anonymous said...

"I believe the reasoning is erroneous because of the following..

1. AOOR's O/S is 180M shares and
2. EBOF's O/S is 24M

So EBOF's Market Cap is $58M (correct as hsown in Yahoo financials).

Could be a pump and dump! "

I am sorry, upon further research,
EBOF does have approx 180M O/S as of 31 Jan 2006. They have not filed their 10KSB, hence I saw their latest 10Q which indicated 24M. But then I saw a 13G/A filed whcih shows EBOF has 175M issued!

Anonymous said...

At .39 I couldn't help myself! AOOR is majority shareholder of EBOF.

I don't believe Willie Nelson, recent EPA honoree for his work in promoting alternative fuels, and Morgan Freeman, academy award winner of some stature, got involved here without some due diligence.

I don't believe that Julia Roberts, another academy award winner of some stature, agreed to be a spokewoman for the company without doing some DD also.

And just added yesterday: NASCAR Driver Rusty Wallace Joins Earth Biofuels.

Time to buy AOOR IMHO.

Anonymous said...

shell game to say the least. Earth Biofuels is linked to Apollo which has several lawsuits pending including the investment company Patriot Exploration 5million plus. They take investors $ and drill and in the mean time don't pay vendors or employees.

Keep investing maybe someone will get paid for services rendered!

Anonymous said...

I don't believe Willie Nelson, recent EPA honoree for his work in promoting alternative fuels, and Morgan Freeman, academy award winner of some stature, got involved here without some due diligence.

I don't believe that Julia Roberts, another academy award winner of some stature, agreed to be a spokewoman for the company without doing some DD also.


Ok, so by this logic if Warren Buffet decided to be an actor or musician then he would be great at it because he is also a great investor. Obviously these celebrities have done their due diligence and determined that getting involved in this company is potentially good for them, but that does not mean they are correct and it does not imply that the same is true for you. That is why they say, "Do your OWN due diligence."