Monday, April 6, 2009

How Socialwise is Different than the typical smallcap

Lets face it, the share price isnt exciting, but disappointing. So why is the stock here? Is it the shareholders? Is it the market environment? Is it the company? These questions are normal. Everyone wants answers when they believe in something thats not going well. Investors are notoriously short (term) minded. This group is different. Many are still excited.

There is a reason why so many involved are so excited. Every time I see Jim Collas, and the rest of the management, they are extremely inspired. They dont worry about the current price, because they know what they have!

Why is Socialwise so different? Thats a great question. First lets eliminate what Socialwise (IDAE) is not:

1)A PUMP and DUMP
Clearly if this was a pump and dump, we would be sitting a lot lower than .40. However, I prefer facts. Fact: the stock float has not even doubled from its extremely low 3.9MM shares in over 12 months. Fact: No new shares are being dumped and/ or sold off in large unaccounted for numbers. Fact: The original IR firms are still with the company. Fact: its at .40, when it could easily be at .01

2)HYPE- A pipe dream of success.
Small cap companies usually fall in these first two catagories. Sure a company may have a great idea, but no real solid plan to execute. Its usually the "if" we get just one major player to "buy (sign, partner, etc), then the company wont look back.... it happens only once in a thousand (or less). Others have a great plan/product but lack leadership to see it through. This represents probably over 95% of small caps, and why, unless you know what your doing, you shouldnt invest in small caps.

3)No WAY of maintaining a market-
Sure you can have all the right ingredients above but lack the one real thing....a viable way sustain a market and longevity. This is usually due to outside forces.

I want to talk about #3. This is where Socialwise is VERY different. Sure it has the potential to make it as a multi billion dollar company with a leadership team that you find in Mid caps ,if your lucky, but thats not what I want to focus on. Many companies have potential, but never do make it.

So what usually destroys small caps that has done everything right? (as in great product, excellent planning, a strong management team, working capitol and keeping the share structure tight). It can be things we dont see coming.

Lets start with the short list (if you think of more please let me know):

Private Funding- The torpedo that has sunk many great small companies. Bringing in start up money that turns toxic. Whether its a convertible note that allows the shares to dramatically increase if the share price dips, or a investor that cuts his/her losses at anytime they feel threatened and put the stock in a situation that it cannot recover. Socialwise doesnt have any of these. So far the investors have remained very solid.

Bureaucracy- This has destroyed many a start up. When your product or company is strong enough to put a dent in major industries they are typically squashed. A billion dollar company finds it in its best interest to take care of problems before they get big. Put enough pressure and they can easilly shut down a small cap thats running on a shoestring budget. Some great new start ups have burned millions while the bureaucracy machine pressed them. No this isnt conspiracy, it really does happen.

Ideaedge (Socialwise) is in a industry that doesnt have (much) bureaucracy. In fact the field is wide open when it comes to payment systems. The industry is actually hungry for new ones. This is why we had the tech boom....it was a new industry without the Bureaucracy and many new great products, ideas and intellectual properties.

Competition- A great idea thats not kept quiet by a small company can quickly invite major player to execute it before the small company realizes what hit them.
Heres the deal,Socialwise owns the patent to their two intellectual properties. Who can compete with them? Not many. They kept everything so quiet that they are going to be first to market, no matter who tries to beat them. Since they have so many relationships formed with many major players, they actually are too far ahead of anyone who would try to compete to make it worth while. You want to be first to market to have a name recognition. For this reason alone this is most exciting. This also invites the mergers and acquisition talk by a major player once you show your company profits are growing and promising to be very big.

This company is unique. I hope you understand the position that we are in. Not only is everything lining up, but we also have a strong shareholder base. This will help the stock stay strong once the company begins to make its numbers and is profitable.

I dont see any reason to doubt. In fact its a great time to add. You will be glad you did later.

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