The Matrix Series: What to do about PTT?

M

michaelscott

I continue on in my Matrix series. A few weeks ago I woke up after living in the Matrix and realized that we live in a world of programmaned trading and hedge funds and not this buy the dip world that we have become so acustomed to. My slumber was disturbed when the mighty Euro started to take a turn and not poke its price through the ultimate resistance. Maybe it was also the TNX going into a super-cycle up after bottoming out. Maybe it was oil turning around and heading to 100 that disturbed me. All I know now is that I have been jolted out of the buy the dip world and its my mission to find shorts.

There is manipulation at every twist and turn and now its my mission to find stocks in the Matrix to short in order to wake them up from their deep slumber within. I do not believe I will win against the machines, the effort will be futile, but we will try to turn a dime just the same.

I saw this stock last year run from 1 dollar to 12.65. I looked through the 10-Qs, the financials, everything...I wondered aloud what happened here. Is this yet another stock caught up in the dreaded Matrix? High P/E, lots of debt, and they issue out guidance 3 years in advance.

An analyst came out the other day with a 20 dollar price target and I wondered aloud if this was another Matrix stock. The Euro is breaking down and the ten year yield in a super-cycle moving yet higher. This has to be a Matrix stock.

At this point, Im not so sure. Im almost in bed with the analyst on this one. There is one thing for certain that the chart tells me. If the stock goes up from here, then it will reach the analysts price target. If it goes down, then it will reach 1 dollar. That dreaded bermuda triangle where the price can exit any which way is in the picture. Yeah, it looks like a pennant or a flag or whatever you want to call it, but I do not fade into these things.

I still wonder aloud what is about PTT and if its in the Matrix. I did look at RICK and I believe it is at a similiar turning point as well.

Notice with PTT that it did fill a key gap from last year which might be a bullish sign. I say we are in indecision right now whether we want to take PTT out of the Matrix. I would long it on any close above the 50 day and short it on any break in the trend line.

We might just leave this thing within the Matrix afterall...
 

Attachments

Here is an updated chart.

As I was saying before, this company looked ridiculous to me at first for the following reasons:

- Operates "stripclubs"
- Provided guidance for the next 3 years
- Covered by one third-rate broker
- Went from 90 cents to 12 dollars for whatever reason in very little time

My thoughts was that it was pump-dump scheme that would crash down like OPBL or LBIX eventually.

However, I dug deeper into the 10-Q tonight and here is what I found. It owns the following clubs:
PT’s ® Showclub in Indianapolis, Indiana (acquired 2002)
The Platinum Club in East Saint Louis, Illinois (acquired 2002)
Centerfold Showclub in Denver, Colorado (acquired 2004)
The Penthouse Club in Denver, Colorado (acquired 2004)
Diamond Cabaret in Denver, Colorado (acquired 2004)
The Penthouse Club in Phoenix, Arizona (opened 2004 and sold in January 2007)
Tabu (Dance club) in Denver, Colorado (opened June 2005)
PT’s ® Appaloosa in Colorado Springs, Colorado (acquired October 2006)
PT’s ® Showclub in Denver, Colorado (acquired December 2006)
PT’s ® Showclub in Louisville, Kentucky (acquired January 2007)
Roxy’s in East Saint Louis, Illinois (acquired February 2007)
PT’s ® Showclub in East Saint Louis, Illinois (acquired February 2007)
PT’s ® Sports Cabaret St. Louis in East Saint Louis, Illinois (acquired March 2007)
Penthouse Club St. Louis in East Saint Louis, Illinois (acquired March 2007)

Notice how they doubled the number of clubs they operate within a matter of months.

I dug into the balance sheet and their assets doubled in the last 3 months!!! It went from 35 million in assets to 69 million. Liabilitities went from about 3 million to 4 million.

http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-115844&Type=HTML

There was a press release today on how they opened yet another club.

http://biz.yahoo.com/bw/070531/20070531005155.html?.v=1

While I dont know much about the strip club business, I know that its not interest rate sensitive and wont be effected by Bernanke. The strip club industry operates within the Matrix and in its own world.

The most important thing to myself though is the chart.

The chart says all. We broke through a key resistance today and I feel confident that we can move up from here.
 

Attachments

I bought at 2.50 and rode up to $11. I am waiting to see it turn around before I jump back on the ride.


It broke it's back during the Feb Drop and has been langusihing..

Another nice One I grabbed on a whim back in February.... VSGN. Bought at .34 now it's at 2.42
 
I dont think its back is broken though.

It did retrace back perfectly and now its moving forward after the retracement. The close today had the following properties:

- Close above the 50 day moving average
- Broke the descending trend line
- Close at the high of the day
- Volume was twice normal so rise was legit
- MACD crossing at bottom
- RSI indicating rising strength but not overbought

The price target (in theory) would be another 10 dollars up.

If there is uncertainty, then one can wait a point more to see if the price holds.

Fundamentally speaking, the company is expanding at a rapid pace. Doubled the number of clubs in last 6 months and is still opening more. Forward P/E at this point of about 10 and with the new club they just acquired it should get even better.

Here is how Im trading it. Long it right now then wait until it gets to around 12.5. Close out position, wait for it to break over 12.65 on volume then long again until 18.5.

Do not hold through conference calls. I dont know too much about this business. I do know they like to put out bullish press releases, but the conference call tells us the truth and the street may not like the truth.

Here is a chart showing the Fibonacci line.
 

Attachments

Im not saying this to pump, but as a benefit to you all. This will be my last post on this issue. **This stock is going to double from here.**

Read the 10-Q, look at the chart, etc. This management is going to buy more stripclubs and if you read the press releases they know what they are doing. Dont be afraid that the market is downturning, this stock doesnt trade along with the market and is not interest rate sensitive.

Think about it. The population of the United States is older, they have lots of money and they need stripclubs. The growth story is there, the demand is there.

I do not joke about these things and believe it will double even if the market tanks.

Look at the upturn in volume today and look how it broke 9. It will get to 18 in time.
 
I am not wrong on this one either. This is going to 18. Time to long it now at the market price. Its not going down. More clubs to opened soon.
 
It appears they are now opening up two more clubs for an additional 12 million in revenue per year.

http://yahoo.reuters.com/news/artic...-06-11_20-22-26_BNG1679&type=comktNews&rpc=44

My expectation is that their intent is to open up at least 2 more clubs in addition to these two by the end of the year.

When I saw that this company issued guidance 3 years ahead, I laughed, but now realize that management probably has a set schedule of acquiring certain clubs. They are probably knowledgable of the club scene and know which ones they plan on buying in the future.
 
You must log in or register to reply here.
Back
Top