No one even knows what the business is yet, but Wall Street is going crazy over the penny-stock company that Bob Sillerman is buying control of for his next big thing. Actually, it’s not a penny stock anymore, since it broke through the $5 barrier on Thursday.
Trading volume continued to be enormous (over 1.6 million shares) on Thursday and the stock traded as high as $5.39. It closed at $4.50, which was still a gain of over 50% for the day.
Some very lucky person bought 1,000 shares of Gateway Industries on Monday at one cent each, plus commission fees. That $10 investment is worth $5,000 at the $5 per share price – and the price has gone up and up each day since Sillerman’s investment in the dormant shell company was made public.
That lucky buyer on Monday – the only February trade of the stock prior to the announcement – isn’t the only one banking a windfall. In fact, that profit is miniscule compared to what Sillerman himself has made on paper. His $3.6 million investment in Gateway, which he plans to rename Function (X), is worth $600 million at the $5 price.
And then there’s Gateway CEO Jack Howard, whose holdings of slightly over two million shares were worth $20,172 on Monday and over $10 million a few days later at $5 per share. Director Ronald Hayes owns 48,340 shares and investor Walter Carucci 450,586 shares.
What’s Bob up to? That’s the big mystery, of course, and he’s not talking. RBR-TVBR briefly spoke with his harried assistant and added ourselves to the long list of reporters seeking an interview.
Not that it matters, but Gateway previously owned an information management company called Oaktree. It was purchased in 2000 for $4.1 million, but the investment didn’t work out and Gateway sold 80% of Oaktree for $1,000 in 2007 to Marketing Data Inc., taking a write-off of over $4.2 million. The remaining 20% was sold to Marketing Data last October for $100, leaving Gateway with no operations and no employees. As of December 31, 2010 it had $5 in cash on hand.
According to its annual report filed with the SEC, Gateway had approximately 309 shareholders prior to the Sillerman deal announcement. They are likely happy shareholders now. (Except for the one who sold those 1,000 shares on Monday.)
But while Gateway had no business or money, it had an SEC registration for its common stock. By acquiring Gateway – or rather 98% of it – Sillerman was able to instantly have a publicly traded company up and running. Now we wait to see what he has up his sleeve.
RBR-TVBR observation: Don’t you wish you’d run into Bob a few days ago and gotten a hint of what was coming? But then, assuming he’d been stupid enough to tell you (not likely!) you’d now be worried about SEC insider trading charges. Don’t forget what happened to Sillerman’s former butler! As for the lucky buyer on Monday, we’re pretty sure he didn’t know what was brewing. If he had he’d have bought a lot more than a thousand shares.