Blogs

Potential For Pink?
Why would anyone ever want to invest in a security that is so un-secure? According to the investing industry experts, unless someone takes a high risk, they will not receive high results. It would seem investing in pink sheet stocks would be the best way to potentially receive a larger return on your investment than anything else, but why? There are a few different reasons.

Stocks that trade as “pink sheets” are designated with “.PK” (also called Over-The-Counter Bulletin Boards designated “.OTCBB”) at the end of the stock symbol. These stocks are low in price because they do not meet the minimum requirements for total shareholders and capitalization; nor do they register with the Securities and Exchange Commission. Companies that list on pink sheets are usually young companies that are newly listed and have hopes of eventually posting on a major exchange. So, investing in a low price stock won’t cost that much and has more potential to increase rather than decrease in value. But, let’s be honest, it’s still the stock market. As with any exchange, there are still risks involved. Pink sheet stocks are often thinly traded because of their low price making it difficult to buy and sell. Pink sheets are highly volatile and only sage investors should really consider them for investing or trading. Because of low activity and lack of regulatory oversight, it makes it hard to track the stock’s progress and any pertinent news for traders to consider before buying and/or selling. Because of the lack of regulatory oversight, pink sheet companies can often disappear as fast as they came, increasing risk to investors significantly. For more information visit www.trianglelends.com.

Establishing Stock Loan Values
Have you ever wondered how the value of a stock loan is determined? I come across people asking me that same question every time I mention the term ‘stock loan.’

Not only does the price of the stock matter, but also it’s performance. There are a couple of different things taken into consideration to determine the performance of a certain stock. Using websites such as Yahoo Finance, NASDAQ, Money Central, etc., Triangle’s research department looks at the stock’s average daily volume, price, and the number of shares available. Then, the volatility is determined by using a detailed matrix which calculates the difference between the highs and lows of a stock over a given period of time creating a target loan-to-value range. Our loan committee then meets to review the findings and determine if that target range is adequate and if the loan given should be at the higher or lower end of the spectrum.

As most of us know, most loans are determined based on the borrower’s credit history. But, that is not the case with our stock loans. We do not provide stock loans based on the credit history of the borrower. The value of the loan is determined solely on the above mentioned items.

Stock Loan Regulation
A frequent question that we receive from potential borrowers is if we are subject to government regulations. Currently, the stock loan industry is not. We are not required to follow the regulations of the Securities and Exchange Commission or any other government agency. However, Triangle Equities Group recently became a Charter Member with the National Council of Securities Lenders (NCSL). The purpose of NCSL is to help regulate the securities industry, unite its competitors, and provide companies in the industry and consumers of the services a code of conduct to follow. Triangle feels it is imperative that our industry have guidelines to comply with in order to prevent abuse of the services we provide our clients. Our industry is rapidly growing and all parties involved should join together to ensure our development.