CIND - When There Simply Isn't Enough Shares To Go Around

CIND has experienced some record volume the past two trading sessions.  This low share count stock was recently sold and the new CEO has been buying back shares on the open market, as evidenced by a recent form 4 filing.  The stock also has one of the lowest outstanding share counts that I have run across, for a stock that is trading below $.10-$.20 a share.  CIND closed Friday at $.017 a share.


CIND, China Industrial Group, Inc, offers an intriguing possibility at $.017, one that its other penny stock brethren can not offer.  With its ultra low outstanding share count, what if the CEO continued buying back shares on the open market?  What if investors continue to buy up the stock?  What if market makers continue to sell shares they don't have?  What if, at some point, there are simply not enough shares to go around?


Let's do a little math.  The total outstanding share count for CIND is 12,073,498.  Take away recent CEO holdings and insider purchases and the float drops to a maximum of 10,854,516.  The figure could be lower, but I just am going by what is publicly known.  On Thursday the stock traded 2,079,035 shares and on Friday the stock experienced a volume of 1,111,210 for a total two day volume of 3,190,245. At the current rate of share accumulation the entire outstanding share count, excluding known insider holdings, could be bought up in a matter of days.  Now that is amazing scenario.

I've received many e-mails from subscribers and readers telling me about these type of stocks.  Stocks where investors buy up the tradeable float and additional shares that market makers sold naked.  As the price continues to rise the market makers are unable to find real shares of stock to cover their naked short positions.  Ultimately they end up buying back these shares on the open market sending the price of the stock tremendously higher.

One such stock has been CDIV, which has returned in excess of 35,000% from its lows to its recent highs. 

 
I am not saying CIND will run 35,000%, but what I am saying is that the current market cap of the company is less than this shell is worth.  That in itself speaks of the undervaluation we are dealing with.

What if, at some point, there aren't enough shares of CIND to go around?  If investors continue to buy and hold shares of CIND knowing that the low 12 million outstanding share count provides them a bigger stake than their more portly brethren, the amount of shares in circulation will quickly disappear.  Ultimately the demand for the stock will overwhelm the supply and the stock price will react accordingly.

Let us not forget that this is also a recently activated shell stock, that lay dormant for over 13 years.  The SEC filings  are a good indication that this company is about to get active again.  That in itself would be something to bolster shares of this stock.  A timely press release coupled with a share supply that has been all but bought up, and you have the ingredients for a gigantic rally in shares.

I think CIND deserves some watching in the weeks ahead.  If the buying continues in earnest things could get very interesting.