Stock Gumshoe

This is a teaser that came in from Ian Cooper’s Early Alert Trader, which has sent us some Macau teasers before. This is for an $18 RFID company that makes the chips and table systems that enable more secure tracking of table games, with a big potential Macau business, but if you actually go back and read the teasers about 75% of this teaser is an exact copy of the last Ian Cooper teaser, for PacificNet a few months ago. Lots of talk about Macau’s general fabulousness as an investment mecca, portraits of Steve Wynn and Sheldon Adelson as the favored poster boy gazillionaires for this sector, etc. etc.

PacificNet, for those who don’t remember, is a company with technology for the one-armed bandits of Macau, and Ian thought it was going from $7 to $50 (so far, it’s making what I can only assume Ian believes is a brief stop down at $5 first). So, not necessarily any rush here.

But still, let’s figure this one out.

The main clue is that this company makes RFID-enabled chips and tables, and that they’ve so far signed a deal (”this year”) with Wynn Macau. Ian says that the “major players are lining up at this company’s door.”

He says that the estimated cost of an RFID-equipped table is $8,000, and that there will be 4,600 tables in Macau casinos by the end of next year. You can do that math and be impressed on your own time (though there’s no promise, of course, that prices will remain that high or that all tables will be RFID-equipped).

There have been other buyers, too: “Macau Galaxy Group, a conglomerate of casinos in Macau, forked over a huge check to this company for an order of 285,000 RFID-embedded chips to be used in its flagship casino, the StarWorld.”

And as to the stock price: “It was trading up around $20 as recently as October but as I’m writing to you it’s selling for around $18.”

And, as I always love to see, he has a very specific prediction: you’re going to bank 425% on this one.

Which means that it’s time to start feeling sorry for our friend Mr. Cooper, because although this ad is still up online it’s clearly several months old … the shares of this one, just like the shares of PACT a while back, have tumbled significantly and if you thought $18 was a bargain back on April 30 — as this tease implies — then today’s price of $13.50 will probably have you running to sell your house to pick up shares.

Please don’t. Seriously. Not on my account, at least.

This company may be fine, but recent months have not been particularly generous to the shares — and here I am, neglecting to even tell you what company we’re talking about.

This teaser is for Gaming Partners International Corp (GPIC).

Then again, if we were looking at 425% gains from $18, that would have been (and perhaps may eventually be) a share price of $76.50. And if we’re going to $76.50 from the current $13.50, then that’s a tasty return of more like 565%. Even better!

PACT, if you recall, took a tumble when they were delinquent in their filings, and what do you know, GPIC did essentially the same thing — they fell when they got a delisting warning for delinquency, then fell further when they reported worse than expected earnings (dipping down to $10 or so for a little while, even) and finally stabilized (if you can call it that) in the neighborhood of $14 over the last couple weeks.

The company has been announcing orders with the big Macau casinos, including Sands, and it does have a big share of the standard table game business as well as this RFID stuff. I have no idea if the accounting problems are behind them, as the company seems to believe, but it is certainly a real business, and they even have an eensy teensy dividend.

So … an interesting little tease, made more so by the fact that it’s almost identical to another Macau tease from the same guy, and by the fact that both companies got hit for almost the same reason in roughly the same timeframe. One might charitably conclude that accounting is more difficult for the gaming equipment companies.

If you’ve any experience with GPIC, feel free to share it with us. The earnings are, to give some credit, expected to increase pretty dramatically as current orders hit the bottom line, and the two analysts who cover this one see them earning close to a dollar in 2008. Maybe they’re right, maybe not, but at least you know where to start your research … and it didn’t cost you $995 (which is, by the way, the discounted price for Early Alert Trader).

This one comes to us from Ian Cooper at Early Alert Trader, and it’s another China play — this time, on the boom in Macau. But it’s not the easy-to-figure casino companies that we all know so well.

This is a little gaming technology company, and Ian thinks it’s going to go from $7 to $50 … “with the deals it’s signing with the major billionaire players setting up shop there, I’m conservatively predicting a gain of as much as 614% for early investors in the next 12 months.”

He writes a lot about Macau in this long ad — lots of talk about how it’s quickly becoming bigger and much more lucrative than Las Vegas.

“This small Chinese city is the ONE place you’ll want your money to be heading in 2007, and I’ve just uncovered a company primed to take full advantage of the explosive situation. This $7 tech company could show you as much as 614% in the next 12 months.”

And he talks about Sheldon Adelson and Steve Wynn, who are seeing their names move up the Forbes list thanks to their massive investments in Macau (through Las Vegas Sands and Wynn Resorts, respectively).

And this growth is supposed to spur the growth at this small tech company — “that’s because this company is producing the technology that Steve Wynn and many other moguls in Macau are using to attract millions of customers, day after day, week after week, month after month, to their casinos.”

There are plenty more clues:

“Its product is so loved by Asian tourists that the casinos can’t keep up with the demand for it.”

“In the last month alone, it’s signed six major deals in the Macau region! And the best part is, its stock is still grossly undervalued at only around $7 a share.”

“The cutting-edge security technology that it produces and supplies to the casinos in Macau is setting the standard in its industry.”

“This small company’s recent meteoric rise began back on August 3, 2006, when it completed a deal to purchase an even smaller gaming technology company … with the proprietary technology it purchased, this company acquired the tools to become Macau’s leading provider of electronic gaming machines for the lavish, multibillion-dollar casinos being built there as you read this.”

So this is a tech company that’s somehow involved both with with security, and with Chinese video gaming machines.

But there’s more!

“The best part about this $7 company is that the Macau government has officially named it as one of the few approved suppliers for this gaming technology to all the casinos and hotels in the region … you see, the company it purchased owns and produces the technology for one of the few Chinese games approved by the Macau government and gaming commission for use in its casinos.”

They have in the last few months inked deals with some big customers: Holiday Inn Macau, Casino Lisboa, Jai Alai Casino

But the gaming is just one part of this company’s business — “one of its subsidiaries [was] selected by China Telecom Corp, one of China’s largest telecommunications conglomerates, to supply it with management consulting and call center training.”

And they got a deal to run Sony’s e-commerce site in China as well.

So would you like to sign up for a subscription, and get the Special Report, “The Most Lucrative City in the World: How to Bank 614% off the Rise of Macau”

Feel free.

But if you just want to know the name of this wee tech company that’s supposed to go up … what was it? Oh, yes, exactly 614% … well, you’ve come to the right place.

The Stock Gumshoe reaches into his mindometer and stirs it around a bit, and suddenly feels compelled to tell you that the name of this company is …

PacificNet (PACT)

And the one little clue Ian didn’t provide? The company is delinquent in its reporting, so you might want to look into that. And they’ve received a delisting warning … I haven’t looked into the details, but they’ve also received these warnings before in the past year, so I don’t know if there’s any kind of systemic accounting problem that’s keeping the shares depressed.

The good news, if you’re looking for a silver lining, is that it’s not a $7 company anymore … it’s a $5 company, thanks at least in part to the latest Nasdaq warnings and some pricky relations with their auditors. It was up around $7 just a month or two ago, so I expect that’s when this email started circulating.

They have signed all the deals noted above, and they are a broad line tech consulting firm as well, the games division is a fairly small part of their business. The acquisition that brought them the Macau gaming business was Able Technologies.

So, it’s a tiny but diversified company, and Ian may well be right that the Macau business will drive the price up manyfold … I don’t know. Whether it’s worth your money is something only you can decide — but at least now you know the name of the company, happy sleuthing.