Alloy Steel International, Inc. (PINK:AYSI) Suspended to the Pink Sheets, But Going Up Again
07 Oct 2010

Offended by the low traders’ interest in Alloy Steel International, Inc. (PINK:AYSI) stock, the company decided to terminate its registration with the SEC and move to the pink sheets. The rescue from the obligation to file current financial reports looks like an additional bonus for the company, but not for the traders.

After hitting the absolute yearly bottom on that news at the end of last month, Alloy’s stock is going up again. Yesterday, the shares gained 10.20% more on their way up to the previous levels and closed the market at a price of $0.54 each on three times the average trading volume. AYSI has good technical support to make more and larger jumps, but since no reliable financial data will be available to the market in the future, the stock faces the risk of becoming a pure speculative pick.

Along with the low trading activity, the next officially disclosed reason to suspend the stock from the SEC are the high expenses related to the regular filing of financial reports. That management decision looks more than strange, and the market’s extremely negative reaction to the latest 10-Q filed in the middle of August is also weird. AYSI share price tanked massively although the company reported dramatic year-over-year progress.

In the first nine months ended this June the business did not look like it is going down, it even became profitable. Product sales were also more than three times higher than the same period last year. Solely the need to raise additional capital, possibly at the cost of dilution, does not sound like a reason good enough to cause such traders’ appalling reaction.

Alloy has recently been in a dispute with its CEO and its CFO and had to enter into an agreement with them to compensate them for incurring expenses during certain legal proceedings. That could be one more thing that probably made some investors dump their shares. Future will show if there is more dirt to come out and become known to the broad public, or if AYSI stock will win back the losses.

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