The micro-cap segment of the stock market carries a considerable amount of risk, but investors are happy to take on this risk to potentially enjoy extraordinary returns not possible with the blue chips. Micro-cap companies typically don’t have much, if any, operating history, but they do have explosive growth potential.
When investing in these securities, investors need to exercise caution and conduct thorough due diligence. Ill-intentioned companies can follow all the rules and stay truthful the entire time, while secretly in operation for the sole purpose of stealing investor capital. How is this possible? Simple; they plan to fail from the very beginning.
Mustang Alliances, Inc. (OTCBB: MSTG) is a relatively new company to the public markets. As of last report, there are 100,038,258 shares of common stock outstanding. Trading at $1.29, this micro-cap company has a market cap of $129 million. Is this company worth $129 million? Well, it’s hard to justify that enormous price considering it hasn’t made a dime since inception while racking up hundreds of thousands of dollars in expenses.
What does Mustang Alliances do? It’s a junior mining company focused on acquiring and developing precious metals properties in Honduras. According to Mustang Alliances, it has “6 concessions totaling 5,400-hectares under agreement in the Choluteca District of Honduras.” The company may decide to acquire the land or it might cancel the agreement and take away any chance investors had of getting a return on their investment.
You can check for yourself. As of the most recent SEC filing, the only assets they have are cash and prepaid expenses, which only total $99,317 as of last report. It’s important investors take time to drill through the fundamentals so they know whether the company is really worth its market value. If not, they need to evaluate the company’s ability to achieve and surpass that value before considering even a small investment.
To learn more about how you, the investor, can protect yourself when investing, visit our Market Basics section at http://www.Basics.QualityStocks.net
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