Why these stocks are hidden from you

delfeldSometimes you find great value and quality in the most unlikely places…

Every day, the big boys like UBS, Morgan Stanley, Bank of America and scores of other banks discourage you from buying the world’s best-performing stocks – even though they trade right here in America! Many Wall Street brokers often refuse to sell these shares to retail clients…

Yet over the past few years, this group of blue chip stocks has outperformed regular stocks by sizable margins.  These stocks represent the bluest of international blue chips – sterling companies like Rolls Royce and Nestle.

Not long ago, just about every blue chip international company in the world wanted their stock listed on the New York Stock Exchange or Nasdaq. Listing on the NYSE was the ultimate sign of quality, respect and prestige.

But over the last few years, there has been an exodus of these global blue chips from America’s major exchanges. More than 110 prestigious foreign firms have delisted from the NYSE since 2007 including Germany’s Deutsche Telekom, Allianz, Lufthansa, Daimler AG, Volkswagen and BMW as well as Italy’s Gucci, the Swiss Swatch group, Mexico’s Telmex, Russia’s Gazprom, Spain’s Repsol, and France’s Hermes.

Nasdaq also reports that 59 foreign firms have delisted over this period as well. You may be surprised to learn that today – there is now only one Singapore and only five Swiss multinationals companies listed on the NYSE or Nasdaq.

Why are all these companies fleeing the NYSE and Nasdaq?

First, Congress passed legislation such as Sarbanes-Oxley that dramatically raised the costs and liabilities of listing international stocks on the NYSE or Nasdaq. Second, Wall Street’s focus on institutional business over retail investors like you led them not to fight this unfortunate trend.

So I began to track where many of these cash-rich, dividend-gushing international blue chip stocks ended up after saying adios to the NYSE and Nasdaq.

I found that they now trade “hidden” on the over-the-counter market also known as the pink sheets. Quality pink sheet names like Lufthansa, Adidas, Peugeot, Marks & Spencer, Rolls Royce, Gazprom, Benetton, and Nestle.

As many of you know, this market can be treacherous and is filled with 9,622 securities of uneven quality and liquidity.

“The Pink Sheets traditionally have been more of a free-for-all,” says Eric Pan, a professor at Benjamin N. Cardozo School of Law in New York adding; “You’re playing with the big boys, and you need to be savvy.”

So you need to be careful and savvy in pulling blue chip needles from this pink sheet haystack.  In particular, trading volume is a key concern.

My first round of intensive research cut the 9,622 companies trading on the over-the-counter pink sheets down to a more manageable 129 companies.  In my second round, only 58 companies made the cut and from this group I make my timely recommendations.

Here are some examples of the pink sheet blue chips on my watch list:

  • largest bank in Sweden
  • monopoly operator of Hong Kong’s subway and rail transit
  • only company in the world that uses robots to make robots
  • largest chemical company in the world
  • largest software company on the planet
  • $10 billion global powerhouse in hydro power
  • giant energy company with the world’s biggest natural gas reserves

In the coming year, I’m going to include a few of these companies in my Value Bounce recommendations. Next week I’ll give you the four reasons why and a pink sheet blue chip I like right now.

Opportunity awaits,

Carl Delfeld.

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