From: gary@intrepid.com (Gary Funck)
Subject: Re: Great American Recreation Corp (GRARE)
Organization: Intrepid Technology, Inc.
Distribution: usa
Date: Sat, 12 Sep 1992 16:42:44 GMT

In article <1992Sep10.010311.5350@cbnews.cb.att.com> ask@cbnews.cb.att.com (Arthur S. Kamlet) writes:
>In article <1992Sep9.141125.15865@cbnewsj.cb.att.com> rdb1@cbnewsj.cb.att.com (ronald.j.deblock..jr) writes:
>>In article <1992Sep9.003231.15574@desktalk.desktalk.com> eric@desktalk.com writes:
>>>This is posting for Calvin Kennedy at:
>>>	ckennedy@oracle.com
>>>Calvin has been contacted by a firm called Hibbard, Brown & Company,
>>
>>This raises a flag for me.
>>
>>Until recently, the bozos at Hibbard, Brown would call me at my office
>>at least every two weeks, sometimes more often.  Always the same guy.
>>Always the same pitch.  I always said, "I'm not interested, please stop
>>calling me."  They stopped for about two months, and then started up again.
>>
>>I haven't heard from them since I moved to a new office.
>>
>>I will NEVER do business with Hibbard, Brown.
>
>Ditto.
>
>Hibbard Brown seems to push penny stocks in which they are the sole
>or one of very few market makers.  That means they pretty much
>determine the price of the stock.
>
>[ Free advice:  If someone touts a penny stock -- or any OTC stock
>  to you,  ask for the Names and Addresses of every market maker.
>  If the list is less than 4 market makers, Stop!  Do not Pass Go!
>
>  Do not accept a statement "There are at least half a dozen market
>  makers." Get the names and addresses and imply you plan to contact
>  them.  (and feel free to do so.)  ]

.... lots of other relevant info. regarding penny brokers deleted ...

As they say, "that's why they call 'em brokers" :-).

First, some info. on Great American Recreation.  As mentioned in
previous posts, they run year-round entertainment resorts in the
New York State area.  Financially, they're very heavily leveraged
(thay are essentially a "shell" company carrying big loans offset
against  their real-estate assets.  From what I remember of the
sales pitch, there are some big name families that own major chunks
of the real-estate (Rockefellers etc.).  That's supposed to make
you feel warm and cozy.

However, Great American has been losing huge amounts of money from
its operations over each of the past 5 years.  Each year was supposed
to be the "turn around year", but so far it hasn't happened.
Looking at the prospectus printed last year (nov 91), lt looks
like they had $25M in short term debt, $25M in long term, $5M in
shareholder equity, $21M in annual revenues, resulting in an
operating loss of $5M, or -$1.41 a share at the time.  Over the
previous five years, they lost money each year, accumulating
a cummulative loss of around $26M.

Not being very savvy with how these real-estate deals go together,
I can't comment on what makes this company tick.  It seems that
a lot of real-estate development projects show heavy consistent
losses in the beginning.  I'm not sure what happens after that,
because I've never followed one that long.  Well, that's not quite
true, I did lose a bundle in a real-estate limited partnership, back
when they were trendy.

A while back, I was approached by an "investment banker" (or "penny
broker": your call -- NB: they were *not* Hibbard, Brown) and was
convinced to "give them a try. ..."; I bought a few hundred shares
of Great American Recreation Preferred (GRAPE) at 12-1/2.  The good
news is that it pays an 8.5% dividend up until Nov. '93, and the
dividends are put aside in an escrow account.  After Nov '92, the
holder can redeem one preferred share for 3 shares of common,
*but* the company has "liguidation preference"; it can redeem the
shares at $10.60 per share of preferred.  [Unless a company has
come into a lot of cash (which doesn't appear to be the case), they
won't exercise this liquidation preference.]

At the time I bought the prefered (without the prospectus -- very smart)
the common was trading at 4-3/4 or so, which put the redemption
value at a little over $14.  Today the common trades at $3, which
lowers the redemption value of the preferred to $9; the preferred
trades with a bid/ask of 8/9; your clue to a rip off.  The initial
12-1/2 is now worth 8 and the dividend is not much consolation.

I offer the above simply to illustrate that it is easy to be ripped
off if only you're willing to cooperate.  I've dealt with three
different "penny brokers" all with equally miserable reults.  Well
sometimes I made money, but it was when I acted on my own
information, and with my own sense of timing.  The brokers almost
always resisted my efforts to buy/sell when I wanted to; the only
reason I can offer is that they were holding a lot of inventory
or they knew about upcoming events that were going to work in their
favor, if I'd just do what they wanted.

Some of you might be thinking: "The broker is at fault, they should
have given you more information.  You should sue them."  This is
basically true, and there are a number of counts against this
particular broker.  I may/may not pursue this avenue; I tend to be
a "write it off to experience" type, but for this particular broker,
I may be willing to make an exception :-).  I'm in the process of
having the account transferred, after that is done, I'll decide
what to do with the broker.

I hope this little anecdote will save other people on the net
a few dollars and a lot of heartburn.

best wishes,

- Gary
-- 
| Gary Funck  		    gary@intrepid.com  [uunet!uupsi!intrepid!gary]
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