I'd also urge you to consider the following. I am banking on the idea that fund managers are sophisticated enough to see that AERL should not be looked at as another RTO about to implode. Management is working with institutional money, bringing them to Macau, showing them the operation, and being highly transparent issuing monthly RCT figures.
1. They have garnered interest from some large fund companies as a result of their road show events. Apparently Fidelity has been in touch a number of times, and other funds (UBS) have spoken with management. But the float (9M) is still rather small for extensive fund participation.
2. 3 analyst firms are researching AERL with one fairly well along in the process.
3. The business relationship with publically traded casino operators means their revenue is being verified monthly by those companies. This makes fraud next to, if not, impossible.
4. They are a Hong Kong listed company and as such are scrutinized more heavily than the Chinese small caps they are lumped in with.
5. Management is committed to issuing shares ONLY IF IT WILL BE ACCRETIVE TO EARNINGS. The business model allows for increased capital to positively impact revenue and profit, it's just a matter of how much. If they issue shares they will only do so if it means EPS goes higher even with those new shares. Cap ex is minimal.
6. Cash generation prior to Q4 when the RCT numbers jumped as a result of more cage capital and the new room was roughly $9M per quarter. I suspect it is now at a annual run rate of over $40M.
The point you made about fund managers I agree with. If the company is for real then they are not going to be put off by other rto stocks getting exposed as frauds. The decision to invest will be based on whether Asia Ent has a good business because the transparency is there. With Macau still growing providing plenty of opportunity going out 5-10 years, a company that has been recognized for being desirable to work with, the rate they are generating free cash, and the crazy price of the stock I believe the funds will be buyers. And we all know that is the most important thing in setting the price.
Hong Kong, China – March 29, 2011 – Asia Entertainment & Resources Ltd. (“AERL”) (NASDAQ: AERL), which operates through its subsidiaries and related promoter companies as a VIP room gaming promoter, today announced that it will report its fourth quarter and full year 2010 results before the market opens on Friday, April 1, 2011. AERL will conduct a conference call to discuss the financial results that day at 11:00AM EDT/ 11:00PM Macau. To participate, please dial one of the local access numbers, which will be listed on the earnings release, prior to the scheduled start of the call. About Asia