Organic Resource Management

I bought this stock in 1997 (TSX-ORI) and it did not do too badly at first. The reason I bought this stock was because I had read an article about buying small cap stock. The theory in the article being that you should buy a basket of small caps of at least 5 stocks. If you had 2 winners and 3 losers, you could do well. Stocks can only lose the money you pay for them, but their gains can be, theoretically, unlimited.

Well, I bought a number of small caps, and I have just 2 left. I have not sold them, as they are not worth much. This one is worth $136. It is not worth selling. What seemed to have killed them all was the last bear market. For this particular stock, I paid $4,300. I have lost, on average, 27% per year that I have had it. Most of the other stocks I paid only $1,000 or $2,000 for, but this one looked good and at first, it was. However, it hit a peak in 1999 and it has never recovered.

In November 2007, it did a reverse split on a 20 to 1 basis. That means that I went from having 3,000 to having 150 shares. Reverse splits are never a good sign. They also did a significant restructuring of the company at that time. However, we are in another bear market so it is much too early to tell if the company will now go anywhere.

The only positive things to say about this company are that it is solvent (Asset/Liability Ratio is 1.98) and the Accrual Ratio is a very good -10%. This Accrual Ratio is also very positive because there is a big difference between the Net Income and the Operation Cash Flow, with the Operation Cash Flow a positive figure.

The Company’s core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its site is at www.ormi.com/ormi/. See my spreadsheet at www.spbrunner.com/stocks/ori.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.