To OTC Journal Members: 
 
 

One Million Cars Fighting for 200,000 Spaces = Big Profits

A few months ago I pledged to get back in the saddle and start sending out some good old-fashioned penny stock ideas. True to my word, I've got one today I think you're going to really enjoy for a couple of different reasons. The fact is that private equity seems to love this particular business and has historically paid a premium for it. First things first, though.

I'll be the first to say when I started to dissect today's company I didn't quite know what to make of it. It wasn't that I didn't understand the business model of parking lots and parking garages. It's actually quite simple... maintain the facility, pay the people running it, and collect at least a little more than those costs from the folks who drive their cars into it. It was just that you see so few of them traded publicly any longer (an idea I'll get back to below). I was pleasantly surprised to see International Development and Environmental Holdings (IDEH) show up as a parking name in which anyone can invest. 

The more I continued to analyze this particular New York-based parking system opportunity the more I liked it. In fact if you’re willing to invest about five minutes of time I think you're going to love it enough to want to grab a few shares this morning. See what you think.
 

Yes Virginia, There Really Is a Parking Management Company

If you intend to look back through some of the quarterly filings, to get a feel for the growth trend, don't bother. For all intents and purposes, the company didn’t go operational with its current business model until December 15^th, when it agreed to purchase five Manhattan parking garages that are expected to generate $3 million in revenue for 2011.

And to answer the next question, yes, though the name doesn't necessarily indicate as much, International Development and Environmental Holdings is a garage management entity. It's also wading into the van and truck leasing business. The parking lot management business is the key revenue driver right now and the focal point of its growth.

To that end, just yesterday the company announced it had acquired rights to Flash Parking's facility at the Lynbrook station of the Long Island Railroad. 

It's just one of many acquisitions to come, according to CEO Scott Lieberman, who has made no bones about the company's plans. He believes these acquisitions will attract the attention of other smaller parking management operators, giving them an opportunity to sell their facility, and giving International Development and Environmental Holdings - or IDEH - an opportunity to achieve the all-important economy of scale... an idea that's proven crucial to success and value in the parking management business.

In other words, Lieberman is on target with his plan drawing on years of experience privately running his own lots and garages. 

It's not just Lieberman that's going to carry the company from the start-up stage to value-building stage though; there are a couple of other aces on board as well.

One of them is Matthew Shilowitz. Prior to sitting on IDEH's Board of Directors, Mr. Shilowitz garnered over 25 years of large-scale real estate and construction development experience. Needless to say, he's got the chops.

The other game-changer is new Board of Directors member Cynthia DeMonte, who manages her own marketing firm. I suspect she'll be as good for the stock and publicity effort as Shilowitz is for the company's growth effort. 

Anyway, that's a quick glimpse of the company but it’s hardly the show-stopper. Keep reading.
 

There's Just Something About Parking Garages...

Believe me, I know the idea of investing in parking garages seems like it's only about two notches above watching paint dry.  This will change your mind though.

Remember Central Parking Systems? It was one of the last publicly-traded parking systems stocks as of 2007, when it was snatched up via a leveraged buyout by Kohlberg & Company... for a 30% premium to its price at the time. 

The private equity interest wasn't/isn't unique to Central Parking Systems though. Institutional money loves three things about the parking business... predictable earnings, growth, and cash. Those are three things everyone likes from their investments but rarely find anywhere else. 

Standard Parking Corporation (STAN) - one of the last publicly-traded parking stocks - verifies the idea. It made more money in 2007 than it did in 2006 and made more in 2008 than it did in 2007. Oh, 2009 was an off year as it made $1.06 per share versus the $1.07 it generated in 2008 but growth is back on track for 2010. Needless to say the company's been profitable every quarter during that time. No wonder institutions want a piece of the parking action. 

Indeed, some institutions and PE firms buy several smaller parking systems with the specific intent of combining all of them to achieve an economy of scale and increase margins as a result... kind of like what IDEH is aiming to do.

Now that's not to suggest International Development and Environmental Holdings is fishing for a buyout. Maybe it is and maybe it isn't. That's not the point. The point is that this industry consistently works. If it's good enough for large-premium LBOs then it's easily attractive enough to take a swing on as an investor.
 

Bottom Line

You get the idea - the opportunity is for real and bigger than most other investors may appreciate. That's your edge. Here's the thing though... the word's getting out pretty quickly if Wednesday's higher volume and price increase is any hint. It was the Lynbrook news that stirred the pot yesterday but given that the company is in an acquisition mode there are bound to be more similar announcements in the queue. I don't know when or what exactly but we're seeing the plan executed. Investors should love it and buy the stock as the story unfolds. 

So, here's the suggested plan - lease it with an option to buy. By that I mean I suggest taking it on as a short-term trade for the time being but keep an open mind about letting that position turn into a longer-term trade.

The reason I want to focus on the near-term right now is simply that we don't have an updated balance sheet yet that reflects the recent purchases of the parking garages. I don't see anything, in terms of that financing that would be unusual or detrimental, but there's no reason to get married to a stock for the long haul until we know exactly what we're getting.

In the meantime though, we do have enough short-term interest and buying support brewing up to merit wading into a position now. I foresee more acquisitions in the near future that could continue to draw a buying crowd and I wouldn't want this one to run away without any of you guys being in it.