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A Tale of Two Dividends- Titan (OTC BB: TTGL) and Bad Toys (OTC BB: BTYH) Compared and Contrasted

Friday, just post close, TTGL announced it was throwing its hat in the ring to become another OTC Journal special situation dividend idea. TTGL announced it would be spinning out its PCB (printed circuit board) subsidiary into a separate public company, and dividending out the ownership of the new company to existing shareholders of TTGL.

There are some similarities and some differences in the moves the companies are making. Titan's PCB division muddies the waters a bit on the whole Titan story, and spinning out the PCB division will serve to clear the picture. It will make Titan a telecom company with a telecom business model. The surviving company will be the real meat and potatoes of owning TTGL- the PCB spin out is simply a little kicker somewhere down the road. At its current level, I believe there is very strong upside in owning shares of TTGL, and the spin out is simply another opportunity to enhance your return.

With BTYH, you are betting you will make your money on the dividend of the Southland shares once it opens for trading. You still have your BTYH shares, but they only have the upside in concert with Southland.

Here's a quick review of the situation for both companies:
 

Bad Toys (OTC BB: BTYH): Make Sure You Understand This

I have written about this pretty much ad nauseum, so this will be the last coverage on the pending event. 

If you own BTYH at the close of market this coming Thursday, you are betting you will make your money on your shares of Southland if, when, where, and how much it opens for trading somewhere down the road.

The stock has found its way back to the $1 range on the news the spin out is finally happening. While it's a double off the bottom, it's still a far cry from the $2.50 level the stock found one year ago when the management of BTYH thought they could do this in much shorter order.

I believe it is a very good bet the company will be able to get Southland open on some sort of senior listing at a level that reflects the true value of their business much more efficiently. 

A profitable company with their asset base and record: $50 million in annual sales, profits about $5 million annually, should be worth at least $100 million in the open market. With 28 million I&O, this implies a price of $3.57.

MarketByte LLC, the parent company of the OTC Journal, owns 150,000 shares of BTYH (as disclosed in every newsletter). The shares are restricted, but eligible to be free trading under Rule 144. I am prepared to bet those shares on the Southland dividend. None will be sold prior to Thursday. I want to get the 150,000 share Southland dividend and take my chances.

I also believe BTYH has not traded to last year's $2.50 level simply because the length of the process has caused it's the company's credibility to erode. Investors are more skeptical than they were one year ago.

I believe the thesis remains intact, and the company has a very good shot of unlocking the value of Southland by completing this process. 

Expect no less than two months (or more) for Southland to open for trading somewhere and at some price. Also- I believe the dividend is a tax free transaction. Unlike a cash dividend, the company is simply giving you something you already own. Check with your tax specialist to be certain.

Look for BTYH to open considerably lower on Friday when it trades without the Southland dividend. Don't email me on Friday wondering why BTYH is down dramatically. You are informed.  If you own BTYH at the close of market on Thursday you will get the dividend no matter what you do with BTYH on Friday. After Friday's level, BTYH should trade up and down with news related to Southland, as BTYH will still own 20% of Southland. The other 80% is going to the shareholders.

I believe this is a heck of a good bet anywhere in the $1 range. You simply have to be patient, and wait for Southland to open for trading.
 

Titan Global (OTC BB: TTGL): A Dividend, But A Little Different

TTGL has also now turned into a special situation dividend play. However, this one differs considerably. Unlike BTYH, TTGL is not spinning out the meat of its company into a separately traded public entity in order to unlock the value.

TTGL is spinning out the weaker part of its business, and I believe there is an opportunity to make a significant return simply by continuing to own shares of TTGL.

Out of the $100 million plus TTGL enjoys in annual revenues, the PCB division only represents about $20 million, and the division lost money last quarter. 

This dividend is merely icing on the cake for TTGL shareholders, and could turn into a lot more down the road. At this point in time, the announcement will probably put a charge in the stock for Monday's trading, and give investors another reason to pounce on this undervalued situation.

Just as predicted, the stock bounced beautifully off its short term 61.8% retracement level. Those who acted on my idea last week in the $1.15 to $1.20 range made the right trading move as things stand today. This bounce shows perfectly in the chart.

The company will now have to move forward with the regulatory process, so it will be some time before the stock trade x-dividend. If you don't own this one and like fundamentally undervalued companies, you need to own this stock.
 

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