College Stock: Penny Stock News

Prior to Friday, most traders probably never heard of Distribution Management Services (PINK: DMGM). But, now, penny stock traders and other investors are probably much more curious about this pink sheet stock.

Of course, DMGM trading nearly 19 million shares on Friday, closing up 5500% in green territory, after gaining as much as 8900% on the day, and nearly 14000% since last Tuesday, certainly has a lot to do with this company’s suddenty-in-the-spotlight position. However, does this company really deserve its spot in the bright lights?

Not dissimilar to many other penny stocks out there, there’s not exactly a lot of information floating out around there on the Internet about Distribution Management Services (PINK: DMGM). According to Businessweek.com, DMGM “engages in the acquisition, development, and sale of real estate property located in Orlando, Florida,” acquiring a 266 residential building sites in May 2005. Frankly, even the company’s website doesn’t really tell us too much.

Digging a little deeper, however, curious traders many have stumbled across a definitive letter of intent dated August 12, 2010 issued by the Montana Acquisition Corporation for the “Prospective Reorganization and Combination of Montana Acquisition Corporation (DE) with Distribution Management Services, Inc. (FL).” Although “letter of intent” doesn’t give us anymore of an idea of either company’s business operations, it does suggest that Montana Acquisition Corporation will offer DMGM shareholders an amount equal to $2 per share, “to be paid by a negotiable promissory note, which shall be distributed on a proportionate basis to DMS’ shareholders by a distribution and/or paying agent satisfactory to DMS’ Board of Directors.”

As if it comes as any surprises, DMGM became quite a popular topic on InvestorsHub.com, with one forum user posting a link to a 2010 Company shareholder letter. Therein, we learn that a “merger” of sorts has been in the works since February 2010. Interestingly enough, this shareholder letter goes on to tell us that DMGM has acquired controlling interest in a New York corporation, which just so happens to also be involved in real estate operations, and was looking to acquired 2,000 residential homes in Clark County and Washoe County, Nevada “to lease homes under an Union exclusive rent-to-buy program.”

At least at this point in time, it’s uncertain how to separate fact from fiction, especially since more information is suddenly more readily available than it was prior to last Friday’s unprecedented volume and gains. It would appear, however, that any type of coverage by a financial newsletter or small cap stock resource (such as this write-up) may, in turn, bring more, perhaps, even undeserved attention to Distribution Management Services (PINK: DMGM).