Pink Sheets Stock Exchange

Pink Sheets Stock Exchange Has Undiscovered Finds

The Pink Sheets Stock Exchange, contrary to what many investors believe, is not an actual stock exchange such as NASDAQ or the OTC.

Instead, the Pink Sheets Stock Exchange refers to an electronic quotation system displaying securities quotes from broker-dealers. The Pink Sheets Stock Exchange began as a daily quote service provided by the National Quotation Bureau. Back then, the quotes were printed on pink paper, which is how they came to be called “Pink Sheets”.

Companies may list themselves on the Pink Sheets Stock Exchange because they are too small to be listed yet on a big exchange. The reporting requirements are different, too. After Sarbanes-Oxley, companies listed on the major exchanges also had to list their shares as a traditional American depositary receipt/share (ADR or ADS), and to comply with convoluted SEC requirements. The Pink Sheets Stock Exchange doesn’t require companies to reveal this information, although they are encouraged to do so.

Because the Pink Sheets Stock Exchange has fewer requirements it’s gotten something of a “Wild West” reputation. Investors hear dire warnings of the dangers of investing in the “Pinksheets”. Most traditional Wall Street brokers tell their clients that these companies are shaky, cheap, unknown stocks with shady histories.

In fact, nothing could be further from the truth. A company may have many reasons for not wanting to list an ADR, among them the hassle and expense of doing so.  So investors shouldn’t jump to the conclusion that a company's unwillingness to list an ADR is a sign of a shady entity.

Many of the companies on the Pink Sheets Stock Exchange are solid and financially fit, and to toss out all Pink Sheets listings is the same as throwing out the baby along with the bathwater.

In fact, some of the world’s powerhouse companies are only available on the Pink Sheets Stock Exchange, for example, strong foreign companies such as Nestle, S.A, or BMW Group.

True, many of the stocks on the Pink Sheets Stock Exchange are small. They are also usually undervalued and mostly overlooked by Wall Street. Ironically, this is exactly why pink sheets (also sometimes called “pinksheets”) provide some of the best profit potential for investors.

Pink Sheets are just a few of the opportunities we help you find at PennyPic.  Our free service uncovers some of the best undiscovered stock opportunities. Enter your email below to subscribe and you’ll be among the first to know about the most promising penny stocks on the Pink Sheets Stock Exchange.