MONSTER ARTS, INC. Custodial plays- are simply when a "shell" that is inactive for a number of years begins the process of changing its ownership, or rather, a custodial change. A shell is a public company that has a share structure in place (you can buy and sell shares in it), but no real assets or active company inside it. These shells become dormant, and usually stay this way for multiple years. Because of this, the price of the stock usually falls well beyond its 52-week low point, and creates a "ultimate bottom", which is usually the absolute bottom (based on SS) the stock will go. If they stay this low, the stock will stay dormant for an indefinite amount of time. shorturl.at/kHLR2
However, from time to time when a private company seeks to go public, and they are not able to do this via IPO or creating their own free trading company, they will reverse merger their private company into a already established public shell company. This is done by the private company doing it them selves, or hiring a firm to do it for them, find a dormant shell company, and initiate the process with the state courts to change the custodianship of the shell company, in order to pave the way for the private company to reverse merger their company into the shell, and thus changing the shell into a fully trading, operational, public company. shorturl.at/kHLR2
The 2 Main Phases of Custodial Plays
The first phase comes when investors catch wind the shell is up for a legal/court decision on whether or not the custodian is granted control of the company. This can generate a significant amount of interest and share price appreciation because traders know that this shell will eventually be on the block as a reverse merger vehicle for an opportunistic private company looking the enter the public arena. shorturl.at/kHLR2
The 2nd phase happens when the new company buys a controlling interest or puts an asset (usually a new corporation) into the public vehicle. This will make the stock surge even more than the first phase, as the more the company is the worth, the more the shares will be worth and the bigger the potential gains. shorturl.at/kHLR2
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