What’s The Deal With BOREF?

As many of you know, this unusual saga began in 1999 — at least for me — as described here (“A Stock That’s Surely Going To Zero”).

Many years earlier, I had gotten to know William F. Buckley, Jr., founder of American conservatism — he even took me out for an overnight sail on his little boat — which is another story, except that I remember his telling me that he owned a bunch of little penny stocks for which he had high hopes (and over which there had been some difficulty with the regulatory authorities) . . . and, though I didn’t know it at the time, Borealis Exploration — BOREF — was one of them.

So here we are, 40-some years later, Buckley rolling over in his grave at the death of conservatism . . . his brilliant son Christopher just having published Make Russia Great Again (“a hilarious and whipsmart fake memoir by Donald Trump’s seventh chief of staff”) . . . and I owning a ridiculously large number of shares in one of those dubious little penny stocks.

Small world.

Because some of you, too, own BOREF — with money, you have assured me on numerous occasions, you can truly afford to lose — I thought I would take a break from the disaster in the Rose Garden* to review a recent communication from Borealis.

*Just as Carl and Tom may fantasize that I will one day just come out and admit I am a Satan-worshipping cannibal, so I had been fantasizing that Melania would look into the camera and — live, with at least a few seconds before she would be cut off — tell the truth about her sociopathic husband.  His sister has.  His fixer has. So many others have.  So why not Melania?  Something to break the spell.

Here are excerpts of an email Borealis CEO Isaiah Cox sent shareholders last week (you probably didn’t get it, because you probably own the stock “in street name” so he doesn’t know who you are):

As many of you know, the BOREF share price is something of a joke.

WheelTug’s shares privately place at a valuation of about $1.25 billion (which we think is a great deal for investors). Borealis Holdings owns more than 58% of WheelTug. So by rights Borealis, if locked to the value of its WheelTug holdings, should have a market cap of $754 million.

That would be $150 per share.  [BOREF closed at $7.90 yesterday.]

That much I basically agree with.

One could certainly argue the $1.25 billion valuation on WheelTug is significantly too rich.

Then again, it’s beginning to look as though the thing may really work.  And the value to the world economy (airlines, airports, and passengers) of  eventually cutting 10 or 15 minutes of ground time out of the average flight would be enormous.

And if the technology works for airplanes, maybe it could apply elsewhere.

And maybe some of the company’s other supposed break-through technologies could prove real, too?

So who knows?

I would never suggest anyone buy BOREF at $150 today.  But neither would I suggest anyone sell it at $7.90.

Isaiah continues:

Have you ever noticed how, when good news is released, BOREF goes up and then lots of shares are dumped into the market to bring it back down again? It happened again this past week – the stock on the WheelTug news could have easily run away, topping $20 or more by the end of the week. But there is always some kind of mysterious dampener on the stock price.

Conventionally, such a dampener would be shareholders taking profit. But ask yourselves: given the news and promise of more good news, how many shareholders really want to sell BOREF right now? My educated guess is that with the incredible WheelTug developments that are now being shared publicly, the number is pretty low.

But so is the trading volume — a few thousand shares a day, which on a low-priced stock is nothing.  It’s not crazy to me to think that some BOREF holders, tired of holding for decades, and very possibly not noticing the WheelTug news, said to themselves, “Oh, thank God.  I can finally get out and break even.”  Or whatever.

Isaiah’s guess is that short-sellers are to blame . . . and that in addition to whatever legitimate short-interest may have built up over the years (legitimate, because the short sellers borrowed actual shares they will have to return) there may also be a huge “naked” short position where shady brokers sold phantom shares they only pretended were real . . . and that as a result your broker may not make good on the shares you think you own.

Reputable brokers in recent years have reported ownership of shares but then, once delivery was requested, insisted that the number of shares was just a clerical error. That particular white-shoe broker had to be sued, and the court found that the broker did not have to deliver the shares, but their cash value instead. It was a net loss for the investor, not counting the legal expense and hassle.

His email offers several suggested remedies.

Our strong management recommendation that long-term investors move their BOREF shares out of their brokerage accounts to a book-entry account at the transfer agent, Transfer Online (TOL).  Then your positions in BOREF are safe.

Another bonus is that as brokers have to cough up real shares, they will have to find them in the market. BOREF should skyrocket in price as people deliver to their accounts at the transfer agent or convert to Borealis Holdings, giving BOREF a substantial valuation.

If you want to convert your Borealis Exploration shares to Borealis Holdings, just email shares@borealis.com for instructions. If you want to keep in BOREF but ensure your shares are safe, I recommend opening an account with Transfer Online https://transferonline.com, and holding your shares there.

If you’re interested in the rest, email kalin@wheeltug.com and ask for a copy of the full email.

In my case, I will probably leave most if not all my shares at Ameritrade and Fidelity, not least because if there ever were a short squeeze that rapidly drove the price up to insane heights, I’d be able to sell mine with a few quick clicks.  Someone with a physical certificate locked away in a vault, or who had exchanged her shares for Borealis Holdings, would miss that opportunity.

I’m definitely not counting on a short squeeze, and I remain prepared for the possibility of total loss.  (“Money you can truly afford to lose . . .”)

The September 15 demonstration may get postponed.  Or — like the shatterproof windows on Tesla’s cybertruck, it could be an embarrassment.

But whatever setbacks there may be, it seems (to me) ever more likely there’s real value here.

(And Tesla, despite its shattered windows, recently traded at $2,000 a share.)

One of my friends with 40 years in the brokerage business, who owns 10,000 BOREF shares, is comfortable leaving them in his brokerage account.  He writes: “If you hold the shares in street name in a regular brokerage account at any registered licensed brokerage house, you will be able to sell those shares in the open market at any stage, any day, so long as the company maintains their valid market listing and so long as the SEC doesn’t forcibly delist or stop trading.”

By a trillion times, what happens November 3 is more important.  But what happens September 15 will be of interest to some of us as well.

Isn’t this fun?