There are some shares that you wouldn't touch with a bargepole, and at first glance of the financial accounts and history of Fundamental e-Investments (FEI) then this stock would fit firmly into that category. But, the shares have come alive a bit over the last couple of days on heavy buying volume that forced the company to issue an RNS saying that it didn't know the reason for the increase at 'this stage'. Therefore, firmly implying that something will be afoot over the coming months.

I have been watching FEI for months and adding as the price has fallen (due to a distressed seller and insti) moving out as I probably know much more than other investors about what is happening with this stock that will be off many investors' radar. This is a tiddler with a market cap of only 2.4m and, of course, there are pros and cons investing in this type of stock just like there are with warrants but only being that much more liquid. FEI looks very speculative at first glance but when you dig deeper and realise the hidden assets then you begin to realise that this is the type of share where fortunes can be made!

Until last year FEI was buried in with the living dead on the LSE, however new management moved last year as new Chairman Stephen Thomson looked to work a near miracle in turning the company round. This is an ideal shell with an ultra low share price, very low market value, solid assets, and control by a quality management team.

If you are confident then you can move in and sit with the new team and multiply your shares over and over again but not one to trade in and out of. We are talking about management who have done this trick several times before so we are managing our risk accordingly. The management team here drastically reduces the risk profile.

FEI was a complete basket case of a stock with little hope until the new management boarded the operation with very little fuss around 18 months ago. The idea being that the new team would save the company from almost certain liquidation and sell off any assets that they may have, and pay off the debt, and then sit with some cash as a clean cash shell. This they did by selling off various small business interests and by having a share placing towards the end of 2005 by issuing 703,926,304 shares at a price of 0.125p thus raising 879,908 before expenses. Due to some warrants being exercised recently the share count is now 1,089,826,447 shares.

The originalboarding and placing operation was as low key as you can possibly get but remember that the new management team don't want a soar away stock price at this particular stage - they want it low so they can get as many shares as they possibly can for themselves. The new management team stuffed their pockets full of shares and put their money where their mouths are. Stephen Thomson bought 40m shares in the placing and Jonathan Nelson bought 80m shares and these guys have a big proven track record. Thomson is the guy who turned Turnpike into Medical Solutions several years ago which became a near 100 bagger at one point!

An interesting non-executive director is Dr Al-Dimashki who owns 25.4% of the company in addition to his other operation Mubeen Corporation which owns a further 24.9%. Thomson and Nelson each own 7.34% and 10.38% respectively with another institution owning 11% from memory so the shares are tightly held. Directors also have options (55m each for Thomson and Nelson) at 0.35p issued back in September before a distressed seller wanted out and savaged the shares.

So, what are the attractions of FEI? Well, they happen to own a piece of land pretty near me which has planning permission for 72 apartments and that will be worth in the region of 2m quite easily that valuation is not listed on the balance sheet. Local gossip is that the land is starting to get developed after February once the existing tennant has cleared out which they are in the process of doing this week. Then there is the further investment in a technology company as stated by the company some months ago.

Dr Al-Dimashki is an interesting character with investments in many technology companies and he will no doubt have something to bring to the table on that front but he has quite an impressive background too:

http://www.financial.de/newsroom/englisch/54841.html

'Dr. Oussama is currently the Managing Director of Middle East Development, LLC, Dubai, UAE. This organization is primarily involved in major real estate investment and with interests in electric power project development. It has grown rapidly during his governance from a modest asset base with 3 staff to a current staff of 45, assets exceeding CAD $150,000,000 and projects having a completion value of CAD $750,000,000.'

The principal advantage of FEI is simply that it can make larger gains in a rising market and could in fact lead to a pretty spectacular profit over a longer period. You could not hope to match this type of gain elsewhere imo but it will not be for everyone. I have taken a much longer view for FEI by investing some in my pension fund too and it may be worthwhile buying some and sitting and watching the action unfolding over the next year.

This does look very interesting and well worth a look imo.

1 YEAR CHART


1 MONTH CHART

Market value a piddling 2m with a likely profit of 1.5m from the development.

The company is going to develop the land themselves and still the reverse takeover to look forward too. Very positive encouraging statements today!

Nice rise on friday afternoon and I would expect bigger rises next week! A cracking time to buy at these levels!

AGM should now follow in the last week of July and should provide more updates especially on demolition of the site, I like the use of the words 'profit potential' in the finals:

"It is planned that the demolition of the current buildings on the site be started in July 2007 and that construction work be commenced in October 2007. It will be
pleasing to see this development start and see the profit potential of the site
realised in what is an appreciating Scottish property market".

Continued rise today with good volume thus far.

L2 closed the same at 1 v 1.

Cannot still buy online with etrade and most online brokers hence the volume dying out today. Still got good rise and bit of volume today including the 2.50 million buy. At key resistance point of 0.27 pence which should be broken in the next day or so hopefully then into a nice uptrend!

Level 2 still the same. A 1 million buy has come through at 0.27 pence.

Epic is wrong.