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This is a situation I am beginning to investigate. I think it's good enough to bring to your attention. I pick these situations from those presented to me by my network of brokers, market makers, PR companies, investment bankers, venture capitalists, & key people in various industries. My primary criterion is the same as I apply for Conservative Speculator -- my opinion of the stock's potential to double or better in the next six to 12 months.
My opinion of this situation will be online here until I find another one for you. I will, however, occasionally do updates on situations featured here which I continue to follow, either in the "Larry Oakley's Opinion" column, or in the "Larry Oakley's Comment" column. Please -- do not use these picks for investment decisions unless you decide on the basis of facts you uncover in your own investigation.
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Current Larry Oakley's Stock Pick:
Date Posted: 08/15/10
Alternate Energy Holdings, Inc. (OTCQB: AEHI)
Alternate Energy Holdings, Inc. (OTCQB: AEHI) My Opinion This is one of the most exciting emerging companies that I’ve been exposed to in the last 25 years. Based on my interview with CEO Don Gillispie & my investigation of the management team, their plans, & my other sources, this situation should be a part of your portfolio.
AEHI, based in Eagle, ID, develops & markets innovative clean energy sources, & is the nation’s only independent nuclear power plant developer seeking to build new power plants in non-nuclear states. The company’s proposed $10 billion commercial nuclear power plant, called Idaho Energy Complex, will be constructed on a 5,300-acre parcel in Payette County, Idaho that the U.S. Nuclear Regulatory Commission (NRC) has officially recognized. The plant is expected to be operational in 2018.
Here’s some of what impressed me:
1. AEHI plans to build a full size nuclear power plant in Payette County, Idaho. This would be the first nuclear power plant that would be built in the U.S. by an independent company, as opposed to all others that have been built by public utilities. AEHI, being an independent, gives it the ability to build without increasing power rates, etc.
2. The plant is in the final stages of local approval to build the facility, the rezoning process is nearly completed, & 80% of the community is supportive. An independent study shows the proposed plant will have dramatic impact on the state & county economies & create thousands of jobs. In late July AEHI announced a purchase agreement on a new backup nuclear site; 6,000 acres adjacent to the primary site.
3. The plant would have the latest generation of nuclear energy technology, which makes it totally safe. I’ll explain why nuclear plants are so safe in my section titled “My Personal Comment on Nuclear Power Safety.”
4. Management plans to follow that first plant with others in states that need the many advantages that a local nuclear plant will provide.
5. The profit potential of AEHI is extremely substantial.
6. Green World Water™, (www.GreenWorld-h2o.com) subsidiary was formed after an exclusive partnership through AEHI China with China National Nuclear Corporation (CNNC) through its subsidiary China Zhongyuan Engineering Corporation (CZEC). On August 12, 2010, Green World Water announced the signing of a Memorandum of Understanding (MOU) with Tubestar Oil & Gas, one of the oilfield inspection services in India. The MOU is the first step in the negotiation process for determining the feasibility of the company building a nuclear desalination plant to supply clean water & power in India.
7. AEHI has signed a memorandum of understanding with Hyperion Power Generation, beginning a joint venture to license, build, & market Hyperion’s refrigerator-size modular nuclear reactors on a worldwide basis. Hyperion’s small reactor can produce 25 megawatts of power, which is enough power for about 20,000 households & It’s stackable. Hyperion came to AEHI to help them market the reactor in China, knowing that AEHI has an unmatched reputation, especially with CNNC, which is the premiere government-run nuclear company in China.
8. Energy Neutra™ (www.energyneutralinc.com), another AEHI subsidiary, assists homeowners & businesses reduce energy consumption & reliance on the electrical grid by promoting responsible & affordable renewable sources of energy.
I strongly suggest that you seriously look into this emerging growth situation – AEHI has the ideas, the technology, strong management team, funding & manufacturing sources, & could easily outperform Microsoft, Intel, & many others. Do your own homework on AEHI – it will be well worth your effort.
What AEHI Does & Is This & the following sections give you additional background about AEHI. You of course could find this information, but as you have shared with me on occasion, you like it when I find it & put it together in one place for you.
AEHI develops & markets innovative clean energy sources. It is the nation’s only independent nuclear power plant developer seeking to build new power plants in multiple non-nuclear states. Other projects include Energy Neutral™, which removes energy demands from homes & businesses (http://www.EnergyNeutralinc.com), Colorado Energy Park (nuclear & solar generation), & Green World Water™ which assists developing countries with nuclear reactors for power generation (http://www.GreenWorld-H2O.com, production of potable water, & other suitable applications. AEHI China, headquartered in Beijing, develops joint ventures to produce nuclear plant components & consults on nuclear power.
Key objectives of AEHI include decreasing U.S. dependence on foreign sources of power, which are progressively proving less reliable & more political in their influence; reducing energy costs to consumers by supplying low cost electricity; providing technology to construct buildings & homes without energy bills; improving grid reliability with large base load plants; & creating much-needed jobs. Initial Comments on this Emerging Growth Situation I interviewed CEO Don Gillispie on 7/28/2010 and am greatly impressed with what he & his team have achieved. His team, incidentally, is a remarkable assemblage of top industry experts – I give you brief bios on them in the “Management Team” section of this editorial. Don has achieved an unusually high approval rating for his plan to build & operate the company’s first nuclear power plant in the Payette County, Idaho area – that approval rating, mentioned earlier, is over 80 percent. AEHI will build the first independent nuclear plant – the rest have all been built & operated by utilities, which are regulated – one of the disadvantages of such regulated plants is that their profits are limited by regulation. An independent nuclear plant of say 3,000 megawatts capacity, like the one planned by AEHI would not be regulated, as it would be if it were built & operated by a public utility. Not being regulated, AEHI’s plant might well have annual pretax profits in the $3 to $4 billion range. Multiply that by many future additional plants & the numbers get rather interesting. Building such plants in several states is a very attractive part of AEHI’s plans, & another equally attractive part of its plans is the use of nuclear power to desalinize sea water. One local such application is based on the fact that the Western U.S. states rely on fresh water to grow their agriculture industry. The problem is that the amount of water required has been growing faster that the sources can provide, so desalinization is the obvious answer. What I used in my California water treating company was ok for very small operations, but was not at all suitable for agricultural use. The obvious way to get sufficient water for agriculture is from sea water, but all methods so far have been too costly. When nuclear power is used, however, the cost plummets to a level that is low enough to be used almost anywhere in the world. AEHI, through its Green World Water™ subsidiary, is developing sources of plant equipment & funding for nuclear desalinization & brackish water purification operations & has already been accelerating its entry into that lucrative new industry. One of the most promising aspects of its discussions with many foreign nations that need sea water desalinization is the fact that such installations have the ability to not only do the desalinization, but can produce electric power as well, one use being the power to pump the resulting desalinized water hundreds of miles to where it is needed. Here is a comparison that demonstrates how AEHI’s technology compares with the other existing methods of seawater desalinization: Coal powered 1100 megawatt plants cost about $4 billion, process about 400,000 cubic meters of water per day at a cost of about $2.00 per cubic meter, has an expected lifespan of about 40 years, & produces about 6 million metric tons of carbon emissions per year. Natural gas plants cost about $3 billion & process the same amount of water at a cost of about $7.30 per cubic meter, will last about 30 years, & produces about 3 million metric tons of carbon emissions per year. Wind powered plants cost about $6 billion & process only about 45,000 cubic meters of water at a cost of about $12.50 per cubic meter, & get carbon credits. Green World Water™, an AEHI subsidiary, can build a plant that costs $3 billion, processes 400,000 cubic meters of water per day at a cost of about $0.35 per cubic meter, will last about 60 years, & in addition, produces 700 megawatts of electrical power, & like wind, gets carbon credits rather than creating pollution. I strongly suggest that you seriously look into this emerging growth situation. Do some investigating on your own – this company has the ideas, the technology, the strong management team, the funding & manufacturing sources, & everything else required to make its two main operations successful, especially in this era of economic difficulty. My Personal Comment on Nuclear Power Safety Since one of my primary majors in my university years was Power Plant Engineering, I have been following this industry since it began. Bottom line: I am distressed with the reputation many people have concerning the safety aspects of nuclear power plants. Let’s clear that up right in the beginning of this editorial. Before we do, I want to comment on the 1986 accident at the Chernobyl nuclear power plant in Ukraine, then part of the former Soviet Union. It would never have been allowed to be built anywhere in the world except in Russia. Chernobyl is the only accident in the history of commercial nuclear power to cause fatalities from radiation. It was the product of a severely flawed Soviet-era reactor design combined with human error. It had an exceedingly bad safety design, and its demise was to be expected. In my statement about the safety of nuclear power plants, I have therefore totally eliminated Chernobyl from consideration. Nuclear power plants worldwide have a far better safety record than any other power producing technology. There has never been even one fatality, serious injury, or anyone who became sick because of any nuclear power plant. In fact, the current Generation 3 Reactors represent the safest record of any industry on this planet. Actually, most of the reactors in the U.S. are Generation 1 & Generation 2, & the U.S. can still boast the same safety record. The fact that so few such plants have been built here in the U.S. is a real tragedy. If construction had proceeded at a rapid pace during the past many decades, we would have by now, in my opinion, enjoyed several things: (1) Little or no dependence on foreign petroleum sources; (2) A far greater growth of manufacturing in the U.S., since we would not have had to send so much of our manufacturing overseas; & (3) Prosperity at an amazing level that would have worked to make the U.S. economy grow at a substantially greater pace than it has, with very little chance that we would now be experiencing the depression that we are in. In my September issue of Conservative Speculator I plan to do a major feature about the Nuclear Industry – similar to my present July issue that has a feature about the Lithium Industry – you may want to study the current issue – you can get a free subscription to Conservative Speculator at the upper right part of our home page. Because the pertinent news issued by the company is a rather good source of information, I include some of the most recent news in this next section. Recent News on AEHI August 12, 2010 -- AEHI signed a Memorandum of Understanding ("MOU") between AEHI subsidiary Green World Water™, developer of the world's first commercial nuclear desalination system, & Tubestar Oil & Gas, one of the oilfield inspection services in India. The MOU will help determine the feasibility of building a nuclear desalination plant to supply clean water & power in India. "This MOU is the first step in the negotiation process. It indicates that Tubestar is serious about working with AEHI & Green World Water. We offer something different from any other company in the world -- a system that we anticipate will produce large amounts of clean water & power at the same time, which is the reason we are hearing from companies like Tubestar," said Don Gillispie, AEHI CEO. The agreement outlines a path for ongoing negotiations between the two companies though will not involve government officials until definitive terms are agreed upon. Any definitive agreement will be subject to approval from the Indian government. Gillispe added: “We anticipate that the desalinization reactor being developed by Green World Water will have the ability to create large amounts of clean water & power simultaneously. Based on overall volume, the GWW reactor should be able to process enough salt water from the ocean to provide clean water for up to 1,000,000 people per day, & at an estimated cost of between 35 cents & 65 cents per cubic meter. Other sources such as coal, natural gas, & wind cost between $2 & $12 per cubic meter, with much less reliability or greenhouse gas emissions. The MOU will give us the opportunity to fully demonstrate to Tubestar all of the potential benefits expected of the Green World Water desalinization reactor."
The Green World Water reactors being developed will be available in 650MWe & 1100MWe systems & are based on advanced western reactors that have thousands of collective years of successful operation in more than 75 percent of the world's nuclear power plants. These reactors will maintain enhanced safety standards & equipment, & AEHI & Green World Water anticipate that they will be able to produce enough power to process enough water to fill a reservoir 2 km wide, 0.6 km long, & 10 meters deep every month while pumping the water hundreds of miles inland, if needed. Tubestar Oil and Gas provides a comprehensive range of inspection services from an operational base in Mumbai, India. Covering the whole of the India & neighboring countries, Tubestar provides inspection, repair, maintenance services, & calibration services. The company offers a range of offshore, Marine, Petro-Chemical inspection products, & technical expertise, which is supported by a worldwide alliance & joint venture companies.
July 28, 2010 -- AEHI announced a purchase agreement on a new backup site for its proposed nuclear power plant in Payette County, Idaho. CEO Don Gillispie stated: "Our excellent primary site of 5,000 acres is also in Payette County & because of the overwhelming support AEHI has already received in that part of Idaho, we felt it was fitting to look at an additional site in the same area." The new backup site involves 6,000 acres adjacent to the primary site & includes a number of benefits that complement both sites such as water rights, transmission right-of-ways, & the ability for future expansion. And like the primary site, it also passes preliminary standards required to build a nuclear power plant. "While we still have an application on what is now a tertiary site in Elmore County, Idaho, about 100 miles southeast from Payette, the Elmore County Commissioners have yet to make a decision on our application after well over a year & continue to show uncertainty in their deliberations. As an investor-owned company, it is vital to focus our attention & resources on better sites where residents & local governments continue to show definitive interest," Gillispie stated. The proposed plant has met with large-scale support at all local hearings; better than 80 percent support has been witnessed at every hearing in Payette County. "This large plant will offer jobs, be financially secure, & the opportunity that many people in the community are looking for. It's the same message we continually hear every time we attend one of the hearings. It's also the reason county commissioners unanimously approved the next-to-last step in the rezone process on the basis that only a nuclear power plant could locate on the property," said Gillispie. According to a recent study, the proposed plant is expected to create around 5,000 jobs through the construction phase& more than 1,000 jobs during operations. Pay levels for those jobs will average $60,000 & $80,000, respectively. The projected revenue for the county & state is staggering. During construction alone, the project should increase Idaho's GDP by $5.3 billion, while $4.8 billion will flow directly through Payette County. July 22, 2010-- AEHI announced the launch of www.GreenWorld-H2O.com. The site will be used to promote & sell commercial Green World Water™ nuclear desalination systems, some of which are poised to sell before the end of the year. Gillispie said: ”We already had visitors to the site before its official launch, which is gratifying because we have a large number of countries that have expressed interest in our product & this site is now offering the additional information they need to make an informed decision." The site will be used to further explain the Green World Water product, but it also demonstrates exactly how a nuclear desalination system differs from any other, mainly coal, natural gas, & wind. In every category nuclear has clear advantages in price, volume of clean water produced, cost to process water from the ocean, & co-generation of electricity. Gillispie added: "It is exciting for us & to our potential clients that we can produce clean water from the ocean for as low as 35 cents per cubic meter. Other systems are doing the same thing, but with a cost between $2 & $12.50 per cubic meter. The great thing about nuclear desalination is that the sale of electricity from the same plant will actually pay for the cost of the water production." Green World Water desalination systems can process up to 400,000 cubic meters of clean water every day & use power generation to pump the water hundreds of miles inland, which will reduce, if not eliminate the problems of drought & dirty water in many parts of the world. That is enough water to fill a reservoir more than a mile wide, by 10 meters deep every month with clean water. Green World Water will use 650 MWe (this abbreviation stands for Megawatts) or 1100 MWe reactors & through a partnership with Hyperion Power Generation, the company may soon add Hyperion's refrigerator-sized 25 MWe reactors to the list as well. International drought conditions are creating havoc in many countries& according to the United Nations, it won't be long before one-third of the world's population will have little to no access to clean water. It is estimated that the problem will increase by 40 percent in the next 15 years. July 15, 2010 – AEHI announced it is preparing for a move to a senior U.S. stock exchange in response to rapid progress towards local approval for its planned nuclear reactor in Idaho, as well as growing global interest in its Green World Water™ desalinization reactor. AEHI believes it substantially meets the requirements to up-list to a senior U.S. stock exchange. AEHI’s Board of Directors & the majority of stock holders approved a reverse stock split this year, if needed, to meet minimum stock price requirements of the senior U.S. stock exchanges & is establishing audit, compensation, & nominating committees in advance of a planned up-listing. CEO Gillispie said: “Graduating to a senior U.S. exchange is a high priority for the company given the progress we have made in securing local approval for our nuclear reactor, as well as the growing global interest in our Green World Water nuclear desalinization reactor & the Hyperion modular reactor. Listing on a senior U.S. exchange will help increase visibility for the company & help to attract a broader class of institutional investors.” In May, AEHI signed a deal with CNNC in China that resulted in the creation of Green World Water, which is now the only company selling a large-scale nuclear desalination reactor. The design makes it possible to desalt seawater & purify brackish water, while co-producing electricity including the ability to pump clean water hundreds of miles inland, essentially eliminating the need for water in parts of the world devastated by intense drought conditions CEO Gillispie commented: “We have already received significant interest in Green World Water from a number of countries spanning most of the continents. We have rapidly assembled a professional & seasoned sales force & are now positioned to sell one or more of these reactors by the end of this year. A single reactor sale could equate to many millions of dollars in both revenue & net income the first year alone.” In June, AEHI signed a memorandum of understanding with Hyperion Power Generation, a company that took the nuclear industry by storm by creating a small, refrigerator-sized modular reactor that produces 25 Megawatts of power & can produce enough power to electrify more than 20,000 U.S. households. AEHI has agreed to work with Hyperion to help license, build, & sell their nuclear reactors on a world-wide basis. Gillispie said: “The Hyperion deal also adds another dimension to Green World Water, which can use the smaller 25 MWe reactor in place of the larger 1100 MWe & 650 MWe options currently being used by the company to produce potable water.” One of the most exciting aspects to AEHI is a proposed nuclear power plant currently working through the final phase of the rezoning process in Idaho. The rezone will allow AEHI to build the plant on a piece of property that is currently zoned for agriculture. The zoning process should be finished in the coming months &, once the reactor is completed, it is expected to create thousands of jobs while generating between $3 billion & $5 billion annually. Management Team I am impressed with the current team. Here are their abbreviated bios: Donald Gillispie is AEHI President, CEO, & Chairman. He has over 45 years experience in construction, operations, & maintenance of nuclear power plants. He is widely considered one of the most experienced senior executives still working full time to help the United States reemerge as the world’s leader in nuclear power. He received his undergraduate degree in electrical engineering at Clemson University, where he graduated cum laude. He later received an executive MBA from MIT’s Sloan School of Business. His real interest in nuclear power began in the military. He attended the Navy Nuclear Power School, became a nuclear operator, & served aboard the SSBN, Francis Scott Key. Since then, he has held several senior positions in the nuclear industry. He handled oversight & startup of Beaver Valley Unit 2 for Westinghouse in Shippingport, PA, & worked on construction & startup of Duke Energy’s first three nuclear units at Oconee Nuclear Station in SC. While working for Tennessee Valley Authority, he handled the construction, startup, & operations of three nuclear facilities, & while working with the Institute of Nuclear Power Operations he oversaw the turnaround & restart of the Rancho Seco & Pilgrim nuclear power plants. He co-founded the Institute of Nuclear Power Operations (INPO), which is the largest technical management consulting business to all U.S. nuclear utilities. He also co-founded Nuclear Management Corporation (NMC), a nuclear operating company in Wisconsin, which operated eight nuclear power plants with 5,000 employees. Incidentally, NMC was awarded best in class by Forbes in 2001. As a co-founder of Grace Glens, a private nuclear-technical management consulting company, he consulted some of the largest nuclear utilities in the U.S., advising senior executives on commercial nuclear power operations He is also an experienced educator in the nuclear industry, was an instructor in MIT’s nuclear executive program, taught in INPO’s senior plant manager’s program, & as part of a three-man executive team, helped oversee the 2007 reopening of Browns Ferry Nuclear Plant unit three in Alabama. The plant had been closed for over 20 years. Its reopening was attended by President George W. Bush. Leon Eliason, a past President of two nuclear utility business units & former AEHI Chairman, has served on the Board of AEHI since inception. He is a professional in the utilities field, with 33 years of experience in operations, maintenance, engineering, & management of Nuclear, Fossil, Solar, & Hydro Power Plants. Most notable, he served as President of the Nuclear Business Unit & Chief Nuclear Officer for Public Service Electric & Gas, Newark NJ – where he was responsible for all operational & support activities including fuel, technical support, business planning, & financial support for two generating stations. John Franz, a past VP of a nuclear utility, has served on the Board of AEHI since February 2007. Since leaving the nuclear utility, he has been a consultant for 12 nuclear power plants & two consulting firms, including practice INPO Accreditation Boards & membership on Nuclear Safety Review Boards. He has 36 years of diverse experience in the licensing, start-up, operation, & management of nuclear power plants. Most notably, he led a troubled plant to top NRC & INPO ratings, as well as directed a plant restart effort following a mandated NRC shutdown. Ken Strahm, Sr., a past President of the nuclear industry watchdog organization INPO, has served on the Board of AEHI since inception. Prior to his retirement, Mr. Strahm was employed by the Institute of Nuclear Power Operations (INPO) in Atlanta, GA, where he served as Director of the National Academy for Nuclear Training & later as President of the Institute. Greg Kane, a past nuclear plant manager, has served as VP & Board member of AEHI since inception. He currently is President of Eagle “I” Nuclear Assistance, a consulting firm that provides, or has provided, management consulting to over 25 nuclear programs. He previously was General Manager at Virginia Power’s twin unit PWR North Anna Nuclear Plant, where he was responsible for safe operation & budgeting of the station in all aspects of activities. Under his leadership, the plant achieved top industry evaluation scores & one of the lowest power production costs in the United States. Ralph Beedle, a past Senior VP of the Nuclear Energy Institute, has served on the Board of AEHI since inception. Mr. Beedle retired after serving as Senior Vice President and Chief Nuclear Officer of the Nuclear Energy Institute – where, in addition to his operational management duties, he interacted regularly with the U. S. Nuclear Regulatory Commission and other federal agencies, as well as members of Congress. Rick Bucci, a CPA (licensed to practice in New York State) has served as CFO of AEHI since 9/2007. He has practiced accounting & tax for 20 years. His background includes hotels, construction, real estate development, & banking. He also served as CFO of two corporations. His experience includes tax planning & preparation, audit services, financial statement preparation & presentation, bank financing, & various consulting engagements. Jennifer Ransom is senior VP & company spokesperson. She has served as AEHI’s VP of administration & corporate secretary, was past owner of Ransom Insurance, & has management experience in accounting, insurance, & retail. James Taylor is an Advisor to the Board. He was former COO of the U.S. Nuclear Regulatory Commission (NRC), & has served on the Board of AEHI since inception. During his career, he was recognized by both Presidents Bush & Clinton with Presidential Distinguished Executive Rank Awards in 1989 & 1994. He also held the position of CFO during his years of NRC employment, & has served on Nuclear Safety Oversight Committees at nine utilities operating nuclear power plants. Mike Sellman is a director. He is a past CEO & founder of the Nuclear Management Company that operated eight nuclear reactors in the Midwest. He also served as a nuclear site VP & plant manager during his career, & was on the board of Nuclear Energy Institute, Institute of Nuclear Power Operations, & American Nuclear Society. He is an international nuclear consultant & advises Idaho National Laboratories. He began his career in the Navy Nuclear Program working on Admiral Rickover's staff. Nancy Shi is President, AEHI China Ltd. She has over 20 years experience in the financial industry including past assistant professor, School of Economics& Management, Tsinghua University, & co-founder Shenzhen Mission Investment & Development Co. Ltd. (China). Members of the AEHI Executive Committee are Don Gillispie (Co-Chairman), Leon Eliason (Co-Chairman), Ken Strahm, & Ralph Beedle. Contact Call Dan Hamilton at 208-914-8894 at the company, or Crescendo Communications, LLC, the company’s IR firm -- David K. Waldman or John J. Quirk at 212-671-1020, or email them at aehi@crescendo-ir.com.
My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).
Do not run out & buy a stock just because I am enthusiastic about the situation. Call the company before you buy -- satisfy yourself first. I always include a phone number for that purpose. My purpose in this column is to respond to your request for my personal opinion. You have the responsibility of making your own investment decisions. Do not give up that responsibility.
My editorial coverage has always been, is now, and always will be without charge. That includes what I write in Conservative Speculator, and what I write in "Larry Oakley's Opinion, " "Larry Oakley's Stock Pick," "Larry Oakley's Comment," & "Larry Oakley's Bold Ventures" columns. It also includes what I write in such venues as articles submitted to other publications, interviews on radio & television, and at the investment seminars and conferences at which I am a featured speaker. By doing all my editorial work free of charge, I have the advantage of writing about what companies I particularly like. There are occasions when I will write about a company that is a paying participant on WallStreetCorner -- that's because I like the company. I always make it clear to them that editorial coverage is free and is not a part of the fee they pay to have their Profile researched, prepared, & posted at WallStreetCorner.
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