The mystery of how a company set up to search for Bigfoot hit a $10 billion value

Tom Biscardi said he has personally seen Bigfoot seven times in 45 years. But that isn't the most surprising thing about him.

No, the most surprising thing about Biscardi is that he is the CEO and controlling shareholder of a company that had a market capitalization on Wednesday morning of more than $10 billion, according to FactSet, a widely used data provider that tracks publicly traded companies. What does that company do?

Biscardi's company is in the, um, big business of Bigfoot.

Figuring out just how a company like that came to have a market capitalization listed at more than $10 billion is a mystery worthy of Bigfoot himself.

It begins in the woods, as all good Yeti stories do. Biscardi told CNBC on Tuesday that his first encounter with a Bigfoot came on a creature-finding expedition in Northern California in 1973. He said he saw a large hairy monster squatting by a chokecherry bush, eating. It had a hairy face that looked almost human, and the creature had berry juice all over its mouth. As it stood up, it turned and looked directly at the explorers, Biscardi recalled.

"I got to tell you something, I nearly s--t."

Grambo Grambo | First Light | Getty Images

Not to worry. The beast did not harm Biscardi. He survived the encounter and says he went on to spot Bigfoot six more times, lead expeditions across the country, produce a variety of videos and help launch a website on which he is referred to as the "Godfather of Bigfoot."

In 2013, the company Biscardi controls filed an S-1 form and registered with the Securities and Exchange Commission. The stock ticker: BGFT, of course.

The company is officially named Bigfoot Project Investments Inc., and it is what's known on Wall Street as a "pink sheets" firm. That means it is an over-the-counter stock traded in the OTC's least-regulated and least-scrutinized market. On its website, OTC Markets describes the pink sheets market as home to penny stocks, shell corporations and "distressed, delinquent, and dark companies" that are not able or willing to provide adequate information to investors.

This netherworld of stocks has attracted increased scrutiny this week in the wake of the SEC's decision to suspend trading in another over-the-counter stock: Neuromama, a Tijuana, Mexico-based company with a murky business model that somehow achieved a staggering $35 billion market capitalization. But for SEC enforcement personnel, finding and eliminating such companies can be a lot like the work Biscardi does hunting for Bigfoot: a slow, painstaking accumulation of evidence, often with very little to show for it.

The Bigfoot company is in a different category than Neuromama. It is active and making current filings with the SEC — the most recent on Aug. 9. On the OTC Markets website there are no markings on Bigfoot's stock chart that indicate potential problems, such as the skull and crossbones "Buyer Beware" label OTC uses to designate companies with potential red flags.

Biscardi resents the Bigfoot skeptics. "They say 'You're crazy, this thing doesn't exist,'" he told CNBC. "Well, it does exist, No. 1, and No. 2, we did take it public."

In its filings with the SEC, Bigfoot says its stock became eligible for trading on June 28, 2016, on the OTC Bulletin Board, but as of July 29 the stock had not yet begun trading. Still, this week FactSet listed a current share price of $50.01 for BGFT. That, multiplied by the number of shares outstanding (more than 200 million) gives the $10 billion figure for market capitalization.

It's not clear where the $50.01 stock price came from.

What is clear is the tale of BGFT highlights the strange distortion effects that can happen in the pink sheets netherworld, a mysterious place where the metrics investors use to value companies such as market capitalization can lose all meaning in a haze of accounting fiction. Market capitalization is a fine way to measure big, widely traded companies. But for a firm like Bigfoot, it doesn't make any sense at all. A $10 billion valuation puts Bigfoot on a par with Xerox, Discovery Communications and Gap — well-known companies with massive assets and popular products.

Bigfoot, by contrast, lists current assets of $221 in cash along with 73 original casts of Bigfoot footprints, a 109-inch skeleton and a rubber suit from a 2008 Bigfoot hoax. The filings helpfully explain that Bigfoot is known by 15 different names around the world, including Yeti in Tibet, Yowie in Australia and Hibagon in Japan.

In the "risk factors" section of the firm's SEC filings, the company discloses all the potential problems it could face, including problems relating to auditors, its burn rate, and potential future revenue issues. Nowhere does the company say that failing to find Bigfoot is a risk factor. In fact, Biscardi says the firm can make money even if Bigfoot is never actually located.

The firm lists Biscardi's salary at zero dollars: Bigfoot Project Investments is clearly a labor of love.

The firm's market capitalization was so off target that even Biscardi — who owns more than 58 percent of the stock — was unaware of the listed market capitalization of the company when CNBC called him this week.

Told the market data service lists Bigfoot with a $10 billion market capitalization, Biscardi said, "Wow, that's a lot of money." Asked if that figure made any sense, or if there were any financials that would back up such a figure, Biscardi said "Oh, I wouldn't say so. I don't think so at all."

If I was worth $10.4 billion, I'd do like that guy Trump and I'd run for president.
Tom Biscardi
CEO, Bigfoot Project Investments

Biscardi took a moment to process the data. "Somebody doesn't have their facts right." He considered the figures. "If I was worth $10.4 billion, I'd do like that guy Trump and I'd run for president."

He said he had just finished a six-week expedition looking for Bigfoot in Montana, and that he was working with former Navy SEALS and Army Airborne Rangers in the hunt. "We know that they exist," Biscardi said of the malevolent bipeds. Now his goal is "to prove it to mainstream America."

In its filings with the SEC, Bigfoot says it is in the entertainment industry. It says it develops documentaries, sells DVDs, and exhibitions of Bigfoot-related materials. The company says it has a burn rate of $25,000 per year and revenue of only $5,440 per year. But it hopes that new DVD sales will increase revenue. Biscardi also said he has plans to open a Bigfoot museum, possibly in California.

SEC filings also show that Bigfoot's accounting firm, Anton & Chia, resigned from the account on June 21, and Bigfoot has not engaged a new independent accountant.

Still, Biscardi said his company's stock is a great investment. "Those who invest in BGFT, Bigfoot Projects Investment Incorporated, OK? I think it will be a helluva market to reckon with down the line, 'cause we're going to be doing very well," Biscardi said.

"Could you imagine if we brought back one of these creatures?" he said. "Think about it."

Think about it, indeed. So where did that $50.01 stock price figure come from? A clue can be found on OTC's own website, which listed a bid-ask spread for the stock. Generally, the bid ask spread for a stock is the difference between what a seller is willing to sell a stock for and what a buyer is willing to pay. It's based on real-world market activity of buyers and sellers. On the OTC's website Wednesday morning, the spread for Bigfoot was listed as between 2 cents a share and $100 dollars per share. The midpoint of that? $50.01, the share price listed on the OTC's website. Multiply that by the number of shares, and you magically get a $10 billion market capitalization.

But late in the day Wednesday, in response to questions about Bigfoot from CNBC, the $50.01 stock price vanished — disappearing faster than a Yeti in front of a high-resolution camera. OTC Markets said it made a "courtesy call" to its data vendors after being alerted to the price by CNBC.

It turns out that the market capitalization of the entire Bigfoot company was based on a ghost in the stock data machine.

Or you could call it a myth.