Can Lithium Americas break through the $1 CDN barrier?

Full disclosure right up front.

I have what I consider to be a significant position in Lithium Americas, traded in Canada on the TSX under the symbol LAC.  In the U.S. the stock symbol is LACDF and trades OTC Foreign.  I have not been compensated for writing this, (or any other) blog entry.  In point of fact I have not and will not accept payment to express an opinion on any stock, either bullish or bearish.

Also it is my full intention to sell my shares of LAC at some point.  And spoiler alert, I do think LAC will break through the $1 CDN barrier.  When I sell I do intend to write a blog post explaining my reasons, however in all probability it will be after the fact.  And if past history is any judge I tend to get out too soon, meaning those buying my shares have had the chance at gains themselves. Nemaska is a prime example.  

Bottom line, nobody ever went broke taking profits, and that axiom is doubly important with speculative stocks like LAC/LACDF from my perspective.

So why do I think the market will support a price of greater than $1 CDN for LAC?  Admittedly its not a big stretch at this point, with LAC sitting at .99 cents on the TSX as I write this.  Since April this is LAC's third kick at the one dollar can as evidenced by the chart below.

I wrote my first blog entry about LAC here at Avoid The Bag on April 27th, Before that I'd shared my opinions on Seeking Alpha.  Seeking Alpha Instablog.  April 27th ATB Blog Post  

In that April 27th ATB entry I offered up the opinion that LAC was seeing the formation of a Cup & Handle chart pattern, the stock was trading at 75 cents and I offered up the view that I could see it dropping as low as 65 cents (it got to 66) before rebounding and heading back to a dollar and beyond.

Well its pretty much made it back to the dollar mark, and I do think it will go beyond....and of course I will explain the rationale behind my opinions.  You can then decide if you consider my opinions rationale or not for yourself.

All my regular readers (all three of them) know that I'm not big on fundamentals.  I consider fundamental data to be any and all information available in the public sphere, and as such it is all dated.  Even if a company announces a merger or acquisition (as happened when LAC and Western Lithium merged), by the time the news hits I consider it already priced in.  Others might pump synergies and economies of scale, but not me.

There are however, events that I believe could serve as catalysts in the future.  

Lithium Americas has a corporate slide presentation available on line that is dated March 2016. (VIEW THE SLIDE PRESENTATION HERE).

In that old slide presentation the company cites a Feasibility Study (FS) done in July of 2012, obviously very old info, soon to be four years old.  In that presentation it cites the price used for Lithium Carbonate in its projections as being $5,500 p/tonne.  

I like conservative estimates, its better to under promise and over deliver.  But while $5,500 p/tonne might have been a reasonable number a few years ago, the explosion in Li prices I believe warrants an upward revision.  When Nemaska announced its updated FS in early April of this year it sent that company's share price sky rocketing from around 70 cents CDN up near $2.  Nemaska revised their Li Carbonate price upward from $5,000 to $7,000 p/tonne.

Then there's the elephant in the room, Tesla.  They will be having their battery Giga Factory grand opening on July 29th.  As the date gets closer I think a lot of Lithium Mining companies, both Juniors and Incumbents, will see their share prices boosted as a bright light shines on the entire sector.  Its the old:  "A rising tide lifts all boats" line of thinking.

And don't forget that Lithium America's recently brought David Deak on board as a Sr VP and CTO. Mr. Deak had spent his previous two years working for Tesla as a Senior Development Engineer according to his Linked-In Profile.  I am not suggesting that anything is in the works between LAC and Tesla, but I do consider it a possibility.

It is for these reasons, in combination with the chart, that I very much like the chances for LAC to bust through that $1 barrier and to make significant gains.  

But please take note....there is no such thing as a slam dunk in the public markets and in my opinion LAC still comports significant risks.  Everyone has different tolerances for risk, and different time horizons.  Stocks can be dangerous, and people do get hurt buying into hype and excitement and the risks here are very real.  

Ultimately any money made or lost, the person to be congratulated or angry with is the one that looks back in the mirror.  The comment field here is open, and while it is moderated, all I ask is that the tone be respectful with no brainless "lots of upside here" pumping or "get out now" bashing.  

Brexit vote hammers the market

My last blog posted expressed the commonly held belief that Britain would vote to remain as a member of the EU, boy was I wrong.  I honestly thought it was a slam dunk.

With polls showing that it could go either way my rationale was simple.  When a vote of a contentious nature comes up, I figure the masses will vote for the status quo.  Its the old better the devil you know line of thinking.  I will say the results somewhat restored my faith in the democratic process.  I considered it very possible that there was going to be Florida style vote counting to tip the results in favor of remain if the exit side was winning.

But even though the Brits voted to leave in their referendum I still think expect Britain to stay in the Euro Zone for a number of reasons.  In no particular order here are some:

• While just over 70% voter turnout is amazing when compared to traditional participation levels, it still means that about 1 in 4 voters stayed home.  It also means that as a percentage of eligible voters only about one third of the total voted to leave.
• Scotland and Ireland voted heavily to remain.  Proceeding to negotiate with Britain's exit from the ECM could result in Ireland and Scotland leaving GB, certainly Scotland.
• Younger voters overwhelmingly voted to remain, while older voters were more likely to vote to leave.  That means those who will have to live the with decision the longest wanted the employment and mobility freedom that comes with staying in the Euro Zone.

Ultimately, if Britain proceeds based on the results of this contentious referendum, its going to be messy.  This is a divorce, and it will get ugly.

Here's hoping calmer heads prevail,  A second referendum would by my preferred option.

Britain - Will they stay or will they go? I say they're staying

There's always something happening in the world to put investors on edge.  Last year it was the recurring possibility of a US default on its debt, but as everyone knows it didn't happen.  Before that it was the situation in Greece.

Now its today's so called Brexit vote.  I am of the strongly held opinion that, again, its much ado about nothing, that Britain will remain in the Euro Zone.  When push comes to shove British voters will vote for the devil they know, as opposed to the devil they haven't known since 1973.

In any case it won't be long until we know, but not until after the closing bells ring on North American markets.  In the interim I expect a rocky day and then a big surge tomorrow when the results that Britain has voted to remain are announced.

Resverlogix - Short interest climbs 1,447%

If you're a Resverlogix shareholder (RVX.TO) relax, its not as bad as the subject line makes it appear.

As noted at the end of MY RECENT BLOG POSTING about Resverlogix,, short interest up to May 31st 2016 was only 1,500 shares.  As per the most recent update through to June 15th 2016 the number of shares sold short climbed to 23,200 shares.  To put that in perspective 23,200 represents a whole two one hundredths of one percent or 0.02% of the roughly 105 million shares outstanding. But it is a big jump in percentage terms.

So why do a blog post about it?

Because I do think there is some possible significance.  The trading of RVX is incredibly thin, Yahoo Finance puts the 3 month average volume on the TSX at just 16,993.  There are many days in fact where volume doesn't even reach 10,000.  On June 14th, 15th and 16th the total TSX volume each day was just 3,800 then 6,900 then 5,900 respectively.

So what does it mean? Is this a bear raid?

Is there someone looking expecting bad news or a failed trial who's looking to cash in on a big drop? I highly, highly, highly, doubt it....not with just 21,700 sold short over this two week period.  The best case scenario for a short seller is if a stock goes to $0.00 and gets de-listed, then there's no need to cover.  Were that to happen with RVX then the party or parties who sold 21,700 shares short would stand to make a little over $20K.  If someone or someones were confident that RVX was going to drop big I would expect to see 10, 20, 30 million or even more shares sold short, not a piddly little 20 odd thousand.

Why short such a small amount?

I consider manipulation by a party or parties looking to buy in or add to an existing position to be a distinct possibility.  20K short on a stock trading around $1 is almost meaningless, were it not for the fact that it represents a full day's trading volume, a little more in fact.  With volumes in RVX being so light its my opinion that parties looking to manipulate the share price, that RVX can be pushed around like the puck on an air hockey table.

Reservlogix is an incredibly speculative investment, and I am long so I may be suffering from something called "confirmation bias", I full acknowledge that.

Any thoughts and/or comments are welcomed, as always please keep it clean and respectful.

Elite Pharmaceuticals - Is the herd about to storm in? (ELTP)

How do you find out about potential investments?  There are somewhere around 20,000 companies that trade on various exchanges and OTC in the United States. That's an awful lot of DD to preform if one wanted to research all of them.  If you examined 10 each and every day for a year you'd hardly put a dent in the pile.

That's why stock promotion and investor relations type services are everywhere.  There's a lot of competition out there for companies trying to attract investors.  And for companies that use their shares as capital to keep the lights on and pay salaries, it can be a matter of survival.  

Elite Pharmaceuticals popped onto my radar in a curious way.  I use Google as my primary source for news.  When I click on my news feed I get links to stories divided into several different categories: Top Stories, World, Business, Sports, Entertainment etc.  There's one category that I really like, its called "Suggested for you".  I assume Google puts news stories here based on my search history.  I've done a lot of searches lately including the keyword SEC, so I'll often see stories that are about the Securities Exchange Commission.  I also like listening to Willie Nelson on You Tube so I'll get links to stories about the last surviving King of outlaw country.  

I've also done a number of recent searches that include the term "OTCBB", and today there was a story included in that "Suggested for you" section about Elite Pharmaceuticals entitled:  Record Sales Spark Elite Pharmaceuticals (OTCBB:ELTP).  

The linked story takes me to a site called MicroCapDaily and it provides a very bullish write up of Elite, citing a 150% increase in revenues right off the bat.  Its a well written piece and very positive in tone.  You can read the entire story by clicking the link above but I will include this little snippet at the very end.  

• Currently trading at a $246 million market valuation ELTP does have $11 million in the treasury, manageable debt and fast growing revenues reporting $12.5 million in sales for fiscal 2016 up 150% from last year. ELTP has fast become an Investors favorite; the Company is fully-funded moving forward, has nineteen FDA approved drugs to be manufactured, approximately eighteen more in the pipeline in various stages with numerous partners, and just announced they successfully completed the studies for opioid SequestOx(TM) and in January submitted their first NDA. We will be updating on ELTP when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with ELTP.

Am I sold on ELTP as a long term investment?  Uhm.....no, anything but.  After perusing their most recent 10K, for the long term I'll definitely take a pass.  With over 726 million shares outstanding, an accumulated deficit of over $140 million and having reported losses every year from 1990 forward, I don't see this as a buy and hold play.  That is my opinion, others of course can disagree.

But just because I'm not sold on ELTP as a long term investment vehicle, that doesn't mean it might not be suitable for a short term trade.  

Why?

I am certain there are a lot of other people in the world who use Google as a source for news in the same manner that I do.  And I'm equally certain that there are other people who have done searches which included "OTCBB".  I think its highly probable that this "news story" about Record Sales for Elite, that it could be popping up on a lot of news feeds.  Even though there are over 700 million shares outstanding, at about 35 cents per share an investment of just $5,000 equals about 14,200 shares.  

If the dotcom bubble taught us nothing else, it showed that fundamentals are ultimately meaningless. All that really matters is supply and demand.  And with this MicroCapDaily story I definitely see the potential for a significant level of buy side interest to pour into ELTP.

I'm viewing this as, potentially, a prime Greater Fool type play.  Despite what I view as incredibly poor fundamentals, I see the possibility for a lot of fools to come storming into this stock starting Monday, and I might just be one of them.  The thinking is that if the PPS starts climbing, that even Greater fools will show up and be willing to pay even more providing the possibility of a profitable short term trade.  

I will have to see how my day is shaping up tomorrow, I might just be jumping on this one, but not for the long term.  With a stock like ELTP I don't want to be in a situation where I'm unable to watch it for any extended period of time.  With a penny stock like this I'd be afraid of going to mow the lawns only to come back to find the PPS down big.  

Ziopharm - What happens when the money runs out?

Warning, this post is going to be relying heavily on Ziopharm's SEC filings.  If you are the type of investor who prefers Press Releases to audited corporate filings, then you you might just want to stop reading right now.

Those who've done their Due Diligence already know that Ziopharm is well into its second decade of existence and has achieved only minimal revenues.  You also know that the accumulated deficit up to March 31st 2016 is over half a billion dollars. With existing capital resources only foretasted to be sufficient to get the company into the 4th quarter next year, and maybe not even that long, the question is what happens then.  Here is what the most recent 10Q filing says:

• The Company has operated at a loss since its inception in 2003 and has minimal revenues. The Company anticipates that its losses will continue for the foreseeable future. At March 31, 2016, the Company’s accumulated deficit was approximately $504.7 million. Given its current development plans, *the Company anticipates cash resources will be sufficient to fund operations into the fourth quarter of 2017. The Company’s ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing or to achieve profitable operations, as to which no assurances can be given. Cash requirements may vary materially from those now planned because of changes in the Company’s focus and direction of its research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments. *Additional financing will be required to continue operations after the Company exhausts its current cash resources and to continue its long-term plans for clinical trials and new product development. There can be no assurance that any such financing can be obtained by the Company, or if obtained, what the terms thereof may be, or that any amount that the Company is able to raise will be adequate to support the Company’s working capital requirements until it achieves profitable operations. (* emphasis is mine)

Next we'll look at the current cash situation

As of March 31, 2016 the same 10Q filing linked above lists cash and cash equivalents at $140,717,000 which is anticipated to be sufficient to fund operations to the end of next year.  From April 2016 to December 2017 equals a total of 19 months, which means the company is anticipating burning through about $7.3 million per month on average.  Of course the filings only say "into" the 4th quarter of 2017, which means it may not be enough to last right up until the end of the year.  The 4th quarter ends December 31st, but if they only have enough to last to the end of November 2017 then the burn rate would be $7.8 million per month on average.  

Using a middle figure of $7.5 million per month means that Ziopharm would be burning through about $90 million a year.  And given that they're only at the early stages it can be reasonably expected that their costs are going to escalate if they are able to progress into latter phase II and phase III trials.

The last capital raise via an underwriting agreement with JP Morgan Securities LLC provided Ziopharm with approximately $94.3 million dollars.  That was in February 2015 and involved the issuance of 11,500,000 shares at a price of $8.225 per pursuant to the underwriting agreement.  

Going forward it would appear that $90 million or so, that it would only provide enough capital to operate the company for about one year, and with costs escalating probably not even that long.  

If Ziopharm is looking to have enough capital to get them through another 2 years past the 4th quarter of 2017, then they're likely going to need close to $200 million in my view.

Bottom line

Sometime next year, barring a buyout, Ziopahrm is going to be running seriously low on capital to operate their business and to fund clinical trials.  Without a substantial revenue stream it is hard to envision them obtaining traditional financing through a lending institution.  A bond issue seems unrealistic for the same reason.  How can a company pay interest on a bank loan or on bonds when it doesn't have a steady, reliable source of revenue and an accumulated deficit of over half of a billion dollars?

The only possibility I see is more dilution.  How much will depend on the price shares are trading at when its done.  To raise $200 million, if they could get an underwriting agreement at $10 then that would mean 20,000,000 more shares.  Right now the PPS is trading around $6, at that price point its about 33.3 million more shares on top of the 131.8 million that were outstanding as of March 31st 2016.  

Thankfully, according to Ziopharm's filings, the company is authorized to issue up to 250,000,000 common shares and up to 30,000,000 preferred shares. So even if the PPS continues to erode they should still be able to issue enough shares to keep operating for a few more years before having to consider the possibility of a share consolidation in my opinion.

FULL DISCLOSURE
I sometimes like to have some skin in the game with the stocks I write about, and in the case of Ziopharm I do own some put contracts so my views are not without bias.

ZIOP - Institutional ownership drops, Univ of Texas opts to sell remaining shares

For the period up to March 31st institutional ownership for Ziopharm is reported at 56,804,195 shares or 43% of the 132,000,000 outstanding.  That's as per Nasdaq's site using the most recent 13F filings.

75 institutions reported selling 9,478,065 shares, and 78 reported buying 5,399,666 shares for a net decrease of 4,078,399.  31 institutions reported selling out completely a total of 4,959,092 shares while there were 23 new positions reported for 2,116,425 shares.  That's a net difference of 2,842,667 shares favoring those selling out.

http://www.nasdaq.com/symbol/ziop/institutional-holdings

The biggest seller was the University of Texas Investment Management Co, or UTIMCO for short. They chose to sell their remaining 2,503,575 shares, all that was left from the 11.7 million shares they received for "choosing" to partner with Ziopharm.

I know there are some who probably think UTIMCO had no choice but to sell, thanks to some false information posted to Seeking Alpha by a blogger with the User Name Options2Wealth.  In a SA instablog this writer said that UTIMCO was obligated to sell the shares because of a charter mandate.  

Allow me to set the record straight on that score.

This error of thinking that UTIMCO was mandated to dispose of their shares in ZIOP comes from this link:

https://www.utimco.org/extranet/WebData/INVESTMENT/DistributedStockPolicy.pdf

Therein it deals with securities distributed to certain endowment funds, the PUF and GEF funds, standing for Permanent University Fund and General Endowment Fund respectively.  Ziopharm however filed their own 8K dated May 5th 2015 explaining how and when the shares might be sold. The 8K states:

• Pursuant to an Investment Management Services Agreement with MD Anderson, the University of Texas Investment Management Co., or UTIMCO, an institutional investment advisor, holds the License Shares and the Incentive Shares on behalf of MD Anderson and *is authorized to exercise investment discretion and voting power with respect to such shares on behalf of MD Anderson. Accordingly, Dr. Cooper has no voting power, investment power or control over *if or when the License Shares or the Incentive Shares will be sold, if ever, or the timing of the receipt of the proceeds, if any, from the sale of such shares. (*all bolding is mine)

Discretion, for those unaware, means an option or choice.  In other words there was no mandate to sell the shares because they weren't distributed to the PUF or GEF funds.  UTIMCO excercised their discretionary power and "decided" to sell out of their holdings in Ziopharm.  

Why?  UTIMCO represents itself as having an "Equity Bias".  That means they prefer holding equities to other investment vehicles.  Why they decided they didn't want to continue holding their Ziopharm shares though, I don't know.

I would strongly recommend reading the entire filing for those who mistakenly thought UTIMCO had no choice but to sell.  And to those who told UTIMCO "had" to sell, if you want to apologise for your error when I posted about this previously, the comment field is open.

Perhaps Options2Wealth will post a correction on Seeking Alpha.  That would be the right thing to do in my opinion, unless of course he willingly misrepresented the facts in the hopes of pumping up the share price, in which case I won't hold my breath.

ABRW - A sure fire winner or just another OTC hype job

So, is ABRW a slam dunk guarantee to go up from current levels?

Of course not, only complete morons would suggest that any stock comports zero risk, especially an OTC penny stock.  Well maybe not just morons, there might be some sharpies out there who are hoping to get potential marks....uhm, I mean investors, to completely ignore any potential downside.

When it comes to investing there are tons of people out there who will throw money at a good story, without being aware of the potential risks involved.  A great example would be Fuse Science Energy drinks a few years back.  When Tiger Woods signed on with them many thought it was a sure winner. 

If you want to check how its doing now just look up it up, fittingly it trades with the symbol DROP because that's exactly what the share price did.  Once worth dollars it now trades for less than one single penny.  (QUOTE FOR FUSE SCIENCE)

Know the risks people.  I will share a video from the Simpsons, one where Homer jumps into stock ownership when he is blown away by a presentation done by a company called Animotion.

Is that you?  Thinking only of the possible rewards and completely ignoring the risks?

So what are the risks?  If you came across ABRW via social media or from an email blast you might think there are none, that an investment in Búcha Inc is a sure fire rocket trip to the moon.  

Let's take a look at the company's most recent filing.  It isn't audited, but with OTC companies that comes with the territory and is one of the reasons stocks trading on the pink sheets have a less than stellar reputation.  

Here's a link to the most recent 10Q, for the period ending March 31, 2016:

http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=11366874

In the filing you will find this:

• The Company had an accumulated deficit of $3,619,669 and $3,331,878 as of March 31, 2016 and December 31, 2015, respectively, had net losses of $287,791 and $72,022 for the three months ended March 31, 2016 (Successor), and for the three months ended March 31, 2015 (Predecessor), respectively, and had negative working capital of $98,811 as of March 31, 2016.  These matters, among others, raise *substantial doubt about the Company's ability to continue as a going concern. (*emphasis is mine).

Another pertinent fact in my opinion is share structure, specifically the number of authorised versus outstanding shares.

• Common stock, $0.001 par value, 50,000,000 shares authorized; 15,435,651 shares issued and outstanding

Shares represent capital, when a company has negative cash flow from operations they can use shares to finance things like employee compensation and bonuses, as well as acquisitions and other general purpose needs.

Alright, I can just hear promoters and touts pounding the table screaming: 

"THAT'S OLD INFORMATION"!!!

That it is, and as such I consider it to be priced in.  I often share the view that all publicly available data, news, filings and everything else, that's its already "baked in" to the share price.  Stocks trade on supply and demand, not on old information.  

So what's the news that caused ABRW to go from a 52 week low of 19 cents to a recent high of $1.96?  A gain of over 900% in a little over three months?. That news came out of May 23rd, announcing a merger with New Age Beverages/Xingtea Group and judging by the volumes a lot of buyers stormed in.

https://finance.yahoo.com/news/b-cha-inc-signs-merger-130000897.html

The press release refers to New Age Beverages as a highly profitable "$50 million" privately owned company.  Because its a private company I know of know way to determine on what basis this $50 million valuation is determined.  

Interestingly the total purchase price is listed as being $19,995,000 in the form of an initial $8.5 million in cash, an issuance of $6,995,000 in common stock and finally a deferred cash payment of $4.5 million.  

It would seem that this is quite a coup.  A $50 million company being acquired for just under $20 million.  Not a bad deal for the buyers.  But again, I can't find anything to justify the $50 million valuation cited in the PR.

Bottom line

I'm not convinced.  With all the hype and forward looking, safe harbor protected promise it is my opinion that those who've been buying recently, at or near the recent highs, that over the long term they're going to see their shares fall significantly in value.

Do note however that my opinion is based on the long term, and in the short term I fully expect there to be a lot of up and down volatility.  Given all the pumping in social media I am betting ABRW will have some big swings, both up and down.

I also expect those who are pumping, that they will be touting long term potential, trying to entice buyers on the way up on promises of riches.  And on the way down they'll blame short sellers and manipulation, exhorting those who get trapped at higher prices to average down.  "It was a great deal at $1+, its a steal under a buck".

And I'll bet dollars against donuts that I will come under attack, for this blog to be ridiculed and trashed.....It comes with the territory.  I'm not a broker dealer, nor am I qualified to give investment advice.  I'm just a retail schmo who's been around the public markets for over 20 years, a guy who used to work in the investment sector whose sharing his opinions and views about how the market game gets retail sheep to buy high while the smart money players sell high.

In my opinion this is a text book example of the Greater Fool idea being played out, and its a zero sum game.  Some will end up with shares when its all over and some will have cash.  Good luck

Full Disclosure

I have no position in ABRW long or short and absolutely zero intention of ever taking one out.  And given that his is an opinion piece it is possible that my opinion could prove to be wrong.

ABRW - A great example of stock promotion.....

Hello to all my loyal and dedicated readers, I appreciate both of you stopping by :-)

To everyone else who stumbled onto this site and are unable to locate the backspace key, or have a computer that is frozen and can't escape this pathetic and miserable little blog, well I will try and keep you entertained for a couple minutes at least.

The "rasison d'être" for this blog, (that's a fancy French expression meaning reason for being), is to help educate and enlighten poor retail schlubs like myself about the games that are played in the public markets.  Why are some players able to buy low and sell high?  Simple, that's because there are others doing the opposite, selling low and buying high.

Which group do you want to be a part of?  What's that?  You don't want to be in the group buying high?  Oh....that's too bad, because there is a mountain of effort that goes into trying to get you to do just that.  Would you like an example?

ABRW is the symbol for an OTC listed company, the company used to be American Brewing but is now called Búcha Inc.  Here's the chart:

Looks nice doesn't it?  Don't you wish  you'd heard about ABRW at the start of the year back when shares were trading for between 20 and 40 cents, instead of now when its jumped up near $2?  Yeah, I know...it sucks.  When OTC stocks are trading at or near their lows nobody is talking about them and volume is light.  Then they explode higher, news starts coming out and before you know it they've already doubled, tripled, quadrupled or more.

How did I find out about ABRW?  My (sic) friends at stockreversals.com have been promoting it all over Stocktwits, Twitter and probably in the email blasts they send out, (they stopped sending me mine, I don't know why).  I know this outfit pretty well, having tracked some of their other suggestions, MOBI, CLDN, WBAI, LEJU, SBOT, ZIOP....its a long list and not a pretty one for those who bought in before they all collapsed.

Of course maybe, just maybe this time they could be onto something.  Maybe ABRW will be the exception?  Nah, I don't think so either.  Here's what Stockreversals is saying on Twitter:

StockReversals.com‏@StockReversals

A micro cap with potentially massive upside $abrw small position 1.40 this week. Former top dog at Coke, Ambev and Cott now CEO

• RETWEETS4
• LIKES9
• 

9:04 AM - 3 Jun 2016

4 retweets9 likes

Sounds good doesn't it?  The former top dog from Coke?  Oh boy.....back up the truck and load up. But wait a minute, it always pays to verify claims by pumpers on sites like Twitter.  Let's see if its true:

Alrightee, here's a snippet from a March 29 2016 PR put out by ABRW.

"Mr. Willis was previously a President for Coca-Cola in Latin America...."

Top dog at Coke?  Well.....not really.  He wasn't "the" president, he was "a" president.  A president in Latin America.  Stockreversals wouldn't be the first outfit to stretch the truth, taking a guy who was a corporate president in someplace like Honduras maybe and trying to pass him off as "Top Dog".

But what else are they saying, do they have a target price?  You betcha....just like KTOV which they were predicting $10+ for before the bottom fell out. With ABRW the target is equally lofty for a stock trading at less than $2

StockReversals.com‏@StockReversals

Long at $1.40-$1.45, $ABRW could see 2.50 on breakout. Valuation says $6 to hit low end of industry Price to Sales ratio of 3, now $1.72

• RETWEET1
• LIKES3
• 

5:36 AM - 7 Jun 2016

Do you think these guys are buying?  Nope...neither do I, that's what they want their followers to do. Of course if one group is buying, then another one has to be selling.....And who do you think will end up on the wrong side of yet another Stockreversals recommended trade?  Yeppers, retailers....that's my opinion too.

Good luck

Why the stock market can be worse than a casino.....

I'm not the first to equate investing in the stock market with gambling, lots of people have compared the public markets to a casino.  And that's never more true than with speculative and money losing companies, no matter whether they're OTC penny stocks or those listed on more senior exchanges like the Nasdaq.

I'm not a big fan of casinos, in the past five years I think I've only been once, during a weekend trip to Niagara Falls Ontario.  In fact the only casinos that I've ever been to are in Ontario, twice to Niagara, once to Rama, and perhaps about ten times to an Indian run casino up near Port Perry.  And that's over the past 20+ years.  

If you don't include the stock market I'm not much of a gambler.  Besides the odd visit to a casino I might play a game of Hold 'Em with friends once or twice a year. 

So why do I think the stock market can be worse than a casino?  The reason is simple, I think its easier to walk out of a casino.

When you sit down at a blackjack table and start betting sometimes you'll hit a a streak. Depending on the stakes you might go up a few hundred dollars in a short period of time.  Then you can choose to walk away, cash in and go home.  But once you leave the table you'll never know whether you would've have made even more money by staying, or if  you picked the perfect time to hit the cashier.  

While you're sitting at the table you can bemoan or congratulate yourself for not taking another card based on what the player to your right draws.  But once you leave its over, you'll never know whether you left at the right time.

The stock market is different.  Maybe you're watching a stock, my favorite hypothetical ticker symbol ABC, and its trading for $5.  You don't buy but you are watching.  Then big news comes out and it climbs 40% in one day, going to $7.  DAMN, I COULD'VE TURNED $10,000 INTO $14,000!!!

Maybe the reason you didn't buy ABC was because your money is tied up in another company, XYZ where you have 1,000 shares and its trading at $10.  You keep watching ABC and after its big 40% climb it pulls back and settles once again at $5.  Your 1,000 shares of XYZ aren't doing anything, still worth $10 each....so you dump them and use the money to buy 2,000 shares of ABC.  

So what happens?  Unlike a blackjack table where you'll never know what cards you would have been dealt after you leave the table, with stocks they keep trading and you can keep watching. Maybe XYZ, the stock you just sold for $10 gets big news of its own and climbs to $15, while the share price of ABC, instead of rebounding off the $5 price you bought in at, it loses support and falls even further to $4.  

Dontcha just love the market?

If you've ever played hold 'em then you probably have seen someone fold their hand and then ask to see what the flop would've been.  Then they want to see the turn card and the river.  Its happened to me. Say you're dealt a pair of jacks, after going ten or more hands of seeing twos and nines.  "Finally" you think, "a hand I can play".  Then the big stack tries to force you all in and you have a decision to make.  Do you risk your entire stack knowing full well you could be going up against AA?  If its a game with friends in your basement you might fold and then ask the dealer to draw out the flop, turn and river cards to see if you made the right choice.

That's sort of what the stock market is like, only worse....because the table never closes.  ABC and XYZ will probably be trading for years and you'll be able to look back whenever you want, to either congratulate or kick yourself.

And there's another reason I consider the stock market to be worse, social media. 

One of the things I don't like about casinos is that I often find the people in them to be anti social.  I'm a friendly guy, a talker....but at a casino table I find an awful lot of people who are deadly serious.  I assume that to be because they're probably gambling because they're in financial trouble and hoping lady luck provides them with a quick fix.  Its depressing.  When I see someone who's in a good mood and relaxed, that's someone I figure who is there for the right reasons, for fun.  I also find they're the types who tend to be lucky.  

My last trip to Niagara I walked out after about an hour with about $150 more than I walked in with....I think its part of that whole "law of attraction" thing. But I digress.

Where was I?  Oh yeah....why social media makes the stock market worse than a casino.  

Imagine going to a casino and being badgered to play at one table or another, or sitting down at a slot and having someone come up and start telling you the machine you're playing, that its a piece of junk that will never pay out.  That's what stock social media sites are like with all the pumping and bashing.

Some people say that comments posted to a message board or to sites like Stock Twits or Seeking Alpha don't matter.  I have a two word reply to that view, and the first word is Bull.  

Yahoo Message Boards, StockTwits, InvestorVillage, Investorshub, Stockhouse, RagingBull, SeekingAlpha, MotleyFool, InvestorsHangOut, 

That's just the tip of the ice berg, there are countless forums and social media sites where investors can go to read and express views on just about any stock trading anywhere in the world.  Why?  If message boards and such have zero impact why are there so many of them?  Because, in my not so humble opinion, they do.

Ultimately stocks trade on supply and demand.  Cards on the other hand, its luck of the draw.  

Every investment social media site is almost like a casino on the Vegas strip.  Each one vying for customers, and when you go in you'll be told what tables to play and which games to avoid.  In my opinion, if you're smart.....you won't listen.

Resverlogix - A Phase III clinical trial targeting Diabetes and Coronary Artery Disease

Full disclosure right up front, I have been invested in Resverlogix since early in 2014 and hold, what I consider to be, a fairly substantial position.  It trades in Canada on the big board TSX under the symbol RVX, while in the US it trades OTC Foreign with the symbol RVXCF.

This company came onto my radar when I was looking for companies engaged in research for the treatment of diabetes, a disease my late great father suffered from.  It represents a highly speculative investment for me and I would not recommend it to anyone.  In fact I've been hesitant to write about it on this blog because of the risks.  

So why did I finally decide to write about it here?

The answer is simple.  Ego.  Nothing more nothing less.  

While I fully acknowledge the risks, with risks come the possibility of rewards.   And if Resverlogix succeeds with their Phase III trial of lead compound RVX 208 known as Apabetalone, then I believe the rewards will be beyond spectacular. If it fails?  Then I expect the share price to absolutely crater.  

The reason I say ego is because if Resverlogix succeeds with their trial I don't want to appear like a 'Johnny come  Lately' touting what a great investment I made.  And if it fails, then I own that too.  Its my money at risk here.

Quite frankly, when it comes to speculative investments, I think there a lot of people who have what I'll call the "Homer Simpson Approach", thinking only of the rewards while totally ignoring the risks involved.

I'm a huge fan of 'The Simpsons' and here's a clip that illustrates the mentality of many retail investors risking money on highly speculative stocks in my opinion.

Okay, so what's this phase III trial all about?  

The trial is called BETonMACE.  BET refers to the fact that RVX 208 is a Bromodomain and Extra Terminal domain inhibitor.  And MACE stands for Major Adverse Cardiac Event.  So in a nutshell the purpose of the trial is to see if RVX 208 (or Apabetalone) can mitigate the occurrences of Major Adverse Cardiac Events in patients suffering from a type of Diabetes called Diabetes Mellitus along with Coronary Artery Disease (CAD).  MACE includes things like heart attack, stroke and obviously death.  

There is a lot of heavy science involved here, and as I have disclosed on this blog before, I have neither a medical nor a scientific background.  Yes I did take science courses in both High School and University, but this science is far too advanced for me to provide commentary beyond a general overview.  

Resverlogix is involved in a relatively new field called Epigenetics. Most people understand what Genetics is, DNA and all that.  Epi is Latin and means above.  What Epigenetics is about is something referred to as writers and erasers, basically above the genetic level, turning things off and on.  

The BETonMACE trial is double blind, randomised, parallel group and placebo controlled. What the company is trying to prove is that with RVX 208 the time to a Major Adverse Cardiac Event (MACE) will be longer and its what is called an Event Based trial.  What that means is that in the different arms they will be measuring the length of time to a MAC event.  Ideally those taking RVX 208 will be free of a MAC event longer than those in the other arms of the study, or maybe not suffer one at all. 

For those with the background and/or patience to understand and research the trial here is a link to the information on clinicaltrials.gov:

https://clinicaltrials.gov/ct2/show/NCT02586155

Rather than trying to explain my understanding of things I will direct you to a couple of resources. Those sufficiently intrigued and wishing to conduct further research can start with these links, but there are many other resources available beyond what I will provide.

The first is a corporate presentation which includes other fundamental data beyond the science like financing and information about share structure:

http://www.resverlogix.com/upload/media_element/229/01/rvx-bio-2016-presentation---final.pdf

The second is from an analyst engaged by the company to provide coverage:

http://www.stonegateinc.com/reports/RVX_March_2016.pdf

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Now onto more familiar terrain.  I am guessing there might just be one or two readers who are surprised to find that I am invested in a Biotech company given some previous posts I have done about Ziopharm.  

I have nothing against Ziopharm as a company and I sincerely hope they are able to develop a treatment or cure for the various forms of cancer they're targeting.  What I don't like is pump and promotion.  

Contrasting Ziopharm with Resverlogix I am willing to bet proverbial dollars against donuts that many Biotech players have never even heard of Resverlogix.  And likewise I would wager that most have come across something somewhere about Ziopharm, either on a message board, a CNBC mention, or even an email blast from an anonymous promotional outfit.

Go onto sites like Twitter, StockTwits, Yahoo Message Boards, InvestorVillage or any other multitude of stock social media sites and you're not going to see messages hyping RVX - RVXCF, You won't see posters telling people: "You gotta get in now, this is gonna explode soon"!!!  Why not?  I'll leave readers to answer that question for themselves, but I will suggest the fact that the company is well capitalised precludes the need for this type of activity.

Do note, Resverlogix has engaged in some IR type activity, hiring the aforementioned  StoneGate for example, to provide analyst type coverage.  With development stage companies it comes with the territory.  For small small and microcap companies to garner exposure its very common. For me its a matter of degree, and I use volume to gauge whether or not I think a company has gone too far.

Resverlogix has not grabbed the attention of the investment world, not judging by the volumes trading on a daily basis.  Over the past 3 months there have been many days with less than 10,000 shares trading hands, and only one day over that time frame with more than 100,000 in volume.  That was March 17th when just over 102,000 shares were bought and sold.  The trading is incredibly thin.

Look at some Biotechs that have shot up and seen massive gains.  Note the volumes before the PPS went up by hundreds of percentage points.  Those who bought in when things were quiet and the trading was light did very well.  Of course there's always the risk that things will remain quiet, that's the price of admission.

This is a risky investment, and given the volumes its not going to attract the attention of day traders looking for a quick flip.  Once again this isn't a recommendation to anyone....those risking money here, I hope they make huge profits, but I hope those risking $$$ here can also afford to lose it.

I'll leave it there, I do think the chart looks bullish right now but with the volumes being so low I view the chart as being less reliable.

I will add in one point on short interest, its almost entirely non-existent.  While many high flying biotechs have awoken the bears of the market, Resverlogix by contrast has just 1,500 shares shorted as of the most recent update to May 31st 2016.  That's not even 1/100th of a single percentage point of the roughly 105 million outstanding shares.  Short interest on RVX has never been high, you would have to go back almost two full years to find a time when it rose to even 1 full percentage point, back in July of 2013.

Cheers.

Ellis Martin Report pulls Nemaska interview from their You Tube channel...

An interesting comment was put up on my Seeking Alpha instablog on a post about Nemaska Lithium.  The post had the subject line:  Why I got off the Nemaska Train Yesterday.  It was published on April 21st, before the birth of Avoid The Bag.  

In that post I included a link to an interview that Nemaska Lithium had done with The Ellis Martin Report, noting the extensive reach of this promotional firm with a radio network broadcasting into a lot of major US markets, places like NYC, Seattle, Houston, DC and more.

The comment came from someone with the user ID EllisMartinReport, representing himself as Ellis Martin.  In point of fact I believe it to be genuine.  I am as yet unable to verify the identity, but that ID has been on Seeking Alpha since 2010.  In the comment (which I will include) EllisMartinReport said the interview with Nemaska had been removed from their You Tube channel, and in fact it has been.

Here is the old URL:  https://www.youtube.com/watch?v=hKwgoxi8x0E&feature=youtu.be

There are also some other interesting comments which I will now share, to read it on Seeking Alpha just go to my original Seeking Alpha instablog post linked above:

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Hi Joe! 

After pulling my youtube piece on Nemaska from youtube this morning, I googled to see how the company may have been using me and/or my piece further. That's when I found your blog. 

It is absolutely true as you say in that most companies pay me for the exposure of their soft interview to my audience. I disclose that fully on my website and my radio program. I was asked by a friend as a personal favor to do a friendly interview on the company and another lithium company (PE) when they visited in Los Angeles. I reluctantly agreed, knowing the the lithium space might be over-hyped and these companies probably wouldn't pay for the advertising and audience that I offer. 

Note: How many people do you know that personally own an electric car? Secondly, do we not have an oil glut? I could go on and on. Does Nemaska have the best real estate in Quebec province for lithium? Probably yes. Is the lithium space a potential bubble? Probably. 

Was I paid by Nemaska for the interview? Much to my chagrin, absolutely not. Did they promise to do so? No. Was everything in the interview stated true? Most likely. I have received a comment or two from investors in NMX thanking me for my report even though they believed it was paid for...thanking me nevertheless. 

But I must state categorically in this and perhaps other blogs where I find information like this posted about my segment with NMX, that I do not recommend, nor do I support investment in this company or the lithium space, nor have I ever been paid to do so. As I've said to many who have asked and many who haven't, I am not a financial adviser or expert. I am a paid broadcast journalist and interviewer. 

I regret conducting the interview or airing the piece on my network, which was limited to VoiceAmerica.com and not the terrestrial radio stations you listed which are certainly part of my overall network. The VoiceAmerica Business Channel and YouTube alone are more than adequate in conveying a message however. 

Furthermore and finally...does anyone remember the rare earth space? Enough said. Thank you for allowing me the opportunity to publish this. Joe, you're a sharp guy. 

Yours, 

Ellis Martin. The Ellis Martin Report.

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There seems to be a lot of subtext here for those adept at reading between the lines.  Of course that`s assuming the message is genuine, and I believe it is.  What I find of particular interest is the parts in bold, that emphasis is my own not Mr. Martin's.  

It appears the interview was done as a favor, however from the tone of the comment I detect that Mr. Martin was likely expecting some kind of remuneration,  But it seems nothing was contractually agreed to and now he's more than a little put off in my opinion.

Does Mr. Martin have cause to be ticked?  If things played out here the way he suggests, then yes I do.  This interview took place on March 3rd of 2016 and was put up on The Ellis Martin Report's You Tube channel one day later on March 4th.  Did the interview have any impact on the trading of Nemaska`s shares?  I will let you be the judge, just look at what happened after that March 3rd date, both volume and the PPS exploded.

Was this the result of the interview?  That's impossible to say conclusively, but I do think it had some impact.  Of course Nemaska has been getting a lot of exposure lately.  The Midas Letter, Investor Intel, InvestingNews, the Las Vegas Lithium investor show, DecisionPlus...and likely a few more.  

I will keep watching Nemaska even though I no longer have any position, long or short.  I will be watching to see how things play out as they move closer to actual production sometime in 2018 barring any delays.