Vuzix - Does fundamental performance even matter? (VUZI)

Over on stocktwits where I post with the username "growacet" I made a comment about $VUZI and was asked by another participant:  "Where's the pump"??

I should probably thank "wallstpirate" because he provided me with some fodder for something to write about.  I've been posting less than usual here at ATB after all, and inspiration is always welcomed.

So...where's the pump with Vuzix?  Where do I begin?

Let's start with smallcapnation.com which discloses an expectation of $15,000 from a third party for increasing awareness of VUZI.  Here's the link disclaiming the compensation:

http://www.smallcapnation.com/vuzix-corporation-vuzi-disclaimer/

Then there's Tailwindsresearch.com which has published 20 bullish articles distributed both on their site and at SeekingAlpha.com  If you're looking for several hours of bullish sounding material on Vuzix, fill your boots:  http://tailwindsresearch.com/vuzix/

Their disclaiming statement says they "may have been compensated" with the usual boiler plate language about their write ups being for informational purposes only etc.  You can read it all here:

http://tailwindsresearch.com/disclaimer/

I could go on and on of course, ceolive.com, integraconsulting.com and more but I think readers get the point.  Bearish short side website thestreetsweeper.org asserts that at least 21 professional campaigns have been used to promote Vuzix.

http://www.thestreetsweeper.org/undersurveillance/Vuzix_Corp___VUZI___Let_The_Caterwauling_Begin

All the promotion, pump and hype is fine of course, but the important question is....What does it all mean?  What it means is that Vuzix is showing up on a lot of radar screens, investors who might otherwise have never heard about this company have been introduced to it.

Nowhere on any of these sites however do I see the writers advising potential investors to read over the company's SEC filings, except perhaps buried in the disclaiming statements, typically using a nice small font.  

But then, do the fundamentals even matter when a company is relying on pump and promotion to attract investors?  Promoters always talk about the future, that's what investing is ultimately all about of course.  I have little doubt that the AR space is going to be big, just like there was little doubt that web based commerce was going to be big back in 2000.  

There were some heavily pumped and promoted stocks back then too, Pets.Com springs to mind and others like Digiscents might ring a few bells for those who are older.  For every amazon and netflix that made it big there were hundreds that simply rode the wave of excitement, their stocks were hyped up and the printing press churned out shares as buyers couldn't get enough tech.

Is Vuzix using a printing press?  Are they constantly printing more and more shares?  Judge for yourself.  Back in February of 2013 the company did a 1 for 75 share consolidation.  Simply put, shareholders got one share for every 75 they owned.  Someone who owned 75,000 before the reverse took place had 1,000 afterwards.

You can read about it here:  http://ir.vuzix.com/press-releases/detail/584/vuzix-announces-reverse-stock-split

Of course that was over 4 years ago now.  What has happened since?  If you check the 10Q filing for the period ending March 31st 2013 you'll see that the number of shares outstanding was 3,536,856 as of May 15 2013.  If you don't want to be bothered looking up the filing yourself here's the link so you can verify the numbers: 

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=9299013&RcvdDate=5/15/2013&CoName=VUZIX%20CORP&FormType=10-Q&View=html

Fast forward to the most recently available filing, the 10Q for the period ending March 31st 2017 and you'll see that the number of outstanding shares has ballooned to almost 20.5 million, 20,408,926 to be precise as of May 10th 2017.

Here's the link to that filing:   

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12056450&RcvdDate=5/10/2017&CoName=VUZIX%20CORP&FormType=10-Q&View=html

That's an increase of 16,872,070 shares in four years.  That would have been over 1.2 billion more shares if not for the 1:75 reverse split and represents and increase of  477%.  If Vuzix keeps it up, at this rate they'll be pushing 100 million shares within the next 4 years.  100 million is a bit problematic, because according to their filings that's the amount they're authorized to issue.  But if they ring the bell again they could always do another big reverse split I assume.

But in the near to medium term it might not matter.  There are lots of companies that get pumped and promoted.  CYNK communications is one of my favorites, it went from a nickel to over $20 despite $0 revenues and having only one employee.  CYNK billed themselves as a social media company, in spite of not even having a website.  It didn't matter though, and it proves that no matter how bad a company is, if the promotion is good...there are always fools around willing to pay an inflated price.

That's it for now.....I might get a few comments, so I'll remind haters that profanity is verboten here. And I'll also disclose the fact that I have no position in VUZI long or short, so no skin in the game whatsoever.  If I do take out a position however I can state with near 100% certainty that it will be on the short side.

The next quarterly filing should be out soon, and we'll know how much more money was lost and how much higher the accumulated deficit has climbed.  And of course how many more shares were printed.  

Peace out.

Contrarian lessons from comedian Ron White (PPHM)

Applied learning happens when a person takes knowledge acquired from one area and adapts it to a different situation.  I'm going to stretch that concept to the limit by suggesting that those who aspire to being true contrarians, that they could learn something from a routine done by comedian Ron White of the Redneck Comedy Tour.

To be a contrarian means to swim against the current, to be bold  and buying when others are scared, and to run for the exits when everyone is rushing in to buy.

Easy to say, not so easy to do though.  The herd doesn't panic without a reason.  When investors start storming out of a stock there's typically some news that spooks them and starts the stampede. With PPHM that news was the release of their fourth quarter and fiscal year end results up to April 30th 2017.

The company reported higher than expected losses and the stock tumbled in after hours trading.

https://finance.yahoo.com/news/peregrine-pharmaceuticals-reports-financial-results-201402620.html

So what does this have to do with a routine by redneck comedian Ron White?  Check out this video of an old bit he did and  then I'll explain.

That's an abbreviated version, but it makes the point.  Ron is describing a flight where there's engine trouble, forcing his plane to return ten minutes after taking off.  In the full version he describes the aircraft as being as big as a pack of gum, with a velocity that's twice the speed of smell....so slow that they get passed by a kite.

That's not a bad metaphor for a highly speculative stock like PPHM and thousands of others.  If you're going to hop on board a plane like this, you best not be a nervous flyer.  Mr. White though, he has the perfect attitude for someone flying on a small plane or for someone investing in speculative stocks.  

When an announcement is made that the plane has lost oil pressure in one of the engines, while everyone else is nervous....Ron, who's been drinking since lunch, doesn't care.  "Take her down", is his remark..."And hit something hard, I don't wanna limp away from this piece of crap"!!!  

I would argue that's a wise approach with development stage companies that have not yet attained, and may never attain, profitable operations.  Obviously there's going to turbulence, "engine problems" and plenty of bumps and jolts.  If you're going to be "losing your mind" like the young passenger next to Ron White in this little scenario....then maybe its best not to get on the plane in the first place.  

You see it in social media all the time when bad news hits....posters come out of the woodwork moaning and bitching.  No doubt many are disgruntled shareholders upset that their speculative little stock hasn't graduated to inclusion on the S&P 500 index.  

But I sometimes suspect that there are others who are actually buying, and merely looking to influence others into giving up their seats. Buying because they're confident that the plane will right itself and not crash.  It could be hedge fund type players planning on promoting the stock later in my opinion, perhaps knowing that while the past isn't pretty, that there's some positive news coming down the pipe that could get investors excited and buying again.

On the other hand, if social media is full of pump and promotion despite crappy performance...."Don't worry about those results, just wait til next quarter, or next year".  When I see an abundance of that type of activity....as Scooby might say "Rut Roh".  

Not a strategy for the faint of heart though....if you're playing with money you can't afford to lose, to extend the metaphor...plane crashes do happen.

PPHM has had its share of turbulence certainly, in early 2016 they halted a phase III trial which sent the PPS crashing from a split adjusted price around $7 to less than $3....those who gave up their seats to buyers lost out on the climb back above $5 though.  

Now financial results up to April 30th have seen the PPS fall back below $5 to somewhere around $4.50 in after hours trading.  So what does the future hold?  Is it time to panic and get that parachute out?  Or is it better to sit back and enjoy that scotch?  Those results are almost 3 months old of course, the calendar I use says its the middle of July and not April.  

Perhaps you've heard that old saw about the CEO asking his CFO..."How do the numbers look"?  The CFO then says..."How do you want them to look"?  

Anyway me and my friend Johnny Walker know what we'll be doing....take her down, go ahead....cause we don't care, we're just gonna sit back and enjoy the ride.  All you nervous types read the disclaimer at the very bottom of this blog site, actually everyone should read it whether they're nervous or not.  

Peace out.