MYDX and NBEV - Admitting bad calls....

I haven't been shy about patting myself on the back here when I've written a bullish opinion on a stock that then goes on to make substantial gains.  I've had a number of successes.

The Bullish Calls

I first wrote about LAC.TO at $0.75 CDN and it is now trading for $1.06....I long ago took profits on that stock at lower prices than where its trading now, and when that happens I simply cry into the money I made.

http://www.avoidthebag.com/2016/04/lithium-americas-cup-and-handle-forming.html

EGT.V is one I wrote about at 14 Canadian pennies.  I bailed on it after doubling my money but its still trading up around 25 cents.

http://www.avoidthebag.com/2016/05/the-lure-of-clean-energy-eguana.html

HMPR, which is now trading as XBKS after a merger is one I'm particularly happy about, and while I have taken profits by selling some shares its one I continue to like and have maintained a position in.
It was trading at a split adjusted price of $18.10 when I first wrote about it here, now its at $26.50 after pulling back from as high as $30.

http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html

RVX.TO is a stock I first wrote about here when it was trading around $1.30 CDN, its currently at $1.75 after getting up around $2.50 in October and is one I still continue to both like and hold, however fully ackowledging that it is extremely high risk in my view.

http://www.avoidthebag.com/2016/06/resverlogix-phase-iii-clinical-trial.html

ACU.V written about at .16 cents now at .185 is one I doubled down on when it fell to 10 cents.  I took some profits when I climbed up over 20 cents, but I still am maintaining a position and still think there's much more upside potential.

http://www.avoidthebag.com/2016/07/the-lure-of-green-energy-aurora-solar.html

In October I expressed a bullish opinion on RMHB when it was trading around .036 cents American. Now it has climbed to .092....it is another one where I'll have to cry into the money I made, bailing on it after a 50% profit.

http://www.avoidthebag.com/2016/10/hemp-infused-beverages-intriguing-idea.html

KUB.V has been a monster, I wrote about it in October as well when it was 2 cents...and now its settled in around 6 cents after trading as high as 7.5 pennies CDN.  Its one I continue to hold, in fact I just added to the position I started at 2.5 cents by buying more at 6 cents.

http://www.avoidthebag.com/2016/10/an-intriguing-penny-play-kubv-ukranian.html

Not too bad at all, and I'm leaving out more recent gainers like Emblem Corp.

Of course not all my calls were long plays.  I did express bearish views at times when I thought some stocks were bubbling up on nothing more than Promotion, News and Hype.

The Bearish Calls
I wrote a few bearish opinions on ZIOP starting last May when that stock was trading in and around $7 to $8 per share, now its sitting around $5.50

http://www.avoidthebag.com/2016/05/ziopharm-wall-street-sting.html

I did a couple posts on KTOV also in May when that stock was trading up around $6.60 per, now its fallen all the way to around $3.

http://www.avoidthebag.com/2016/05/ktov-what-just-happened.html

And then there's VUZI when it was up at $8.81 on its way to almost $10.  Now its fallen all the way back to $6.40

http://www.avoidthebag.com/2016/09/vuzix-time-machine-back-to-tech-bubble.html

And finally my very recent bearish thoughts on NF.CN from November when it was up around 25 Canadian pennies and on its way to being promoted to over 30 cents.  Its now trading for 11 or 12 cents and in my opinion on its way back to .02 cents eventually.

http://www.avoidthebag.com/2016/11/message-board-fun-and-games-with.html

But enough of the successful calls, I didn't get them all right last year and I am sure I will get some wrong in the future.  Two opinions I expressed were particularily bad, one long idea and one short.

MYDX is a company I wrote about this past November and one I took a position out in.  When I wrote about the PPS was trading for 2.2 cents, and I bought into at .0144 as revealed in the comments. Its most recent closing price was .0021 for a drop of over 80%.  Ouch!!!  Thankfully it was a small position, and I followed my own advice in that post and only risked money I could afford to lose.

http://www.avoidthebag.com/2016/11/mydx-another-way-to-play-marijuana-space.html

I will continue to hold MYDX (the symbol and company name are one and the same).  The company is forecasting profitability in the near future, I'm not going to hold my breath however.  A good recipe for going broke in my opinion is to believe the forward looking bullish outlooks on penny stocks. I've already booked some solid capital gains in 2017 and losses can come in handy at tax time, even if the dollar amount is small.

The bearish short opinion was expressed on NBEV, back when it was trading under the symbol ABRW.  I wrote about that stock in June of last year when it was trading up around $1.75 cents after already made a huge jump from as low as .20 cents in February and March.  Today its trading up around $4.20 and has been as high as $5.50

http://www.avoidthebag.com/2016/06/abrw-great-example-of-stock-promotion.html

My opinion on NBEV hasn't changed for the long term, but I have to admit I was wrong.  The ultimate arbiter in the market is price, and I thought NBEV had been pumped up near its limits in June, so I was incredibly wrong on that one as well.

When I get it right I'm not shy about sharing my success, but that means I have to take ownership of those views and opinions I get wrong too.  Some social media posters talk with extreme confidence when pumping and bashing stocks because they know sheep will follow strength, and admitting to past failures or the possibility that a call could be wrong, well that doesn't inspire confidence, and pumpers and bashers in my opinion (one that is often not humble) is that most are industry hacks.

Professional market players infest social media sites where stocks are discussed, that's opinion but for me its not up for debate.  The way I see things they are manipulators and bullies, trying to dominate the herd so as to shepherd the sheep into the stocks they're dumping, or out of the ones they want to accumulate.

I'll end this post here and wish everyone luck.  I will also once again cite those two maxims that I think are of critical importance to retail investors.  Firstly that nobody has ever gone broke from taking profits, and secondly that if you sell a stock and then see it continue climbing even higher, before buying back in cry into the money you made and think again about that first maxim.

Cheers.

Xenith Bankshares - (XBKS) Consolidating from a position of strength

I first wrote about a company that is now called Xenith Bankshares back on May 11th 2016 before it merged with and into Hampton Bankshares (HMPR).  

http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html

Post merger holders of HMPR were not affected, the number of shares they owned after the merger were the same as before.  Holders of Xenith were given (if memory serves) 4.4 shares for each one share they held of the old XBKS.  Post merger the name for the combined company was changed to Xenith Bankshares and it resumed trading under Xenith's ticker symbol XBKS.

Clear as mud?

Back in May the shares were trading around $1.80, and today they're worth $2.50 as of the close on December 7th 2016.  That's almost a 40% gain in just over 6 months, so not too shabby.  Of course that pales in comparison to many hyped up, speculative companies. But then it also hasn't been the roller coaster ride you often see with those riskier plays..

Not a bad looking chart, covering the period from when I first wrote about it on this blog to the present, but enough patting myself on the back.  

Shareholders recently approved a share consolidation which will take effect on Tuesday December 13th with every 10 shares being converted into 1 post consolidation:

http://finance.yahoo.com/news/xenith-bankshares-inc-announces-reverse-211604435.html

There can be different reasons for a company to enact a share consolidation, some good and some bad.  Often when its a company listed on a more senior exchange like the NYSE or Nasdaq a reverse split is employed to bring a company's stock back in compliance with the rules of the exchange.  

You see it all the time with stocks trading for less than a dollar over a protracted period of time. Exchanges like the Nasdaq have a minimum bid price requirement of $1.00 so a stock trading for less than that will often consolidate to lift their share price.  However at $2.50 that obviously isn't the issue for Xenith Bankshares.

Other times a penny stock will do a reverse so that the stock can be uplisted off the OTC markets and onto a more senior exchange like the Nasdaq.  A couple of stocks I've written about here have gone that route, SBOT and VUZI specifically with consolidations of 10 and 75 to 1 respectively.

Obviously though neither of those two rationales apply to Xenith.  They don't need to maintain compliance and they're not seeking to move off the Over The Counter market.  So one might reasonably ask: "Why bother"?

I can think of a few reasons.  At $2.50 (or thereabouts) per share XBKS qualifies as a penny stock in many eyes, there are investors who view any stock trading under $5 to be a penny play.  With positive earnings of $0.77 for the trailing twelve months according to WSJ.COM and a piddly little PE ratio of just 3.23 as per the same site, it doesn't look like the markets are showing XBKS much love or respect. 

With a 1 for 10 consolidation the PPS will be up around $25 per share assuming the PPS maintains its current level.  I believe that they will then have the chance to attract more serious investors, those who shy away from stocks they view as Penny Plays.

I can also envision XBKS attracting more institutional interest, although with current institutional ownership at over 56% they're already doing well in that regard.  Short interest will not be affected directly, current up to November 15th 2016 the number of shares shorted was 1.94 million, not even 2% of the float.  Those shorted shares will also consolidate post consolidation, bringing the number down to about 194,000.  

As I've written before on my other posts about Xenith/Hampton I believe the biggest potential catalyst comes with a return to paying dividends.  If they can start paying shareholders in regular distributions I can see their PE ratio climbing to something more in line with the standard in the banking sector, somewhere around 20.  

One last thing to take into consideration is the fact that this consolidation will result in "odd lot" holdings for any shareholders who own shares in increments of 100.  For every 1,000 shares held before the reverse, they will become 100 shares post consolidation.  However 100 shares will become 10.  This could be important depending on an individual investor's time horizon and level of investment experience in my opinion.

Someone holding 500 shares pre-consolidation will have 50 after the split, and 50 is what is called an "odd lot".  If someone goes to sell an odd lot (anything not in 100 share blocks) their order goes to the back of the line so to speak.  

Its something to consider for those who will end up with shares numbering in the tens instead of hundreds, or thousands.

That's it, I'm a shareholder so view my commentary in that light and verify all the information provided.  While I would not willingly post false information I am human and am more than capable of making an error.  Comments are always welcome and good luck.  

HMPR - Golden Cross

I'm not one to draw my hand into a fist and start pounding the table about any stock, its not my style. But if I was forced to pick one stock to pump, then HMPR would be the one I would choose.

Are there other stocks out there that will make bigger gains in the near term?  Oh yeah, much bigger...but most (and possibly all) will be in money losing companies playing the Promotion & Hype game to lure investors in on rosy projections about the future.  

If you've been watching the markets for any length of time you've seen it happen, and maybe you've been caught in one or more yourself. They soar, investors load up as they climb, convinced they're gonna be rich....then BAM, the bag closes and the PPS collapses.  Sometimes it takes a few months, sometimes a few weeks, and still other times its just a matter of days.  

HMPR doesn't qualify as that type of investment for me, because they aren't paying cheeseball promoters to interview the CEO, nor are they being hyped by email blasting chop shops and twitter morons trying to pass themselves off as stock experts.

Hampton Roads Bankshares is, (as the name implies) a bank, and it is profitable.  

If you like a company that puts out a news release for any and every little event....then move along, you won't like HMPR.  That's not to say there isn't news, just not the usual fluff you see so often with speculative money losing companies.  Hampton Roads Bankshares has a proposed merger with Xenith Bankshares that is expected to receive shareholder approval on July 29th. 

http://finance.yahoo.com/news/hampton-roads-bankshares-inc-xenith-212500712.html 

Perhaps in anticipation of that news the stock has gone on a bit of a run.  I've written about Hampton before, back on May 11th when the PPS was $1.81:

http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html  

It closed Wednesday July 27th 2016 at $1.98 and now the chart shows the 50 day moving average poised to cross over the 200.  Followers of Technical Analysis (or TA for short) refer to this as a "Golden Cross", when a faster moving average crosses over a slower one.  And for devotees of TA the "goldenest" of golden crosses is the 50 over 200.

Full disclosure to my devoted blog dogs, (yes all three of you) I am a shareholder so my opinions are not without bias.  And while I believe HMPR is a solid "buy and hold" long term investment....I could be wrong.  Do your own DD and don't hesitate to consult with a licensed professional.  

HMPR hardly gets any chatter on places like twitter and stocktwits, this is not some speculative money losing company being hyped and promoted like its the greatest investment vehicle of all time and a sure fire winner.  If you want a stock like that sign up with some email blasting chop shop.  

Spotting the pumps easier than going long

This blog is not even three months old, and already I have managed to identify some stocks that, in my opinion, were inflated and due to come down.  Taking the PPS from my first write up on the following companies, here is how my bearish calls have performed as of this past Friday's close.

• May 8th  RYU.V   Down -18.9%
• May 5th  ZIOP     Down -27.2%
• May 17th KTOV   Down -54.9%
• June 12th ABRW  Up    +04.0%

My scorecard on bearish calls isn't perfect, but if ABRW does what I expect in the coming weeks and months, then I'll have to give myself an A+.  

As much as I'd like to pat myself on the back for my genius skills at sniffing out inflated stocks, it really wasn't that hard.  The way I see it this was all "low hanging fruit" so to speak.  Three out of those four companies, ZIOP, KTOV and ABRW were all hyped and promoted by an email blasting promotional outfit called StockReversals.  

I followed StockReversals long before I started this blog, and I've seen them pump a number of stocks that have all tanked.  In no particular order I've witnessed them pounding the proverbial table to drum up buyers for SBOT, MOBI, CLDN, LEJU and WBAI over the past 3+ years, touting long term value potential.  

If you want to check the charts on those stocks be my guest.  Those buying in expecting price appreciation over the long haul got creamed.  

RYU.V on the other hand was a stock I saw getting spammed all over a site popular for Canadian listed stocks, stockhouse.ca.  They'd just announced that Gwenyth Paltrow was going to promote their clothing line. I've seen so many celebrity endorsements for penny stock companies over the years, and have yet to see one deliver long term value to shareholders.

So why is identifying inflated stocks so much easier than finding companies with low share prices poised to make gains?

That's pretty easy to explain in my opinion.  Inflated stocks that are poised to drop big, they are SCREAMING for attention.  Why?  Simple....the smart money holders who want to sell need dumb money suckers to come in and pay the inflated price.  

Companies that are trading at or near their lows on the other hand, the good ones in my experience aren't experiencing heavy volume and don't have much in the way of news.  So it can be hit and miss trying to discern which ones might be good candidates.  

I have put out some bullish opinions on a couple that have born fruit though.  I wrote up EGT.V when it was 14 to 15 cents and it got up around 40 and is still trading in and around 28 to 30 cents.  And HMPR was at $1.81 when I expressed my reasons for being bullish and it just closed up over $1.90.

Hampton Road Bankshares is actually a company that I truly believe has the potential to deliver long term shareholder value.  That's not to say it is without risk, but to my eyes the fact that they are turning  a profit gives them a lower risk profile as compared to companies using their shares as capital to stay afloat.

Ultimately I think its every bit as important to know what to avoid as it is to know what to look for. Who wants to pay $6+ for a stock like KTOV only to have half your money wiped out in a matter of weeks.  

I've also mentioned some stocks that have come down, RVX.TO is one that I wrote about when it was trading at $1.34 and this past Friday it closed at $1.23 for a drop of 8.2%.   With RVX though I haven't seen any suspect pumping and table pounding all over social media....if that happens my opinion will change in all likelihood.  And if that does happen it might be reasonable to expect to see the PPS climbing well above even $1.34....only time will tell.  Ideally I'd like to see them succeed with the Phase III clinical trial.  

News Hype and Promotion boys and girls.  In my opinion that is the Unholy Trinity of the stock market that should be avoided.  Beware when something looks too tempting, things are not always as they appear.

Hampton Roads Bankshares (HMPR) A great play for retail investors?

All stocks are speculative in nature.   Whether its a penny stock with 100,000,000 or more shares issued and an accumulated deficit in the hundreds of millions, or a profitable dividend paying company included on a major index. 

Speculation centers around the share price.  Just because a company has never achieved positive earnings doesn't mean its share price can't soar.  And likewise just because a company has a history of profitable operations and perhaps even pays dividends, that doesn't mean that its PPS can't fall. 

For my own part I view speculation as being a matter of degree.  A company with actual profits I view as being less speculative than a company that is currently losing money.   But from my experience its typically companies that have the worst histories in terms of bottom line performance that experience the biggest gains.  However those gains often evaporate within a very short period of time, often in just a few weeks or a couple months, and sometimes in mere days.

The difficulties for retail investors are numerous when dealing with highly speculative stocks.  The volatility can be both exhilarating and devastating, with retailers almost feeling the need to babysit their investment, watching it in real time every trading day.  That kind of attention isn't easy, even in our hyper-connected world.  And it plays on people's emotions in classic market fashion, alternately triggering greed and fear.

Let's say its a penny stock that was bought at 10 cents that goes up to $1.00 for an eye popping 1,000% gain.  Imagine you bought 50,000 shares at a dime for total investment of $5,000 + brokerage fees.  The stock goes to a buck meaning that $5,000 has turned into $50,000....But what if you're in a meeting, or at an appointment when it hits that dollar mark.  And what if instead of closing at $1.00 it finishes at 85 cents for the trading day.  You still have an awesome gain if you sell for 85 cents, but instead of getting $50,000 for your shares you have to be willing to "settle" for a mere $42,500.  

Now let me be clear here, turning $5,000 into $42,500 is awesome, but $42,500 isn't $50,000....and its greed that so often nabs retailers and leaves them holding the bag, even when its overflowing with profits.  

Which brings me to Hampton Roads Bankshares, HMPR.  Yes I know my musings have a lot of preamble, but that's a function of my age.  I'm a long winded old bastid...un vieux schnook comme on dit en français.  

If you've been tracking this nearly invisible and pathetic little blog, or if you followed me over at SeekingAlpha then you should know my style.  I'm not about to start pounding the table screaming buy Buy BUY with lots of hyperbole about "OUT SIZED GROWTH POTENTIAL" or any of that other crap, because that's exactly what it is....CRAP.

HMPR represents a speculative investment for me, but comparatively speaking I consider it much less risky than many companies out there because it has positive earnings.  

If you're looking for a stock with a big following with millions of shares trading each day, then you're not gonna like HMPR.  On stocktwits where I post as growacet you won't find thousands of users following HMPR like some cash burning speculative biotech.  There are only 70 or so IDs watching it. If you check the Yahoo Message boards for pumping and bashing, you'll see me...krill66 offering up an opinion every now and again, and one other user telling me I'm an idiot and that HMPR is a waste of time.  

As far as I'm aware there are no email blasting chop shops hyping it, or any stock promotion IR firms working to attract investors.  But that shouldn't come as a surprise.  When a company is losing money and is using its shares as capital to keep the lights on and pay salaries, then engaging in promotion makes a lot of sense.  A company like HMPR that has + earnings doesn't need to play those games.

Besides, as per Nasdaq's Site almost 65% of the outstanding shares are held by institutions.  

Those who read my most recent blog posting, Why short interest matters - The danger of betting against Dah Bears, will probably want to know the degree of short interest.  As per WSJ its not much, just 2.16 million or less than 3% of the outstanding, that number is current up to April 29th 2016.   

A note of caution though about the low short interest.  With 3 month average volume of just 120K or so per day, it doesn't take a lot of volume to push HMPR around.  The public float here is only about 77 million shares, and if a big player is looking to inject a little fear into retail longs, then raiding 1,000,000 shares and selling them short could have a big negative impact on the PPS.  I don't think the chances of that happening are big, but I do think its possible.

As regular readers know (all 3 of you) I'm not big on fundamentals, viewing it as old data which is already priced into the stock.  While past performance does provide a guideline its no guarantee about the future.  As I noted HMPR is earnings positive with a significant number of shares in the hands of institutions.  

What do shareholders have to look forward to going forward?  

There's a pending merger with another Virginia based bank, Xenith Bankshares, that was announced this past February. (NEWS STORY HERE).  Of course that news is months old and constitutes part of the fundamental picture, so I assume it to be already priced in.

In my opinion the greatest potential for HMPR rests with the possibility of a return to paying dividends.  HMPR used to pay a quarterly dividend, but that ended in 2009 in the wake of the Great Financial Crisis.  From the GFC forward HMPR entered survival mode, suspending dividend payments and effecting a reverse split.  

Even without a dividend HMPR offers great risk vs reward potential to these eyes.  After years of rate cutting we have finally entered a period of climbing interest rates in my opinion, and I consider the banking/financial sector to have excellent prospects for growth going forward.  Interest rates have been so low for so long that many US regional banks like Hampton Roads had to struggle to survive, and many didn't.  

In my opinion HMPR has emerged from that cloudy period with the return to positive earnings and the lifting of regulatory restrictions which prevented them from paying shareholders in the form of dividend distributions.  There is no assurance that they will once again start with distributions, but with the restriction removed its at least possible now.  

I will end this blog posting with the chart.  I consider a long flat base to be an excellent indicator, and in my opinion the longer the base the better in terms of the potential for an eventual breakout.  This is a 5 year chart showing a 3+ year base pattern.  If it does play out and does break out from this base pattern it might not be for a while, but in the interim I don't think HMPR will see any wild swings downward.

As always take note of the disclaimer at the bottom.  I have been holding and buying HMPR for almost 3 years now so my opinions are extremely biased.  I eat my own cooking in other words, and sometimes I cook up masterpieces while other times I burn the food to a crisp.  Here's hoping HMPR is a slow cooked succulent delight.