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.

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.

KTOV - What just happened?

A big part of the reason I write this blog is in an effort to help retail investors garner a better understanding of how the markets function and about the forces at play.  I would argue that a lot of those forces are employed to entice retailers into buying high those stocks that the smart money is selling high.  That or to sell low when the smart money crowd is looking to load up.

That's the way the market has to be.  For one group to sell high there has to be another group willing to pay the high price, and the same dynamic in reverse when stocks are low.  Obviously everyone can't be buying and selling at the same time, otherwise the markets would look like a football game with both teams lining up on the same side of the ball, both teams wanting to play offence and defence at the same time.

When it comes to the public markets I divide the players into two broad based teams.  On one side you have the industry players, and on the other its the retail herd.  

And when you look at the tools available to the smart money industry players, it shouldn't come as a surprise that its retail investors who so often end up on the wrong side of the trade.  Especially when it comes to the stocks for highly speculative money losing companies.  

Big house investment banks underwrite the offerings and secondary issues, with analysts working for these same firms.  Media outlets too many to name, investor relationship firms, email blasting chop shops.  And who is the target of this multi-billion dollar industry?  Retail investors like myself.

So now onto KTOV.  I'm not going to write anything about the fundamentals, because as I've noted so many times, all fundamental data is old information and thus already priced in as far as I am concerned.  

I wrote about KTOV on May 17th, 2016 in a post about Ziopharm that noted how an email blasting outfit called Stockreversals had touted ZIOP last year when it was a high flyer and that now their promotional chops were being used to hype KTOV. 

http://www.avoidthebag.com/2016/05/ziopharm-no-short-squeeze-and-no-buyout.html

In that post I wrote that KTOV was just the latest in a long list of stocks hyped Stockreversals.  I also posted a chart that showed KTOV climbing from around $2.50 as recently as February and closing at $6.68.  

• "Can I say with certainty that KTOV will follow the same pattern that LEJU, ZIOP, CLDN, SBOT and all the others did?  Nope, I can't.....but I would not bet against it either.  I have no doubt that those promoting KTOV will say, ''this one is different'', it always is.

That was then, holders and watchers know where it is now.  KTOV closed at $4.75 on Monday May 23rd.  That's a drop of over 25% from when I first wrote about it.  

Am I writing this to pat myself on the back?  Yeah, a little....sure.  I'm human and as prone to the sin of pride as anyone.  But I also know that a good call can be temporary, KTOV could have a big rally tomorrow and the pumpers will jump all over a guy like me saying that $4.75 was a big buying opportunity.  

In fact I expect KTOV to have some big rallies.  If the smart money is dumping, its hard to get retail investors buying and holding a stock that falls big and keeps falling.  

Long term though?  

My expectation is that KTOV will follow the same pattern as LEJU, CLDN, SBOT, MOBI and ZIOP to name just a few of the stocks that stockreversals has pounded the table about.  Go ahead and check the charts for those issues, but don't bother with CLDN.  After a 1:15 reverse split it merged with another bio tech called Eiger.  

The more important question is why do email blasting chop shops like stockreversals hype so many stocks that soar and tank?

Take a second and consider the possibility that you find out about a stock that's going to fly, one that's going to go from somewhere around $5 up to $15.  The market is all about supply and demand, you know that already of course.  So are you going to start telling anyone with a pulse and a trading account about this incredible company?  Or are you going to buy all you can and maybe let a few very close friends and family members know?  

After all, that $5 price is going to disappear pretty quickly if too many people find out about it.  If you start pumping out emails and then screaming all over sites like Twitter and SeekingAlpha the price is gonna go from $5 to $6 and keep climbing.  You'll have missed out on the chance to really load up on it.

Unless of course so much dumping happens that the climb halts and then reverses trend.  Its a zero sum game boys and girls, some get cash while others get shares.  

You've heard the old saw: "If a tree falls in the forest and nobody is around, does it make any sound"?

Well if a public company puts out good news and nobody has it on a watch list, who's going to strom in and pay the high price?  Shops like stockreversals with followers numbering in the tens of thousands can get a stock on the radar screen with lots of retail investors.  Then all you need is some good news and a climbing share price and its show time.  

I should point out that stockreversals will often mention a dozen or more stocks in their email blasts and commentary, and sometimes the stocks they include are suitable as long term investments in my opinion.  But when I see this outfit on Twitter, Stocktwits and SeekingAlpha banging their fist on the table about one particular company, that's when my Spidey Sense starts tingling.

Full disclosure, I have no position in KTOV long or short, and no intention of ever initiating one.  I also have no positions in any of the other stocks mentioned except for ZIOP.  I hold some put options on Ziopharm.  Having an opinion is great but its also fun to have some skin in the game.

Later I intend to be writing about the difference between what I consider to be investment grade stocks and those that are what I'll call "speculative grade".  For my purposes I consider those companies that have achieved positive earnings as "investment grade" because they're profitable. Companies that are burning cash and using their stock as capital to finance operations, those I consider "speculative grade".  

Retail investors love speculative stocks, because it is these stocks that typically see the biggest gains in the shortest periods of time.  But they're also the stocks that often experience the biggest drops, with retail investors all too often coming late to the dinner table and buying high before the big drop.  

Until next time.

Ziopharm - No short squeeze and no buyout

I have been accused of being obsessed with Ziopharm, and there is certainly some merit to that opinion.  I have a passion for the stock market in general, and right now Ziopharm is an ongoing fixation that's lasted a little over a year.  

Before ZIOP those who follow me on stocktwits' (where I post as growacet) will remember that it was MOBI that occupied my bearish attention, being a stock I viewed as a hyped up pump job.  

Both MOBI and Ziopharm came onto my radar the same way, from an email blasting chop shop. This outfit has hyped a number of stocks, LEJU, SBOT and CLDN spring immediately to mind on top of the aforementioned MOBI and ZIOP.  

Touted as investments, citing forward looking promise....but you can check the charts to see how well they did as long term holds.  CLDN was pumped by this shop in early 2015, but don't look for it now, it doesn't exist.  After a 1:15 reverse split it merged with a company called Eiger Biopharmaceuticals.  

Puke, frankly this type of promotion turns my stomach.  

I had a friend named Dave.  I use the past tense because Dave (not his real name) isn't around anymore, not for his wife, not for his two daughters.  I'll never know the precise reasons Dave decided to take his leave, but I'm pretty sure I know why.  He played the market, and was just the type of guy that email blasting chop shops rope in.  He had a good job with a good salary, but dreamed of winning the market game and getting rich beyond his wildest dreams.

People can and do get hurt playing the stock market, gambling with money they can't afford to lose. And these promotional outfits couldn't give a rat's rosy rear end.  To quote Gordon Gekko:  ''Greed is good''.  So long as these slime make money, they don't care.  

I want to make one point very clear here, the shop I'm referring to is one of the best in my experience, and that's what makes them dangerous for newbie and unseasoned investors and/or traders.  What do I mean by good?  

What I mean is the stocks they tout often make very quick and sizable gains after they start pumping them.  Here's the chart for LEJU which stockreversals (hell I might as well include their name) started pumping shortly after it started trading.  In August of 2014, they recommended it at $12 to their email sucke...errr, subscribers.

That's pretty typical for the stocks this outfit hypes.  After touting it at $12 it quickly climbed up around $18.  Then over the ensuing months it crashed hard, falling all the way as low as $3 and change, today its worth somewhere around $5.

Someone who bought 10,000 shares at $12 would have been in for $120,000 and now they'd be getting somewhere around $50,000....a $70,000 loss.  And don't think those kind of losses don't happen.  

Of course they've long since moved on from promoting LEJU, and ZIOP for that matter.  

Their latest ''hot stock'' is KTOV', another relatively new issue like LEJU was.  Does the climb look familiar?

Can I say with certainty that KTOV will follow the same pattern that LEJU, ZIOP, CLDN, SBOT and all the others did?  Nope, I can't.....but I would not bet against it either.  I have no doubt that those promoting KTOV will say, ''this one is different'', it always is.

Now, again....let me be clear.  I know that apologists for stockreversals and other promotional outfits of this ilk will say, and rightfully so, that these stocks all did make gains from the prices at which they were profiled.  

In so far as I am able to verify that information, it is a true claim.

But I also understand the mentality of retail investors, as do promoters.  Retail investors have a bad habit of actually becoming attached to their stocks, of reading every news item and opinion piece that comes out.  Its not long before the average retail investor believes the forward looking promises. Especially with speculative companies with a history of burning through cash and diluting.

The professionals and the chop shop boys know this, they know how retailers think, and they profit from it.  I used to work as a financial consultant, and I know all too well that average investors, investing in individual stocks, that they overload and don't have proper diversification.  

Retail investors end up being the fulcrum around which the professionals make bank, alternately pumping and dumping, and then shorting and distorting.  Joe Retail (my chosen sobriquet here) wants to find quality stocks that he can buy and hold, ones that will deliver long term value.  Some volatility is to be expected of course, but not the kind that leads to charts like the one above for LEJU and all the others if you want to check them out.

So what happens?  Whether its MOBI two years ago, or LEJU or ZIOP, retail investors are left holding the bag, unable or unwilling to take a loss.  They become convinced they've been scammed. Not by the jokers who sent out the emails, but by dark market forces determined to hold their stock down.  

That's what's happening with ZIOP right now in my opinion.  Many shareholders are unwilling to acknowledge even the remote possibility that they were roped in by promotional hype.  And if they go to social media, places like InvestorVillage for example, they find others telling them what a wise choice they made.  Even if their shares are now worth half of what they paid for them.

Everyone can read the filings.  Ziopharm has not misrepresented anything.  They have nothing in late stage development.  And they're projecting that they won't have enough cash to get them beyond 2017.  Ziopharm's 10Q and 10K filings are very clear in saying that they're going to be in need of raising yet more money.  And they allow that their current resources may not even last til the end of 2017, that expenses could increase meaning they would run out even sooner.  The risks are fully disclosed.  

The quarterly and annual filings use terms like expectation, and words like may and could.  But expectations are often not met, and what ''may be'' and what ''could be'' can also be expressed with equal accuracy by saying ''may not be'' and ''could not be''.

The hope that many ZIOP shareholders seem to be clinging to now is that of either a buyout or a short squeeze.  Or both.

Again, this is only opinion because we're talking about the future here....but to use the vernacular of my youth growing up in NYC and NJ, ''FUGHEDDABODIT''!!!.

Firstly on the buyout side.  Yes, RJ Kirk has orchestrated some blockbuster deals in this space.  He did an incredible job in selling both Scios and New River to big pharma companies .  But Scios and New River had drugs that were either approved or in late stage development.  Ziopharm by contrast is probably 5+ years away from even being close to anything, and as noted before they don't have enough Do Re Mi to last that long.

On top of that the buyers of Scios and New River....they definitely got the raw end of the deal in my opinion.. Johnson and Johnson has had to take write downs for Nacretor, the drug developed by Scios.  I could be wrong, but the old adage....''fool me once'' springs immediately to mind.  

Maybe RJ can convince someone to buy Ziopharm, but I can't see why they'd pay anything even close to the current MC of $900 odd million for a cash burning company with nothing in late stage development.  

Finally there's the case of short interest, which for Ziopharm sits at about 30% of the float as of the most recent update to April 29th 2016 according to WSJ.com.  This is nothing new for Ziopharm of course, the short interest has been high for a long time.  

Shorts didn't rush to cover the 35 odd million they were short in November 2015 when the price was pushing up near $15.  Why they'd all of a sudden be forced into covering at less than half that price now is beyond my ability to comprehend.  I think those touting a pending short squeeze, that they're either naive novice investors, or industry hacks trying to keep the retail monkeys holding their bags.

Full disclosure, I like to have some skin in the game about the stocks I write about...and with ZIOP I do own put contracts.  All the other stocks previously mentioned in this posting though, I have no position long or short in any of them and no futures contracts.  

I'm going to close this off, but I want to write about one last thing, my faith.  I am Christian, and as most people will be aware, a central tenet of the Christian faith is to 'do unto others....'.  I don't want to overstate this, I'm not one of those guys you are going to see standing on a street corner trying to get people to accept Jesus as their personal Lord and Savior, I'm not an evangelical nor a fundamentalist.  But I do have a strong faith in the teachings of Jesus of the Bible, in particular those which appear in more than just one Gospel.

Writing this blog is somewhat cathartic for me, and it helps me sort out my own thinking.  And one thing I know is that I might just have a log in my own eye while I rant about the sliver in the eyes of email blasting chop shops.  I've written about some companies that I believe have good prospects for price appreciation, but I have not fallen in love with them and if they make big gains I fully intend to dump them.

EGT.V certainly falls into that category.  And LAC.TO is another that I'm watching closely for irrational exuberance.  So far the only stock I've written about that I genuinely believe has excellent prospects as a buy, hold and prosper investment is HMPR for the reasons enumerated in my posting on that company.  I'll be writing about another soon, Extendicare a dividend paying retirement-nursing home.

Peace.