Resverlogix (RVX.TO RVXCF) Trying to assign a price target

I am an active participant on the site StockTwits with the user name growacet.  

Its basically Twitter for stocks, but instead of # hashtags stocks are discussed using the ticker symbol with a $ dollar sign in front.  I have about 175 followers, and likely a similar number of ignores.  I'm sure a lot of $ZIOP bulls blocked me because they didn't appreciate my bearish opinions when that stock was trading at $13+ and I wasn't buying into the bullish predictions of $20+.

I was recently asked on that site for a one year price target on $RVX.CA

1. 

   Sep. 9 at 6:20 PM

   growacet

   $RVX.CA Nice to see RVX holding up on an overall brutal day, and while volume is still light it was about 33% above normal. Bullish
2. 

   Sep. 10 at 12:56 AM

   S210

   @growacet what price target do you see this in a year from now?

   via StockTwits for iOS
3. In reply to

   • EMBED

   

   Sep. 10 at 9:07 AM

   growacet
   

   Howie

   @S210 If they pass futility analysis at halfway point of phase III trial then a MC of $1 bill USD to me seems fair and maybe conservative

Now, full disclosure right up front.  I am currently a shareholder in Resverlogix and have written about the company here before at AvoidTheBag.  As such my views and opinions should be considered as being extremely biased.  If you're considering an investment in Resverlogix I strongly recommend consulting with a qualified investment adviser to ensure you have the requisite risk tolerance and to ensure it represents a suitable investment for your profile.  

Personally I find trying to assign a future price target on a speculative stock to be something of a mug's game, but I did offer up the opinion that I could see RVX attaining a market capitlization of $1 billion USD if the company's phase III BETonMACE trial passes the halfway point futility analysis. To give that some context the current MC is just under $100 million USD.

Why do I consider assigning a target price to be a mug's game?  

With speculative stocks there are so many variables, and with development stage biotech, ultimately the biggest variable is success or failure.  At least in Resverlogix's case the finish line is within sight given that they've reached a phase III trial for their lead compound Apalbetalone also known as RVX-208.  But still, setting a price target is fraught with uncertainties and unknowns.  

But targets are put out all the time, and I assume the reason is because that's what investors want.  If a stock is trading for $1, $5, $10 or whatever....investors want an "expert" to offer up an opinion on whether that price is low or high.  Why buy an $8 stock if the target price is also $8?  Better to buy a stock that's trading for $8 but that is projected to go $20...maybe.

Resverlogix also has analysts offering opinions and price targets:

• Stonegate Capital Partners put out a report in November of 2015 with a target range of $3.54 to $9.34  
• Van Leeuwenhoeck Research provided their last update in May of 2016 with a new NPV of $8.50 CAD up from their previous $5.85 opinion:  
• Zacks put out the most recent report with a $5.00 CAD valuation target:  

1. http://www.stonegateinc.com/reports/RVX_NOV_2015.pdf
2. http://nebula.wsimg.com/2e68712bb20de1e4d82f91da58ab0b9f?AccessKeyId=F1B3D293B900048B2E3E&disposition=0&alloworigin=1
3. http://s1.q4cdn.com/460208960/files/News/2016/July-29-2016_T.RVX_Vandermosten.pdf

My own opinion is predicated on Resverlogix succeeding with its phase III trial, the goal of which is to prove that Apalbetalone can provide Relative Risk Reduction (RRR) for the incidence of Major Adverse Cardiac Events (or MACE defined as heart attack, stroke or death) in patients with Diabetes Mellitus.  

The phase III trial is called BETonMACE and it has been running for almost a full year now, however there isn't a specific end date because its an "events based" trial.  The results will be evaluated after 250 MAC events with a futility analysis to come after 125 events.  A futility analysis is used to determine whether or not a clinical trial should continue or not.  

If MAC events are occurring equally in both the Placebo and Apalbetalone arms of the study, then the trial will likely be determined to be futile and stopped.  If the treatment is outperforming the placebo, then the trial should reasonably be expected to continue.

The company is blinded to the safety and efficacy results, however a recent PR put out by the company announced that the independent Data Safety Monitoring Board had given a positive recommendation for continuing the trial with no modifications after a completed safety review.

https://finance.yahoo.com/news/resverlogix-announces-positive-recommendation-data-110000475.html

Of course the most obvious question, and one that is perfectly legitimate is this;  

If Resverlogix has so much awesome potential, then why is it trading at such a depressed level with a market capitlization of less than $100 million USD?

The answer in my opinion is as obvious as the question, its because of profile, or rather a lack of it. RVX is not a stock on a lot of radar screens.  And this pathetic and miserable little blog will do very little to change that.  Yes there are some analyst outfits covering the company, but they're small boutique shops that companies pay for exposure.  Nobody is ever going to confuse Zacks with BMO or JP Morgan.  

Daily volume for RVX.TO trading in Canada is only about 20,000 over the past three months and on the US side where it trades OTC with the symbol RVXCF the trading is even lighter with only about 3,000 shares changing hands on average.

The big boys like the aforementioned JP Morgans and BMO, I highly doubt they have brokers talking up an investment in Resverlogix, and looking at things logically....Why would they?  There are plenty of development stage companies engaging investment bankers all the time to underwrite initial and secondary offerings.  The major outfits underwriting those offerings and ponying up hundreds of millions, perhaps billions of dollars....those are the stocks that are going to get the buzz, the ones that will be put "in play".  

But if the phase III BETonMACE trial succeeds, then I don't think that will matter.  In my opinion the market potential for Apalbetalone would be explosive with indications in major diseases like Diabetes, Kidney Disease, Cardio Vascular and Alzheimers.  All those conditions are impacted by bad cholesterol which Apalbetalone may alleviate.  

It is my view that a successful futility analysis with the company being given the green light to continue through to completion of the trial, that this would be the catalyst that could vault Resverlogix to a market capitlization of at least $1 billion USD, and even that is extremely conservative in my view.

Ultimately though, if the trial succeeds, I don't see Resverlogix taking Apalbetalone to market, I would expect them to be bought out by Big Pharma, as happened recently with Relypsa which sent it from around $14 as recently as May to $32 on the Nasdaq where it traded under the symbol RLYP.  

Recent Developments

Resverlogix recently cancelled their Annual General Meeting (AGM) which was scheduled for October 5th, notifying the market via a SEDAR filing.  No reason was given for the cancellation so I emailed the company's Investor Relations VP to ask why.  A reply came back saying that the meeting date had in fact been "changed", but that no reason could be given because that information is not in the public domain.  Here's the text of the email I received:

• Unfortunately, we can not advise to the reason for the change in meeting date as this would be information not in the public domain. When the business to be addressed at the annual meeting has been finalized a Notice of Meeting will be filed with the regulators (www.sedar.com) and ultimately the company will issue a press release regarding the details of the meeting closer to the event date

So obviously something is going on that warranted cancelling the AGM and I am hoping its something positive like another regional deal or a buyout by Big Pharma, but ultimately its all speculation at this point.  And even if there is a big deal being worked on that doesn't mean it will be finalized, lots of deals die in the negotiation stage.

But getting back to a stock's valuation, ultimately its about supply and demand.  I made lots of Ziopharm shareholders mad last year when I offered up the opinion that the $1 billion + valuation the company had was merely the result of retail investors being herded into the stock by a lot of fluffy news, cheeseball promotion and social media hype.

Its that old line about selling the sizzle not the steak.  And there is nothing wrong with frying up a juicy T-Bone and enticing diners with the sound of the meat sizzling.  But if they come and sit down and instead of a T-Bone they find a minute steak or hamburger, well they're not gonna stick around too long.

At the end of the day it all comes out in the wash and if a company succeeds then the market will recognize it at some point.  If a company doesn't succeed, or if they over promise and under deliver....well the market recognizes that as well which is why you see a lot of high flying heavily pumped stocks get pummelled downward.

If BETonMACE succeeds, in my view the sky is the limit given the diseases being targeted and the potential market.  But before that happens they will have to have a successful futility analysis, and with a positive report on that I can see Resverlogix attaining a market cap of $1 billion USD at least while waiting for the full trial completion.

Sizzle is nice, it can get the mouth watering.  But you can't eat sizzle.  

Vuzix - Time machine back to the tech bubble? Why I'm playing the short side

Its been more than 15 years since the days of the tech bubble when stocks soared on hope, promise and dreams.  Companies were popping up almost daily with innovative technological ideas and investors stormed in, sending valuations to insane levels.  Seeing companies with market capitlizations of $100+ million became the norm, even when profits were non-existent and dilution was the order of the day.

But with public companies, whether back in the days of the tech bubble or now....its always about the future. Back in the nineties investors saw firms burning through billions of dollars on tech solutions and e-commerce ideas that promised a new paradigm.  But ultimately it was the old paradigm of simple economics that did them in. Eventually a company has to bring in more revenue than it spends...that's reality.

So what's the dream with Vuzix?  

Smart glasses for business and entertainment providing things like 3-D virtual reality.  Its an exciting concept certainly, and I can certainly see it being a viable space.  The question is will Vuzix as a company be able to make a go of it.  

Back in the dotcom era lots of companies were going to be huge successes in delivering E-Commerce solutions, and some did, Amazon springs immediately to mind.  But for every Amazon there were hundreds of other companies that imploded, Pets.com, Etoys, Digiscents, Go.com and on and on and on.

Some of these companies had big players buying into their ideas, companies like P&G and Disney, big name athletes like Michael Jordan and Wayne Gretzky were backers.  But business is business, and eventually revenues have to be sufficient to sustain operations.  Even the sheep get tired of throwing money at an idea, at some point investors want to see solid bottom line performance.

Vuzix is far from a new company, they've been around since 1997 which will soon put them into their third decade of existence.  They started out as VR Acquisition Corp, then became Kaotech, then Interactive Imaging Systems, then Vicuity, then Icuiti.  In 2007 the company adopted its current name of Vuzix. 

According to the company's SEC filings they have incurred net losses since their inception, with a reported $13,4 million net loss for the year ended December 31 2015 and an accumulated deficit of $57.6 million as of that same date.  A loss of $10+ million per year means they're going to have to sell an awful lot of glasses at a decent profit margin to achieve positive cash flow.  

Revenue is great, but business doesn't operate in a virtual reality world.  In the real world revenues need to eventually surpass expenses. 

And then of course there is competition from companies like Google and Sony.  Maybe Vuzix will be the David that slays the Goliath players in the market.  My Christian faith notwithstanding, when it comes to the business world I find its usually Goliath who wins.

Bulls, promoters touts and shills will no doubt point to the small float with WSJ reporting just over 17 million shares outstanding and a float just shy of 13.5 million.  But they will likely fail to mention the share consolidation that took place in February of 2013 when VUZI enacted a 1 for 75 reverse stock split.

Bulls will also undoubtedly take issue with all the old information I've just provided and will point out, quite correctly, that investing is about the future not the past. That is true, just because a player has a career batting average of .220 over ten seasons, that doesn't mean he can't turn it around in season 11 and challenge for the batting title.  But if I'm betting on the outcome, I won't risk money on a .220 hitter winning a batting crown.

Ultimately though the reason I placed my bet on the short side on Friday September 2nd just after the opening bell....Its because in my opinion the sheep have been herded into VUZI with a lot of promotion, news and hype.  Here's a small sampling of some bullish write ups that took place over the summer.

http://sylvacap.com/vuzix-smart-glasses-will-key-component-dhl-global-augmented-reality-program

https://www.thestreet.com/story/13686807/4/these-5-stocks-are-breaking-out.html

http://ceolive.tv/vuzi-virtual-reality-wearables-leader-vuzix-announces-collaboration-agreement/

http://saadvisory.com/update/archive/July-11-2016.htm

As probably should be expected after all that activity, VUZI volumes exploded.  After hardly ever trading 1 million shares in a day during all of 2015, in July that 1 million level was topped on numerous occasions.  And the PPS surged as well, going from in and around $4.50 to up in and around $9 in just a few months.

Maybe this time the herd will be right, but I am one who ascribes to that time tested old bromide that ''the herd is almost always wrong''.  Lots of promotion, news and hype is not unusual when companies are diluting, its hard to sell secondary offerings without something to get the bleacher crowd excited and a rising share price.  

Since the PPS started climbing at the end of June the volumes trading have been huge when compared to more recent norms,  Maybe the level of interest can be sustained, but I don't think so.

We'll see how VUZI performs going forward.  

Canada poised to open up a $10 billion industry this spring

Shhhh, this blog posting is about something that's currently illegal in my home and native land, Marijuana, Mary Jane, Wacky Tabacky, Pot, Weed, Cannabis.

A lot of Marijuana stocks have been roller coaster rides for the past two to three years as American states like Colorado legalized weed.  Then last year Canadians elected a Liberal government headed by Prime Minister Justin Trudeau with the legalization of marijuana being a key platform plank.  That sent MJ stocks on another wild ride.

Prime Minister Selfie (as Conservative critics have dubbed him) admitted smoking up while visiting with friends when he was sitting in opposition to the then governing Harper Conservatives. That revelation led to a funny little exchange on Canada's 'This Hour has 22 Minutes' comedy show.

No matter your opinions on JT's politics, ya gotta admit the guy is pretty cool...but enough preamble.

What's going on with Marijuana as a potential investment vehicle?

As noted in the subject line, marijuana is projected to generate $10 billion  a year in Canada, and likely even more.  And if Canada's Liberal government makes good on its pledge to bring in legislation by the spring of 2017 the overall sector will probably explode again.

That's good and bad.

The good is that there will be companies capitalizing and delivering solid fundamental results.  The bad part is that once again there will be all kinds of penny stock scams out there touting the $10 billion figure while dumping shares into the excitement.  They'll take the cash but never deliver one thin dime in long term shareholder value.

I want to be clear on something here.  If you're just looking to flip in and out quickly....then often times it doesn't matter whether the company you've invested in is solid for the long term or not.  I've written a lot about Lithium here, and that's exactly what happened with a lot of junior miners. Companies put the word Lithium in their name and, BAM, they popped.  Sometimes by 100% in just one day.

But if you're looking for a long term investment...then caution is warranted.

Peter Lynch of Fidelity fame once famously quipped: "Buy what you know".  The thinking behind that axiom is that if you're familiar with a particular industry, that you'll be more adept at making wise investment decisions.  But a lot of times investors storm into penny stocks because they know something about a particular industry, and lots of people know at least a bit about marijuana.

Many people have smoked weed, and like it.  Some probably think of themselves as a having a "PHD in THC" because they've committed dialogue from Cheech & Chong movies to memory....they think that qualifies them as experts.  Sad but true.  And the companies that show up on people's radar are all too often hyped up penny stocks.

There's one Canadian company in my view which pretty much epitomizes this mentality, with investors buying into a stock based on forward looking promise, hype and promotion.

Puf Ventures has the perfect ticker symbol for a marijuana stock, PUF on the Canadian Securities Exchange or CSE.  Canada has three exchanges, and if you do some research you'll find that the CSE has easiest reporting standards which in my view makes it the riskiest.  I would equate it to the American Pink Sheets sometimes called the "Gray Market".

PUF has been promoted by an outfit called Prosperity Stock Report which discloses having participated in a Private Placement priced at 5 cents, and with the stock trading currently around 9 cents, they've done well if they've been selling.  Interestingly PUF recently announced they bought into some mineral claims which may contain Lithium.  Here's a link to that news:

http://thenewswire.ca/archives?tnwcatalyst2=release_id%3D19667

Here's what it says in part:

"...in order to capitalize on the recent surging demand for Lithium, it has acquired a 100% interest in certain mineral claims (the “Claims”) located in Quebec, Canada, known as the Lac Saint Simon Lithium...." 

Regardless the company says it is committed to its strategy to become a licensed producer of marijuana.  

I'm going to end this blog posting here....but I will add this link to a site that lists the companies that comprise something called the Marijuana Index, and the Canadian companies that comprise it.

http://marijuanaindex.com/stock-quotes/marijuana-index-canada/

I would advise caution with all these companies obviously, but in particular those listed on the CSE and Venture Exchanges.  Here's another link to an excellent Globe & Mail article that also urges caution:  

http://www.theglobeandmail.com/report-on-business/rob-commentary/investors-should-take-a-deep-breath-before-they-try-cannabis/article27059802/

Good luck

A tale of two Canadian stocks - RVX.TO & LAC.TO

Resverlogix (RVX.TO) is a development stage biotech and Lithium Americas (LAC.TO) is a junior lithium mining company.  At first glance you might think the two have absolutely nothing in common, but dig a little deeper and I can see some definite similarities.

I view both of them as miners.  LAC is the more obvious, seeking to mine lithium to meet exploding demand at a time of limited supply.  Resverlogix is also mining, but in a more metaphorical sense. This development stage Canadian biotech is ''mining'' for a treatment of cardio vascular disease (CVD) for patients with diseases like diabetes.  

I engaged in a little trading today (Thursday Aug 25, 2016), taking some profits on LAC with some of the proceeds being used to increase my position in RVX.  Both (sic) of my regular readers are well aware of my favourite bromide, ''you'll never go broke taking profits''.  I sometimes need to remind myself of that when I'm sitting on significant gains, which was the case with my LAC holdings.  I didn't sell out my entire position, a little over one third.

I still like Lithium Americas, a lot.  But the junior lithium mining space has become very crowded with a number of recent entries engaging in heavy promotion to attract investment.  LAC has seen its PPS falter meanwhile after spending a few weeks over $1.00 in June and July.  

Meanwhile there are a few newly minted Lithium juniors making jumps despite a lack of feasibility studies, construction permits or partnerships with established players.  But that's life with high risk speculative penny stocks.  The dust will settle and there will be big winners and big losers.  Many will find the stock that they saw being touted by an email blast or from a flashy ad that showed up on a sidebar....that it wasn't the pot of gold they thought it was.

SQM has been getting some press of late, and given the 50/50 joint venture they have with LAC I still like the chances for their Argentinian mine to enter production and for LAC to really catch fire. But it could be a while before that happens, and there are always risks....it might not happen at all. So taking some profits made sense to me.

Resverlogix is another matter,  I view RVX as being incredibly undervalued right now.  And there have been some recent developments that have caused me to raise an eyebrow.  The first thing that caught my attention was the cancellation of the Annual General Meeting (AGM) which was slated for Oct. 5th.  The cancellation was announced without a PR, instead a filing on SEDAR was issued.

There has been nothing further from the company, however some message board participants have reported receiving word from the company that the AGM has been rescheduled, but that the details are not going to be released until the agenda is finalized.  I take message board chatter with a big grain of salt and sent a message to the company myself yesterday that hasn't yet been answered, I sent another today.

Then today at 1:05 PM I saw some trading activity that caught my eye.  A firm by the name of AltaCorp engaged in 14 trades by my count on the buy side.  I tabulated it at 10,500 shares with the buys starting at $1.20 and ending at $1.24.  I'd never seen or heard of this AltaCorp before and it turns out, like Resverlogix itself, they are based in Alberta....hence the Alta part of their name I assume, a common short form for Alberta.

In looking over AltaCorp's website in the about section, I didn't find anything about them providing brokerage services to individual investors,  They seem more focused on the investment banking side with M&A and equity financing type activities.  The sudden appearance of AltaCorp on the day's reported trading along with the cancelled AGM led me to speculate that maybe something was and is brewing.  

That combined with a check of the chart pushed me to take some profits on LAC and to use some of the proceeds to increase my RVX position.

Its all mining in my view, whether its to find lithium or an effective treatment for Diabetes patients....here's hoping they both strike pay dirt.  

Resverlogix Cancels Annual General Meeting

On Monday August 22nd 2016 a ''Notice of the meeting and record date (amended) - English'' was filed with SEDAR by Computershare acting as agent for Resverlogix.

This notice advises that the Annual General Meeting that was slated to take place on October 5th 2016 in Calgary has been cancelled.  Here is a cut and paste:

To: All Canadian Securities Regulatory Authorities 
Subject: RESVERLOGIX CORP. 

Dear Sir/Madam: 

We advise of the following with respect to the upcoming Meeting of Security Holders for the subject Issuer: 

Meeting Type : Annual General and Special Meeting 

Record Date for Notice of Meeting : August 22, 2016-CANCELLED 

Record Date for Voting (if applicable) : August 22, 2016-CANCELLED 

Beneficial Ownership Determination Date : August 22, 2016-CANCELLED 

Meeting Date : October 05, 2016-CANCELLED 

Meeting Location (if available) : Calgary, 

AB Issuer sending proxy related materials directly to NOBO:  No 

Issuer paying for delivery to OBO: No 

Notice and Access (NAA) Requirements: 
NAA for Beneficial Holders Yes 

Beneficial Holders Stratification Criteria: Not Applicable 

NAA for Registered Holders No 

Voting Security Details: 

Description                          CUSIP Number           ISIN 
COMMON SHARES               76128M108                 CA76128M1086

Sincerely, 
Computershare 
Agent for RESVERLOGIX CORP.

SEDAR stands for ''System for Electronic Document Analysis and Retrieval''.  I have at times likened it to EDGAR.  Canada has a very convoluted regulatory make up consisting of Security Commissions in every province and territory.  As such SEDAR can serve as a repository for investors conducting research as well as for regulators.  

When seeking out annual and quarterly filings like U.S. 10Qs, 10Ks or 8Ks, SEDAR basically fulfills the same function for Canadian companies.

As to why the AGM was cancelled, I have absolutely zero idea.  Yes I have some idle speculation, but it is just that. Some social media participants have posted information saying the AGM is merely being postponed as per phone conversations with the company...but that is not something I am relying on.

The last news put out was on August 11, 2016 reporting that the company had received a positive recommendation from the Data Safety Monitoring Board overseeing the phase III BETonMACE trial. 

Lithium - A bubble within a bubble?

Okay, first things first.  All you Lithium bulls, pumpers and shills.....relax.  If you're hell bent on reading this little blog piece then take a chill pill.  Grab a beer or a glass of wine and try not to get worked up.  

Yes I am going to express the opinion that Lithium right now is bubbling, but don't worry.  This is a teeny tiny obscure little blog, I'm not on CNBC or ABC Nightly News or anything like that.  

Think of the market as being a hurricane, with the winds and rain representing the torrent of news and information available.  Within that hurricane I'm a guy with a squirt gun, and not a big one, not one of those super soaker thingies.  All I have is a one of those little hand held water shooters, the kind with four little finger slots that allow you to hide it from the teacher in the palm of your hand.

Bubble markets are funny things....those who suggest a bubble when prices are still percolating, they're usually attacked as being idiotic morons who don't have a clue.  Watch Peter Schiff get attacked for expressing the view that the United States was heading for a huge correction in the housing market and a massive recession back in 2006.  

The guy saying Schiff is out to lunch....to me he sounds like the guys who hype speculative stocks, supremely confident and as it often turns out...supremely wrong.  Those who listened to Schiff and acted accordingly were in in the pink.  But I bet most listened to the permabull instead.  He was strong forceful and confident, telling people what they wanted to hear....and that's what the sheep love.

So why do I think Lithium is a bubble?  And what do I mean by a bubble within a bubble?  Of course I will explain.

Markets are all about supply and demand, that's obvious.  And with Lithium demand exploding there is a supply constraint currently, however I don't expect that constraint to last.  While it does however Lithium prices will continue to be robust.   But I do expect supply to catch up to demand and for prices to fall sometime within the next two to three years.  

The reason I think prices will fall is because of the second bubble, the explosion in Jr Lithium miners bringing new supply to the market.  Some like Orocobre have already started producing, with Galaxy slated to be shipping within perhaps mere weeks.  Others like Neometals, Nemaska and Lithium Americas are getting close.

Now, some will suggest that with Tesla and other car manufacturers jumping into the EV space...that these companies will buy every gram of Lithium that comes on stream now and for at least a decade or more. I however disagree.  

That's what American housing bulls were saying in 2006, that "this time its different"....demand will not abate. Everyone needs a place to live, immigration and tightening supply will drive prices higher and higher they said...and they were wrong.

That's the pumper narrative with any and all bubbles "this is different".  Those who profit from the bubble want the party to go on forever, and some probably even believe it, that the music will never stop playing.  

Do note that I see the music continuing for another 24 months or so, and that there will be winners. The big 3 incumbants: Sociedad Quimica y Minera S.A.  Albermarle, and FMC Corp as well as newer producers like Orocobre and Galaxy.  Of course with those big 3, Lithium is but a small component of diversified businesses, so they probably will not perform as well as some smaller "pure play" miners.  But with that being said, they also won't correct as severely as the smaller players when the bubble inevitably bursts in my opinion.  

Those companies that are able to bring Lithium to market before supply explodes should also do well I believe.  Juniors able to start selling Lithium before the supply crunch ends will probably do better than existing producers over the next couple of years I believe.  

There will be losers too of course.  Those companies that came late to the party, that were too busy buying an outfit and getting their hair done....they'll show up just as the excitement wears down.  I'm talking about companies that are currently touting their "Lithium Projects" but who don't have things like resource estimates, feasability studies, building or mining permits.  These late comers have a huge game of catch up to play, and even if they succeed in bringing a mine or mines to production, the supply crunch fueling the Lithium pricing bubble I perceive currently...I expect it will have largely disappeared by the time they start delivering product, if they even get that far.

Comments are welcome....however they are screened before being posted.  All I ask is for a mature respectful tone, and if you have an opinion express it as such....not as fact.  I have expressed my opinion on what is coming in the next couple of years for the Lithium space, but it is just opinion and it could be wrong.  

Momo Inc. - Another hyped up China stock?

I always have my ear to the ground for hyped up stocks, and Momo Inc (Nasdaq MOMO) is the latest to pop up on my radar.  

It caught my attention in the usual way, being touted by one of those outfits that sends out email blasts.  Quite often shops that pump stocks via email, they churn through them pretty quick....claiming to be a swing trading or momentum group.  Still they hype the fundamentals and often give the impression that the companies they're touting, that they're solid long term investments.

When it comes to the markets I think its important for individuals to decide whether they want to focus on trading or investing.  For those looking to invest I would suggest that greater caution is needed, with a deeper look at fundamental performance and valutations.  Traders conversely should focus more on price volume movements and the technical picture, worrying less about a company's long term prospects for success or failure.  

After all, any stock can catch fire....and often its those grossly overvalued companies, or those with less than stellar fundamentals, that make the biggest short term gains.  Players with a long term investment perspective often storm into a stock excited about future "potential" focusing on things like revenue growth, while ignoring things like current valuation and expenses.  Newbie investors see a stock climbing and think it will keep on going.

You're not limited however, you don't have to be either a short term swing trader or someone with a buy and hold strategy, you can do both. You can decide that some stocks are worthy as long term holds, while viewing others as trading vehicles.  But I would argue that if you're looking at a stock as a trading vehicle, that it helps to have others who "drink the Kool-Ade" and believe in the long term prospects.  

So what about MOMO?

Momo Inc is a Chinese based company, and I've seen the market fall in love with Chinese stocks before. LEJU and MOBI spring immediately to mind.  Both made substantial gains and then collapsed. 

According to WSJ.com MOMO has 143.7 million shares outstanding and a market cap of over $3 billion USD.  The PE ratio on that site is reported at an eye popping 195.61 based on EPS for the trailing 12 months of $0.08 cents.

Momo is a Chinese social networking company, and if you haven't heard of it that shouldn't come as a surprise.  That's because Communist China doesn't allow social networking sites like Facebook and Twitter.  In fact the entire Chinese market can almost be equated to an intranet as opposed to the world wide internet.  I've heard the Chinese net referred to as a lagoon off the greater internet ocean. Still its a massive lagoon with close to 1 billion users, more than double the entire U.S. population.

Here's a link to an article which lists the "Top 10 Chinese Social Media Sites":

http://linkfluence.com/en/2016/02/08/top-10-chinese-social-media-sites/

Interestingly, Momo Inc is not on it.

Doing a google search of top social media companies and platforms in China I don't find Momo Inc anywhere.  The big player, one that I had already heard of and seen videos about, is WeChat which seems to combine Face Book, Twitter, Instagram, E-commerce and more all into one app.  

Of course if you're simply looking to flip a stock based on momentum, swinging in and out on the tips and dips, then none of the fundamentals really matter.  Excepting of course that those looking to dump on the highs need others buying and when those highs are achieved.  

Looking at the chart there have been plenty of chances as MOMO has swung wildly since in began trading in late in 2015, fluctuating between $19 on the high end and $7.50 to the down side.  As I often repeat though, its a zero sum game. Those looking to trade shares for money on the highs need others willing to trade their cash for shares.

For those interested in the social networking space in the Chinese Market I would suggest a look at Tencent Holdings Inc. the owner of WeChat and China's most valuable tech company as per a report on CNBC this past week.  Tencent trades in the US on the OTC foreign exchange with the symbol TCTZF. 

http://www.cnbc.com/2016/08/17/tencent-overtakes-alibaba-as-chinas-most-valuable-tech-company-as-wechat-owner-posts-strong-results.html

When it comes to riding momentum and swinging in and out of a stocks its almost like that children's game "hot potato" where a potato on spoon is passed around while music plays.  The kid left holding the potato when the music stops loses and is kicked out of the game.  With stocks those that buy the highs before the promotional music stops and the bottom falls out...they don't get kicked out of the game until they've gone broke.  

It would seem to me that those holding a hot potato with a PE ratio nearing 200, that they might just be looking to pass it along before the music stops playing.  That might explain all the buzz and chatter for MOMO on stock boards and social media sites.

It doesn't make sense to start pounding the table and ringing the dinner bell for buyers unless you're looking to sell.  

Disclosure:  I have no position in any of the stocks mentioned here although I might look to go long on TCTZF.