Vuzix - From Mega Deal to Mega Disappointment?

I believe in giving credit where credit is due, so credit for this posting has to go to SeekingAlpha writer Mark Gomes.  Back on August 16th 2017 Mark published an article on Seeking Alpha:  "Did Vuzix Just Announce a Mega Deal".  I'm assuming most VUZI watchers read it, and probably near 100% of VUZI investors.  

You might have missed the follow up post he did a little over one month later on September 16th however.  A post in which he writes about why he closed his VUZI position.  The title tells it all:  "Is Vuzix a Wounded Warrior". 

It was easy to miss because, while the first bullish article was published on the main site as an article, the second was an "instablog" which doesn't even show up if you search out VUZI on the Seeking Alpha site.  The only way you might see it is if you follow Mr. Gomes on Seeking Alpha and then choose to peruse his instablog.

Included in his reasons for closing his VUZI position was a video review done of the Cyber Timez software using Vuzix glasses. I've watched the video a couple of times, and while the gentleman doing the review never mentions Vuzix by name (a small blessing perhaps), when he holds up the box with the glasses it clearly says Vuzix (check at 00:49).  I don't think you ever see the Cyber Timez logo. 

If you read the comments below the video you'll notice a couple of people suggesting OrCam.  OrCam is another company which supplies glasses to aid the visually impaired, and they have partnered with the Wounded Warrior Project.  You can read about OrCam and WWP here:

https://www.prnewswire.com/news-releases/wounded-warrior-project-partners-with-orcam-congressman-to-help-blind-veteran-300459998.html

As I noted in an earlier blog post, the above referenced Wounded Warrior Project is not to be confused with the Wounded Warrior Program that Vuzix partner Cyber Timez is affiliated with.  While the WW Project is a large and well known charitable registered orginization.  The WW Program that Cyber Timez is affiliated with is not a registered charity.  It is supplied by a company called Minton-Jones, a provider of office supplies, furniture and printing headquartered in Norcross Georgia.  

I know the Wounded Warrior news was hyped and touted over and over on social media.  I guess its small wonder that nobody shared the above video.  Here's an earlier video showing the host of the Blind Spot talking with the Sean of Cyber Timez demonstrating the glasses, and they're working. 

Personally I find the voice to be incredibly annoying, but then maybe that's just me, I can't stand the voice prompts on my GPS.  Still, I think it would be easier to simply ask someone what color shirt they're wearing, or what kind of room I'm in.  

Comments always welcome....but no profanity.  If you leave a comment like Robert did on the first video where he said:  "I will never buy this product it sounds like it's a real piece of s***" It won't be published.

Peace out.

Sunday Thoughts on FOMO - Fear of Missing Out

Ah yes, its another Sunday.  Time once again to consider those things which daze and amaze, confound and astound, the little games the market plays to both thrill and send chills down the spines of retail investors hoping to turn a profit by buying low and selling high.

I'm going to assume that anyone willing to read an anonymous blog on investing, that you're likely one who uses social media in hopes of uncovering what you'll discover to be a worthwhile investment.  Well, you're going to be disappointed because I'm not going to be suggesting any stocks with this post.  

On Sundays I often like to share my experience and offer it up so that others may avoid some of the mistakes I made in my younger days.  And I have to admit, that sometimes I throw caution to the wind and I continue to make mistakes every now and again.  Its that old adage about maximising gains and limiting losses that you'll often hear from gamblers.  

At the end of the day the stock market is a lot like gambling.  Even with dividend paying blue chip stocks it is possible to buy and then to get hit with bad news that sends the company's shares down in value.  Of course any seasoned and experienced market observer will tell you that, while blue chips provide excellent safety and good prospects for decent long term growth, you're not gonna be doubling your money in a short period of time.

But I'm guessing most readers already know that, and the reason you're perusing an insignificant little blog like this is that you're looking for outsized gains, with dreams of turning $1,000 into $10,000 or $10,000 into $100.000....dreaming of eventual millions.

And that's where FOMO, or "Fear of Missing Out" comes into play.  It is possible to make big returns and to turn $1K into $10K but it is incredibly difficult and far from easy.  If it was easy everyone would be doing it.  Anyone who tells you they have a sure fire method, or a sure fire 100% guaranteed winner?  They're lying, pure and simple.  I've had 10 baggers, but in looking for them I still get caught in others that lose me money.

Social media is full of industry hacks looking for the greedy and/or desperate.  These anonymous posters (anonymous just like myself) will tell you they're never wrong, and that the stock they're touting is a "no brainer" a "lock"....and they will tell you they have the "facts".  The only fact is that they're 99.9% certain to be lying charlatans.  

So how does FOMO rope people in?  Probably the most important ingredient is price movement.  Investors see a stock climb 10% in a day, and often times more....with social media full of messages about some hot and moving stock exploding, and it can be hard to resist hitting the buy button.  Maybe its a 10 cent stock that's moved to 14 cents that you had on a watch list.  That's 40% right there, if you'd invested $10,000 at 10 cents you would have had $14,000 at 14 pennies.  

So what happens?  You jump in, but not at 10 or even 14....you buy maybe 100K shares at $0.15 cents, that's $15,000.....or maybe you're a little more conservative and only risk $1,500 by picking up 10,000 shares, no matter.  You are now in the game....you're a player.  Doesn't it feel good?

People will often tell themselves (and others) that when a stock drops in value, that they haven't lost a single penny, that a loss is not a loss until the shares are sold.  But the same holds true when a stock climbs in value.  People will talk about how much money they've made on a stock, while at the same time saying they're holding their shares with an iron fist.  Well....guess what sparky?  If you haven't turned your shares into $$$ by selling, then you haven't made one single solitary cent.  

Here is what I am going to suggest.  Think it over, ruminate on it....I think you'll find it makes a lot of sense.

Firstly, if the stock you're considering is static....with little price movement and not much volume compared to historical norms, then take the time to do some due diligence, some real research.  Its not hard and it doesn't take that long.  Firstly you want to determine if this company is worthy of a long term investment, or simply as something to own over the short term.  Here are three quick suggestions:

• Has the company ever turned a profit
• When was the last round of dilution
• Do the CEO and other key execs have histories of success

I think you'll find with a lot of companies that get talked up on social media, that the answers to those questions are:

• Nope, just a growing accumulated deficit
• At least once and often times more in the past 12 months
• No, although sometimes companies bring in mid range execs from big corporations.

Now, just because the answers to the questions I just asked may all seem negative, that doesn't mean you can't make money, nor does it mean that you shouldn't maybe risk some money in hopes of making a profit.  

Just know what you're dealing with.  Think of it as dating, companies with a growing accumulated deficit, that have been diluting continually, that have a CEO whose never made a dime and maybe a key exec or two who were cut loose from some NYSE listed big name company.  Companies like this can look incredibly hot and exciting....they get your financial libido all worked up and your pulse racing.  Its just that, well....you don't want to marry them.

Know what you're getting into.  If its some hot technology, or biotech....or a sexy new consumer product, then maybe you should simply date it.  Get in, get out and if you get out with a profit and then see the stock climbing even higher still, then just cry into the money you made.  You did your DD and have concluded that its a hype job, and eventually the bubble will burst.  

In other words, don't get caught up in FOMO.  Yes there will be social media types calling sellers losers, laughing at those who've missed out on even bigger gains.  But if you sell at a profit, then you've missed out on nothing.  Those who are still holding on, or who are continuing to buy, they're risking that greater fools won't show up and be willing to pay even more than what they did.  They could end up holding the bag in other words.

Now conversely....its possible that in doing your DD, you might just conclude that a stock has a decent shot at actually making a go of it legitimately.  Perhaps they're losing money but haven't done a raise in the last year or two.  Maybe their CEO actually has taken a start up company and sold it at a profit that saw shareholders make a nice fat return. That the business itself might actually succeed and generate sufficient revenues to cover all the expenses with profits left over.  If that's the case, then maybe you do want to marry it, or to at least have a long term relationship.

Bottom line is that there is no "one size fits all" method for picking investments.....But there are emotional responses of Greed and Fear that trap even the most experienced market participants.  FOMO is something to be aware of and its something to watch out for.  If you have a stock on your radar that all of a sudden jumps, 10, 20, 30 or even 40% or more in a day or two....It might just be best to let it go, there are thousands upon thousands of public companies out there.  But if its one you think has the potential to be a long term winner, then maybe dip a toe in the water....with the realization that you're willing to hold on for the longer term and maybe even average down if there's a price correction.

That's enough for now, happy Sunday everyone, and I love reading your comments.   

RVX.TO climbs 24% in one week despite "Fear Uncertainty and Doubt" or FUD for short

Shares of Resverlogix climbed 23.9% last week on the TSX where the stock trades under the symbol RVX.  On the U.S. side where shares trade OTC with the symbol RVXCF the gain was 21.8%  However take note of the fact that most of the trading takes place on Canada's big board exchange.  OTC volumes have averaged roughly 7,500 per day over the past 3 months, while in Canada RVX trades ten times that number.  (Numbers as per Yahoo Finance)

Here's the chart showing RVX.TO from Friday Sept 29th's close of $1.46 to this Friday Oct 6th's close of $1.81

So what caused the sudden jump?   Quite frankly I have no earthy idea.  

The only news item was on Monday October 2nd announcing the company's AGM is to be held on December 12th 2017.  But even there it noted that the company had to receive an extension with respect to the meeting from the Toronto Stock Exchange.  That's hardly surprising given that in a news release of August 28th just passed it was stated that the company was relying on a financial hardship exemption and that the board of directors had unanimously determined that the company is in: "serious financial difficulty".  Here's that PR from the company's own website:  

https://www.resverlogix.com/media/news-releases.html?article=134245#.WdkaTltSy70

Now to be clear, full disclosure and all that...I am a shareholder in Resverlogix.  However I will do my best to avoid falling into the trap of trying to put lipstick on a pig.  I am very bullish, but that is simply because I have an upside down way of looking at things.  Contrarians by definition will at times see bad news as good and good news as bad.

So how bad do things look in the straight up non-contrarian world?  Pretty damn bad if you ask me.  If the company's own communications are any indication, then Resverlogix looks like a company in complete and utter disarray.  

In baseball they talk about making the simple plays.  Well Resverlogix of late can't even get the simple things right.  On September 26th 2017 their Sr VP of Business & Corporate Development gave a presentation at Biopharm America in Boston.  The only problem?  When the company published the information to their own website they got the date wrong, having Mr. Lebioda presenting on the 27th instead of the 26th.  Ugh

Small potatoes?  It would be if this kind of mistake wasn't becoming almost a regular event. After publishing that the company would be presenting at the Rodman and Renshaw event on September 11th 2017 the decision was made to skip it.  Did the company notify shareholders of the decision to miss this opportunity?  Nope.  The only explanation from the VP of IR came after the fact when I was told via email that the cancellation was due to a scheduling conflict.  

In a later phone conversation that same Investor Relations VP actually claimed the company was under no obligation to disclose the cancellation because the company's attendance at the event had not been "widely disclosed".  That is laughable considering the event was published to the company's website.   How much more widely can something be distributed than by publishing it on the World Wide Web???

And it wasn't the first time the company had skipped out on investor presentation, having done the exact same thing in May of this year in Paris at BioEquity Europe.  I could go on with the Power Point slide presentations with wrong information or slides completely missing.  Disarray?  Incompetence?  That's for each individual to decide.

So against this back drop of a company that proclaims itself to be "in serious financial difficulty", that can't get even the most simple things right in terms of corporate communications.  Against this ugly back drop we see the PPS climb over 20% in just one week on higher than average but still very tepid volume.

Why???

The most simple conclusion is that in spite of all the Fear Uncertainty and Doubt....that there were still more than enough buyers looking to acquire shares than were looking to unload.  Its a reasonable conclusion in my opinion, but I don't know what the rationale of those buying is.  In fairness I have been continuing to add share purchase warrants myself, but I haven't added any shares since RVX was trading in and around $1.35.  

Maybe the company's phase III trial will get a thumbs up on the anticipated Futility Analysis due any time now.  Perhaps they'll soon be able to announce that they've secured sufficient financing to lift the cloud that has them disclosing being "in serious financial difficulty".  Maybe they've got interest from a big player for some type of licensing deal or partnership.  

Lots of perhaps, ifs and maybes.  But last week, buyers didn't seem to care.  Do your own DD of course and comments are always welcome.  

One last note, from a technical perspective the chart is looking overbought in the near term, so barring some positive news I would not be surprised to see the move higher stall or pull back at least some.  

Contrarians might want to Consider Cub Energy (KUB.V)

Given that Cub Energy trades with the symbol KUB on Canada's Venture exchange (TPNEF on the OTCBB in the US) I thought of spelling words starting with the letter C with a K instead.  But then I'd be suggesting that Kontrarians Konsider Kub....three Ks in a row is fine for a pitcher in a baseball game, but otherwise I find it disgusting.  I'm not blowing any dog whistles for KKK types with this blog.  

Anyway, as I so often do I'm digressing.

Contrarian investing/trading, for me it means seeking out those companies that are either out of favour, or that are below the radar.  With Cub Energy I think there's an element of both involved.  Because their operations are in the geopolitically sensitive country of Ukraine, that for me justifies the company being out of favour.  And given the pathetically low volume, KUB.V is obviously far below the radar screens of most investors and traders.

In the past 3 months KUB.V has seen 0 shares trading hands on 9 different days by my count, and not one day of 1 million or more. Most days over the past 3 months have seen less than 100K trading, which for a stock at this level makes the dollar value basically inconsequential.  

A winning strategy I've stumbled on is to buy when volume is incredibly light and then to sell when volume is incredibly high.  Its not 100% full proof though, nothing is.  Sometimes that waited for surge in volume never comes, and on occasion I have lost patience and given up only to see a stock I once held take off.  This isn't the first time I'm writing about KUB.V of course, but the surge in volume I'm waiting and hoping for hasn't materialized yet.  Here's the first post I did on KUB.V in October of last year:

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

I fully realize that taking out a position in KUB is a pretty boring proposition.  It doesn't have the excitement of penny stocks in the Cannabis space for example.  With MJ penny stocks you often have chop shops pumping out emails to anyone with a brokerage account and a pulse.  You're not going to see social media types proclaiming KUB.V a "no brainer" investment like you do with so many companies that are bleeding cash and printing shares to survive and meet payroll so that Execs can keep pulling in hundreds of thousands while an accumulated deficit grows bigger and bigger.  

Seriously, I think many Penny Stock company CEOs and Execs should be in government, they would fit right in.  But again...I'm digressing.  Besides, CUB Energy is earnings positive as of their most recent quarterly filing, so they don't need to play that game it would seem.  

Its not often you're going to find a stock trading for less than a single Canadian nickel with a Book Value three times higher than the current PPS.  Typically companies trade above their book value, not below it.  

I will leave readers to reach their own conclusions based on research and due diligence, and will close by saying I think this one is overdue for some attention....but in my opinion the stock has been under accumulation and smart money players like to buy low BEFORE the herd shows up.

Blessings and good luck, comments welcome.

Stepping on Superman's cape - Beware the merchants of hype

Ahhh Sunday, a day I sometimes like to reflect on those things that daze and amaze, that astound and confound, the games that amuse and confuse retail players in our wonderful equity markets.  

Its back to school time so I thought I'd share a lesson taught by the late Jim Croce.  Thankfully I'm writing this and not singing it, if I subjected readers to my singing voice I'd probably lose all of my loyal readers.  Yes both of them :-)  Those who've been around this planet more than half a century, you might remember this song.

♪♪♪ You don't step on Superman's cape

You don't spit into the wind

You don't pull the mask off the old Lone Ranger

And you don't mess around with Jim ♪♪♪

Now, aside from pointing out my age, that song teaches a very valuable lesson.  I don't know who this Jim in the song is, but the first two characters, Superman and the Lone Ranger, they don't exist.  

However when it comes to the stock market and social media, they're everywhere.  Anonymous posters abound who have Super Human abilities to pick out winning stocks, and like the Lone Ranger they're altruistic and benevolent souls simply wanting to help investors make winning plays.

And when they're not posting to message boards they're working at homeless shelters, donating blood or visiting elderly people in nursing homes.  If you believe this then I have a really hot stock tip for you, a company that's is poised to explode, you can read about it here:  Sure fire winning play

I've written about this before, but not for a while.  The reason these merchants of hype work social media sites is because fools abound.  We all know about those emails that come from some widow in a far flung African nation.  She sends you an email seeking assistance in repatriating millions of dollars that she is willing to share with you, but she needs money to facilitate things.  We've all seen it and asked ourselves:  "Who's dumb enough to fall for something like this"?  Not many people, but there are some desperate and dumb souls who do fall for these scams.  

And in the markets there are desperate and dumb people in droves, who will throw hundreds, thousands...even tens of thousands at a stock no matter how much of a diluting pig it is, no matter how many years they've been losing money, no matter that the main players have never had success turning a start up type company into a profitable business.

Be careful out there.  There are lots of industries that are going to be big, new energy solutions, new technologies, new drugs, new consumer products like food and drink.  But I would be dollars to donuts, that the small and microcaps that will in fact become big and successful, they don't have social media pumpers seeking out anyone with a brokerage account and a pulse.  Most of them will fail miserably, taking your money with them while providing the execs with a nice paycheck for failing.

That's enough for now....good luck.

Vuzix - What the hell happened on Thursday?

If you're holding or watching Vuzix, which trades under the symbol VUZI, then you no doubt saw the wild trading that took place on Thursday September 28th.

The stock opened down at $5.60, but that was nothing compared to what was coming.  The stock crashed and traded as low as $4.10 inter-day, but by the close it recovered to the opening price of $5.60 for a 5 cent drop from the Wednesday close.  

Quite the roller coaster, or more like that drop zone amusement ride maybe...or better yet a bungee jump.  

Social media sites like StockTwits were rife with speculation as to the cause.  Some thought it was a bear attack, others put the blame on manipulation dropping the price so that accumulators could take out stop losses.  There were all manner of theories, and I can imagine it was probably a bit nerve wracking for some shareholders.  I figure there had to be some big players involved, the volume of almost 1.5 million is almost ten times more than the daily average for the preceding three months.

Of course assuming there were some big players working their magic, I don't expect they'll be announcing anything.  Don't expect to see some Hedge Fund type issuing a PR saying:

********************

Fake News Wire (FNW) September 30th 2017:

We at Bogus Hedge Fund were responsible for the increased volume and volatility in the trading of VUZI shares on Thursday Sept 28th.  We engaged in what is commonly called a "Bear Raid" by borrowing as many shares as we were able and dumping them back into the market.  

This had the desired effect of having the share price fall significantly and we were then able to cover our short by taking out stop loss orders and other sell orders from nervous shareholders scared by the rapid fall we engineered, thus covering our short and realizing a nice return on our little gambit.

********************

Mind you, if a PR like that does in fact come out...just remember, you read it here first at Avoid The Bag.  

Vuzix may have been the target of such a bear raid, there's no way to know.  It is after all an incredibly risky stock given the amount of money they're burning through as evidenced by their 20 year history and accumulated deficit of over $85 million up to June 30th of this year.  

http://ir.vuzix.com/financials

Dilution is continually happening, after effecting a 1:75 reverse split share consolidation in February 2013 the number of issued shares was reduced to roughly 3.5 million as of May 15, 2013. But as of the most recent 10Q filing for the period up to June 30th the total outstanding shares had grown to over 20.6 million.  That was before yet another share offering for 1.5 million more shares.  

And then of course there is Intel which holds 49,626 shares of Series A Preferred Stock.  Each of those Series A Preferred shares is convertible into 100 common shares, meaning if Intel opts to convert and sell them, then there would be even more dilution to the tune of 4,962,600 more shares.  At this rate it might not be long before yet another reverse split is needed if they want to stay listed on the Nasdaq rather than going back to the OTCBB and Vancouver Exchange where they started.

Those who've already read the filings know the Pro Forma Book Value as of June 30th was only $0.71 per share of common stock, and just $0.44 cents on an as converted basis with the Series A convertible shares.  If you've missed that information you can get it from the filing here:

http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=12224119&RcvdDate=8/10/2017&CoName=VUZIX%20CORP&FormType=424B5&View=html

So what happened Thursday?  Was it hedge fund type games, or maybe Intel converting and disposing of its shares, or something else all together?  Who knows...but the fundamental picture remains scary to my eyes.  

I am aware that there are a lot of people seeing Rainbows and Unicorns in the future.  All I will say is wake me when the dream becomes reality, or maybe the Rainbow and Unicorn types are the ones who are asleep and dreaming.  

Comments always welcome, but no profanity...the word "hell" in the subject line of this posting is about as far as I will allow.  

Resverlogix to attend BioPharm America 2017 Sept 26 and 27 in Boston

Resverlogix has posted to its website, on the Media Events page, that the company will be attending Biopharm America in Boston on September 26th and 27th of this year, just over a week from now. Look under "Current Events" about half way down the page:

https://www.resverlogix.com/media/events.html#.Wb32pMiGPIU

Biopharm America is in its 10th year and is described as unique partnering event which brings together hundreds of executives from: Venture Capital, Major Pharma, Academia and all manner of Biotech Firms from start ups to developed companies with drugs on the market.

Biopharm America uses "PartneringOne" a software platform that allows participants to tailor one on one meetings specific to their needs.  The two day conference features leaders and executives from across the spectrum of Life Sciences.  Some big players slated to be in attendance include AstraZeneca, Bayer, Genentech, Merck, Pfizer and many more. 

As a Resverlogix shareholder who's very hopeful for the success of Apabetalone, the company's lead compound currently in Phase III trial, it is certainly encouraging to see the company busy and getting out to an event such as this one.  

BUT PLEASE TAKE NOTE, THERE IS A VERY REAL POSSIBILITY THE COMPANY MAY SKIP THE EVENT WITHOUT GIVING SHAREHOLDERS ANY NOTIFICATION!!!

I realize that might come as a shock to some, that a public company would publish on the world wide web its attendance at a major conference, and then not show up without prior notification.  But it is something that has already happened twice this year, most recently at the Rodman & Renshaw Investor Conference in New York City on September 11th.  The other time was in May at BioEquity Europe in Paris.  

In both cases the company published on their website attendance but then cancelled without providing any notification to shareholders ahead of the fact.  In the most recent case I communicated with IR at Resverlogix and was informed via email that the Rodman & Renshaw cancellation was due to a scheduling conflict, but no details were provided as to the nature of the conflict.  

I am pointing this out because if the company skips out again without prior notification I don't want my readers to accuse me of knowingly putting out false information.  I prefer to be proactive rather than reactive, and knowing the company's history of skipping investor conferences and such without notification I feel it behooves me to at least warn readers that it is a possibility.  

I am hopeful however that if, (for any reason) the company does decide to skip BioPharm America, that now they will notify stakeholders before the fact and not after.  I will be checking their media page frequently to see if the event is still listed and will leave a comment on this blog posting if I notice that it suddenly disappears.  

But to reiterate, I am hopeful the company will be proactive going forward.  I base that hope on a conversation I had with Resverlogix's VP of Investor Relations this past Friday. During that conversation I went through something of a laundry list of items where the company's communications were severely lacking in my view, some of it very basic stuff.  

On top of the two investor conferences that were skipped the company had published a Power Point with missing agenda items, and another with the wrong debt figure and share totals.  Then most recently on September 13th just passed the company put out a PR which said the company's most recent quarterly statements and MD&A were available on the company's website....they were not. Thankfully late on the afternoon of Friday September 16th, (after my conversation with IR) they were finally posted to the site.  Better late than never. 

IR acknowledged the importance of projecting a positive corporate image and of professionalism in the company's communications.  After all Resverlogix has a value statement on their website that says they're committed to "timely and transparent communications".  

Going forward I expect nothing less.