Category: Microcap

Tim Sykes looks to sue stock promoter Stock Psycho for Libel

Tim Sykes is looking to sue the owner of PennyStockAlerts.com for libel; that stock promoter has written several negative articles about Sykes that appear very high in the search results when searching for “Timothy Sykes” and related searches on Google.

http://pennystockalerts.com/timothy-sykes/
http://pennystockalerts.com/penny-stock-millionaire/
http://pennystockalerts.com/stock-psycho-busts-timothy-sykes-promoting-penny-stocks-for-pay/

Sykes wrote a blog post responding to the second of the above posts last June, entitled Refuting 8 Lies About My Being A Penny Stock Promoter & A Scam, Excuse Me For Only Being Up 1,458%.

It was Tim Sykes who alerted me (and his other Pennystocking Silver subscribers) to this matter via a Profiding alert (link for subscribers only) in which he linked to this brief article on Domain Name Wire that describes his lawsuit (PDF) against Domain name registrar Moniker Online Services LLC  in Florida. The case is 0:12-cv-60515-JIC in the Southern Florida district of U.S. District Court, and the complaint was just filed by Sykes and entered into the court docket yesterday. Excerpted from the complaint below is the information pertaining to Sykes’ complaint against PennyStockAlerts.com:

7.   Upon information and belief, the registrant for pennystocksalerts.com uses the alias “Stock Psycho” (“Stock Psycho”).
8.   Stock Psycho has engaged in unlawful activities, including without limitation defamation, trade libel and other related torts, and has caused Plaintiff damage by reason thereof.
9.   After exhaustive investigation, Stock Psycho’s true identity is unknown to Plaintiff.

The weird thing about this is that it is not hard to find Stock Psycho’s true identity. While the domain name is registered privately via Moniker (see whois search or check out my screenshot of a whois search I ran today), the disclaimer page at http://pennystockalerts.com/disclaimer/ (see screenshot taken today) states:

Pennystockalerts.com is owned and operated by IPR Agency LLC, a California company.  For purposes of this disclaimer, IPR Agency LLC and Pennystockalerts.com are to be understood as the same entity.  All references to “we”, “our”, etc, refer to IPR Agency LLC and its wholly owned website PennyStockAlerts.com

California has an online business entity search. A quick search for “IPR Agency LLC” brought up the following info (see full screenshot):

So the website that Sykes alleges has defamed him clearly states that it is owned by a Californian LLC by the name of IPR Agency LLC, for which Ryan Franks is the registered agent. I do not understand why Sykes’ lawyer bothered to sue Moniker when the PennyStockAlerts.com website indicates that it is owned by a Californian LLC that exists and that can thus be served with a lawsuit.

I should add that the same person and LLC that runs PennyStockAlerts.com also runs DailyPennyStocks.com under the alias “Darth Trader”. The indications that DailyPennyStocks.com is run by IPR Agency LLC are less obvious — at the current time that is not mentioned on the disclaimer page but is mentioned in the copyright and in the emails (see these screenshots).

[Edit 12/7/2012] – The lawsuit against Moniker was dismissed without prejudice (pdf). I believe that Sykes is pursuing the matter in another venue though.

A web search yielded the following classified legal ad in the Los Angeles Times:

Legal Notices: NOTICE OF ACTION CONSTRUCTIVE SERVICE IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT OF FLORIDA, IN AND FOR MIAMI-DADE COUNTY. CIVIL ACTION NO. 12-33962 CA 25 IN RE: TIMOTHY SYKES vs. RYAN FRANKS AND IPR AGENCY, LLC, NOTICE BY PUBLICATION TO: RYAN FRANKS AND IPR AGENCY, LLC YOU ARE HEREBY NOTIFIED that an action for legal and equitable relief has been filed against you and you are required to serve a copy of your written defense, if any to it on Karen Cohen, Esq., attorney for Timothy Sykes whose address is Law Offices of Karen Cohen, PLLC, 1041 Ives Dairy Rd., Suite 236, Miami, FL 33179 and file the original with the Clerk of the above styled court on or before January 2, 2013; otherwise a default will be entered against you for the relief prayed for in the complaint or petition. WITNESS my hand and the seal of said court at Miami-Dade, Florida on this 16th day of November. Clerk Name: Harvey Ruvin As clerk, Circuit Court Miami-Dade – County, Florida By Barbara Rodriguez As Deputy Clerk (Circuit Court Seal)

This appears to indicate that Sykes and his lawyer have not been able to locate Ryan Franks or IPR Agency LLC in order to serve them with the lawsuit.

[Edit 3/15/2013]: Stock Psycho / Darth Trader now discloses that the websites are owned by Focus Media.

Disclaimer: I am not a lawyer or legal expert. I have no positions in any stocks mentioned. I have multiple business relationships with Timothy Sykes — please see my terms of use for details. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

The websites of stock promoter Sherwood Ventures LLC (f/k/a Blue Wave Advisors LLC)

One well-known stock promoter is Sherwood Ventures LLC, formerly known as, or whose websites were formerly owned by, Blue Wave Advisors, LLC (see their website). It is a good stock promoter to analyze because unlike some other promoters, they do not change their address and legal entity every year or two. This makes finding their various websites rather easy. The rest of this post below was written before Bluewave changed to Sherwood. To my knowledge all the websites remain under common ownership.

One of the more common mistakes that new penny stock traders make is that they look on websites like StockPromoters.com or HotStocked.com or StockReads.com and then see that (for example) 20 different newsletters are promoting one stock. What matters is not the number of newsletters but how many separate promoters pump the stock and what the reach of those promoters is. (Of course, the most common mistake new penny stock traders make is believing that buying promoted penny stocks is a good idea — most of the time that leads to losses; there is a reason why I started trading penny stocks solely by short selling them and even now I sell short much more often than I buy.)

Following are excerpts from emails I received today promoting PBIO, first from BeaconEquity.com:

BeaconEquity.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From StockPreacher.com:

StockPreacher.com is a wholly-owned subsidiary of BlueWave Advisor,BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From MicroStockProfit.com:

Microstockprofit.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services

From TheLightningPicks.com:

TheLightningPicks.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From TheHotPennyStocks.com:

TheHotPennyStocks.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From StockRoach.com:

BlueWave Advisors, LLC owns seventy five percent of the outstanding membership interests of StockHideout LLC. Stock_Analyzer owns twenty five percent of the outstanding membership interests of StockHideout, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From StockHideout.com:

BlueWave Advisors, LLC owns seventy five percent of the outstanding membership interests of StockHideout LLC. Stock_Analyzer owns twenty five percent of the outstanding membership interests of StockHideout, LLC.BlueWave Advisors has been compensated thirty five thousand dollars from Equities Awareness Group (a non-controlling third party shareholder) for PBIO advertising and promotional services.

From InvestorSoup.com (on 3/15 — I did not see an email from them today promoting PBIO):

Investorsoup.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.Currently BlueWave Advisors has been compensated sixty thousand dollars from Ouisache Advisors (a non-controlling 3rd party) for BARZ advertising and promotion.BlueWave Advisors has been compensated 750,000 Restricted Rule 144 shares from the company for PSID advertising and promotion. BlueWave Advisors has been compensated seventy five thousand dollars from Ouisache Advisors (a non-controlling 3rd party) for VGTL advertising and promotion

From PennyStockCraze.com (on 3/15 — I did not see an email from them today promoting PBIO):

PennyStockCraze.com is a wholly-owned subsidiary of BlueWave Advisors, LLC.Currently BlueWave Advisors has been compensated sixty thousand dollars from Ouisache Advisors (a non-controlling 3rd party) for BARZ advertising and promotion.BlueWave Advisors has been compensated 750,000 Restricted Rule 144 shares from the company for PSID advertising and promotion. BlueWave Advisors has been compensated seventy five thousand dollars from Ouisache Advisors (a non-controlling 3rd party) for VGTL advertising and promotion.

[Edit 4/5/2012 to add the Tech24.org website]

I just learned about another pump website owned by Blue Wave Advisors, LLC —   Tech24.org. See: http://www.tech24.org/disclaimer:

Tech24.org is a wholly-owned by BlueWave Advisors, LLC. BlueWave Advisors, LLC is a financial public relations company that is compensated by many of the companies profiled.

One interesting fact about Blue Wave Advisors, LLC is that the company owns and runs two paid subscription stock alerts services. Those services are TopStockPicks.com / SuperNovaAlerts and JasonBondPicks.

From TopStockPicks.com disclaimer:

TopStockPicks.com is a wholly-owned by BlueWave Advisors, LLC. While BlueWave Advisors, LLC is a compensated investor relations firm, TopStockPicks.com and its newsletter are unbiased.

From JasonBondPicks.com disclaimer:

JasonBondPicks.com is wholly-owned by BlueWave Advisors, LLC (BWA). BWA is a compensated investor relations firm. JasonBondPicks.com (JBP) offers a monthly, paid membership stock alert newsletter. These stock picks are one hundred percent unbiased and JBP is never compensated for them. JBP also runs a free newsletter, which will occasionally send out stock ideas which BWA may receive compensation for.

From a business perspective, it is a great idea for a stock promoter to have separate paid alerts services so that they can earn money in multiple ways (and they have a captive audience of people on their free stock promotion email lists to upsell their paid services to). That being said, I do not like the situation from the perspective of the guru, because the relationship, while it certainly leads to increased sales, can taint the guru, especially in a situation like with JasonBondPicks.com where Blue Wave sends paid stock promotions to people on his free email list.

[Edit 2013-6-10]: Both JasonBondPicks.com and TopStockPicks.com now disclose ownership by “Patriot Publishing.” Perhaps the negative publicity of their ownership by a stock promotion company led to the spinoff. In all likelihood the owners of Patriot Publishing likely remain the same people who own and control Sherwood Ventures.

Disclaimer: No positions in any stocks mentioned. I have multiple business relationships with Timothy Sykes, co-owner of Profit.ly, which currently provides the platform for JasonBondPicks.com and TopStockPicks.com [update 3/20/2012 – Apparently those newsletters are no longer on Profit.ly or at least are not being sold through Profit.ly — see http://profit.ly/sales/gurus] — please see my terms of use for details. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

On Timothy Sykes becoming a stock promoter and promoting IRYS

In case you missed it, Timothy Sykes promoted IRYS this morning in an email to those who signed up to his free promotional email list for the re-launch of his longer-term penny stock trading newsletter. See the email online here. The disclaimer from his email is as follows (bold added by me):

DISCLAIMER: This newsletter is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. Millionaire Media, LLC and Market Authority, LLC, have been compensated one hundred thousand dollars for the distribution of this particular email. Any future email regarding a specific company will be the result of an advertising and promotional campaign for which Millionaire Media, LLC and Market Authority receives compensation. This compensation constitutes a conflict of interest, as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this newsletter as the basis for any investment decision. Millionaire Media and Market Authority do not hold positions in the covered company.

While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.Market Authority is also not a registered investment adviser. We do not and will not provide personalized investment advice. Market Authority publishes opinionated information about finance and trading that we believe our subscribers may be interested in. Click here to view our entire dilsclaimer.

Past performance is not indicative of future results.

[Update 3/5/2011 – See Tim’s blog post about this]

I have to acknowledge my failure in this situation. Tim asked my opinion on him doing an ‘ethical’ stock promotion some time ago. I was vehemently against the idea of him doing that — I felt that he would take a huge hit to his reputation even in a best-case scenario. If the pump were to bomb and his subscribers lost money the hit to his reputation would be huge, I thought. I feel now that I failed and I should have been more against it — I should have said that I would cease working with/for Tim if he did ever get paid to promote a stock.

The fact of the matter is that it is hard if not impossible to have a successful stock promotion without blatantly lying. The whole point of stock promotion is to get suckers to invest in worthless companies so that insiders or other large shareholders can sell their shares. If mostly day-traders buy a promoted stock, then they will buy from the promoters at first but then their sells later in the day will crowd out the sells of the promoters. Longer-term investors will buy and hold for days or weeks or months or years and thus not compete with the promoters to sell stock.

By promoting a stock while not actually hyping it up, the promoter will get fewer buyers (mostly day-traders) and the promotion will do poorly. I believe we are already seeing this in IRYS, where there was a bunch of buying in the first 15 minutes after the open, sending it up from its .755 open to a brief high of .83, before it started fading. The current price action does not bode well for the stock.

If you look at Tim’s email you will see that he didn’t put absurd price targets in it nor did he hype up the company. That makes his stock promotion less unethical than others. It still leaves a sour taste in my mouth and I know more than a few of his subscribers are unhappy with Tim for engaging in any stock promotion.

As to what I did with IRYS, I bought 21,000 shares at the open and sold almost all those shares in the first 15 minutes (I sold my last shares at $0.801 at 10:54 AM EST) . I have no position remaining and I netted just over $870 in profits. I did not mention my buys in Tim’s chat but said I would not discuss my trading of the stock; as with all pumps, I urged everyone to be careful and not to chase the stock. I did alert when I had sold most of my shares and when I sold the last of my shares so that people in chat would think twice before buying it at the elevated prices it was at (over 80 cents). I no longer have a position in IRYS and I will not buy it again (I may short it in the future). I always strive to maintain the highest levels of ethical behavior and I believe that I acted in such a way as to minimize not just any conflict of interest but even the appearance thereof. That being said, I am a trader first and a blogger and chat moderator second — I was not going to avoid trading IRYS just because Tim Sykes was the one pumping it.

Disclaimer: No positions in any stocks mentioned. I have multiple business relationships with Timothy Sykes — please see my terms of use for details. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

We are all in this together … or not

Whenever you hear that phrase, “We’re all in this together,” be very, very cautious. That is what scammers will say to convince you to do stupid things with your money (like buying pumped stocks) and what both hucksters and even non-fraudulent trading gurus will say to try to get their hands on your money.

The simple truth of the matter is that everyone has different goals and priorities. The most important thing you can do is to make sure you are aware of how the priorities of those you deal with and listen to differ from your own. A stock promoter’s goal is simply to get you to buy stock — damn you and your kid’s college fund.  A trading guru who sells his services with an alert service or trading chatroom benefits the longer you subscribe. His financial interest is best served by selling something that you will continue to want or need for years and years. The guru’s monetary motivation will — ceteris paribus of course — cause him to charge as much as he can for as little as he can. He will sell you hard to get you to pay him more money.

Even saying that all traders care about is profits is wrong. Especially in the penny stock world there are many of us who are motivated by other things besides profits (of course we are all motivated to a large extent by profits). I remember getting a bunch of flak from commenters on this blog when I accused a certain pumper of violating securities laws (six months later the SEC sued him). People attacked me for potentially destroying profitable trading opportunities. But I along with most other bloggers don’t just do this for money.

At the end of the day, each of us is motivated by different things, some of which are obvious, some of which are not. Money is the most obvious, but most of have emotional motivations — we genuinely want to help those we come across. Some of us have other motives that drive us, more powerful motives. When the time comes, my motivations will be made clear. In the meantime, let us embrace the motto “All for one, one for all, and every man for himself!”

 

Disclaimer: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well..

Pumper Crazypennystocks.com is two separate legal entities

It appears that the stock promoter known to me and others as Crazypennystocks (despite not using that website for over a year and running a number of other websites) is split into two seperate legal entities, at least according to their disclaimers. Actually, this happened first when Crazypenny websites first starting disclosing compensation (on the QOIL pump in September 2010 when Pennystockadvice disclosed $10,000 in compensation and SecretPennyStocks disclosed $5,000 Canadian in compensation) but I did not notice it until now.

See the images below:

PennyStockAdvice.com discloses $20,000 in compensation already received but does not disclose the third party payer.

SecretPennyStocks.com discloses an expectation of receiving €15,000 and discloses its ownership by Centro Azteca S.A and payment “from a third party through the Tengeria Foundation”.

Disclaimer: No positions in any stocks mentioned and no connection to the stock promoters mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well..

Penny stock trader Nate Michaud settles with SEC in pump & dump case

Nathan M. Michaud, a prominent penny stock trader, has settled with the Securities and Exchange Commission regarding a civil suit filed by the SEC in May 2009 regarding a pump & dump that occurred in the stock of Asia Global from August 2006 until February 2007. Michaud is known online as “Investorslive”, has 9,000 Twitter followers, and runs the website Investorslive.com and since 2009 he has run the trading chatroom InvestorsUnderground.com. The settlement proposal, under which Michaud has agreed to pay $93,914.19 to the SEC, was filed on December 21st, 2011 with the U.S. District Court of Delaware.

The original SEC complaint in the case was filed May 20, 2009 and can be found online at the SEC’s website (direct link to pdf). A summary of the complaint can also be found on the the SEC’s website (link). The misdeeds alleged by the SEC in this case were fairly complicated and involved eight different people (since amended to include four others) and in the pump and dumps of four different stocks. A parallel criminal case filed by the US Attorney for the District of Delaware charged six of the eight sued by the SEC (Michaud and Adam S. Rosengard were the only two charged civilly and not criminally). Named in the SEC civil case and also in the criminal case were Pawel P. Dynkowski, Matthew W. Brown (founder of InvestorsHub), Jacob Canceli, Gerard J. D’Amaro, Joseph Mangiapane Jr., and Marc J. Riviello. I will not further discuss the criminal case in this post– much has been written about that already.

Following are excerpts from the original SEC complaint that highlight the allegations against Michaud. (Also see the 2nd amended complaint that I downloaded from the Delaware District Court, from December 22, 2011, which includes four additional defendants.)

4. Brown planned the Asia Global pump-and-dump scheme with Defendants Joseph Mangiapane and Marc Riviello, who were both registered representatives at a small broker-dealer in California.  Dynkowski and Defendant Nathan Michaud, who met through InvestorsHub.com, pumped the price of the stock using wash sales, matched orders, and other manipulative trading, coordinated with false, misleading, and touting press releases by the company. The scheme occurred in three cycles:  August-September 2006, November-December 2006, and January-February 2007.  After manipulating the price of the stock, Dynkowski, Brown, Mangiapane, and Riviello dumped more  than 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts.  The illicit proceeds from this scheme totaled at least $4,050,529.

…

46.  Defendant Nathan Michaud, a trader whom Dynkowski had previously met  through InvestorsHub.com, also participated in this scheme.  In August and September 2006, Dynkowski and Michaud, as well as others, engaged in wash sales, matched orders, and other manipulative trading to generate phony volume and artificially inflate Asia Global’s stock price.  When the scheme began, Asia Global traded for approximately 11  cents per  share.  Starting on August 9,2006,  Dynkowski and Michaud began to pump the stock using wash sales, matched orders, and other manipulative trading.  Dynkowski and Michaud continued their manipulative trading through the end of September 2006.

47.  This manipulative trading artificially inflated Asia Global’s stock price. In the space of thirteen trading days, the price ofAsia Global’s stock rose from 11.5-cents per share at the close of the market on August 9, 2006, to an intraday high of 41  cents per share on August 25,2006.   As i a  Global’s daily volume likewise jumped by millions of shares per  day during this period.

 

When asked for comment via email, Nathan Michaud emphasized that he “had nothing to do with the dumping” of improperly registered stock. From the SEC complaint: “Dynkowski, Brown, Mangiapane, and Riviello dumped more  than 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts.“.

The SEC asked the court to punish Michaud with the following actions:

c)  permanently enjoin Defendant Michaud from engaging in future conduct in violation ofExchange Act Section 10(b) [15 U.S.C.  § 78j(b)], Rule lOb-5 thereunder [17 C.F.R. § 240.10b-5], and Securities Act Section 17(a) [15 U.S.C. § 77q(a)];

…

f)  order Defendant Michaud to pay civil penalties under Exchange Act Section 21 (d)(3) [15 U.S.C. § 78u(d)(3)];

…

h)   order Defendants Dynkowski, Brown, Canceli, D’Amaro, Mangiapane, Michaud, Riviello, and Rosengard to disgorge, with prejudgment interest, any ill-gotten gains and provide an accounting of  monies they received;

The settlement proposal was filed by the SEC with the Delaware District Court on December 21, 2011, as was Michaud’s consent to the settlement. As is usual with SEC settlements, by consenting to the settlement, Michaud neither confirmed nor denied wrongdoing and agreed not to break securities laws in the future. He was also ordered to pay $40,600 of disgorgement of profits, $3,314.19 in interest, and a civil penalty of $50,000 (totaling $93,914.19).

From the settlement proposal:

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant is liable for disgorgement of $40,600, representing profits gained as a result of the conduct alleged in the Complaint, together with prejudgment interest thereon in the amount of $3314.19, and a civil penalty in the amount of $50,000 pursuant to Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)].

Previously, Timothy Sykes wrote about the allegations against Michaud back in August 2010.

What is my take on this? I have interacted with Nate Michaud online since April 2008 and I was in his chat room for all of 2009 and 2010. In none of my interactions with him has he come across as anything less than honest and I have not later found anything of substance he has said to be untruthful. He continues to trade pump and dumps (both long and short). I do believe that he is guilty of impropriety in the case he settled with the SEC, but I have not seen anything to indicate that he has acted improperly since I have known him. Please see my disclosures below on my relationship with Nate Michaud.

Update 1/25/2012: The judge has signed off on the settlement (PDF), making it official. One interesting thing to note is that Michaud signed the settlement in November 2010 — it took over a year for it to get filed with the court and approved by the judge (due to the related criminal case against other people).

 

Disclosure: I used to be an affiliate of InvestorsUnderground (IU) stock chat, for which I received 50% of a new subscriber’s first month’s payment and 25% on an ongoing basis. I have not received any affiliate payments from them since December 2010. I am no longer a member of InvestorsUnderground stock chat; my membership ended at the end of 2010. I had subscribed to IU since its inception at the beginning of 2009 and I paid the standard rate of membership for charter members, which was $99/quarter (I also was a member of the free predecessor chat, Green on the Screen, for 6 months starting in summer 2008). From 2009 through 2010, I received a total of $5,720.39 (net of Paypal fees) from Pietro Rossa Trading (the Nevada corporation through which Nate Michaud runs InvestorsUnderground). This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

I no longer recommend InvestorsUnderground.com stock chat

My InvestorsUnderground affiliate link redirects to this page. I stopped using InvestorsUnderground stock chat in December 2010 and I stopped recommending the chat at the same time. I do not recommend products or services that I do not use. This should not be considered a recommendation against IU chat — I simply don’t know enough to have an opinion anymore.

My old affiliate link now redirects to this page.

[Post updated 7 November 2018]

Disclosure: I used to be an affiliate of InvestorsUnderground (IU) stock chat, for which I received 50% of a new subscriber’s first month’s payment and 25% on an ongoing basis. I have not received any affiliate payments from them since December 2010. I am no longer a member of InvestorsUnderground stock chat; my membership ended at the end of 2010. I had subscribed to IU since its inception at the beginning of 2009 and I paid the standard rate of membership for charter members, which was $99/quarter (I also was a member of the free predecessor chat, Green on the Screen, for 6 months starting in summer 2008). From 2009 through 2010, I received a total of $5,720.39 (net of Paypal fees) from Pietro Rossa Trading (the Nevada corporation through which Nate Michaud runs InvestorsUnderground). This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Now is a Good Time to Buy Back Stock

Many companies borrowed money to buy back stock when their stock prices were high. Now that stock prices have fallen they are conserving cash. That is backwards. One tiny little company did the opposite. That company is TSR, Inc. [[tsri]]. I have previously written about TSR, recommending it when its stock price was about twice as high as it is now (oops), and then writing about my attempt to get the company to spend its cash hoard. The company instituted a buyback plan but bought few shares. Then today it announced that it had just bought back over 10% of the outstanding shares at a price of $2.30 per share. At this price the company bought its stock for 80% of its net cash + receivables + Treasury bonds. This will be accretive to book value per share and will not harm the company’s liquidity. That is how companies should use buybacks.

From the press release:

TSR, Inc., (NASDAQ:TSRI – News) a provider of computer programming consulting services, announced today that it had repurchased 456,523 shares of its Common Stock in a private transaction at a purchase price of $2.30 per share. The repurchase is in addition to repurchases that may be effected from time to time pursuant to the Company’s previously announced stock repurchase program. Pursuant to the stock repurchase program, the Company’s Board of Directors has authorized repurchase of up to 300,000 shares, of which approximately 61,000 have been repurchased. There were approximately 4,500,000 shares outstanding prior to the purchase.

At current prices I believe TSR to be an excellent investment. By my calculation, the company’ recent buyback increased the per-share net quick assets (net cash plus marketable securities and receivables, including non-current treasury bonds) to $2.97 per share from $2.90 per share. At $2.30 per share it is at under 80% of net cash plus marketable securities and it trades at a P/E of 11. The stock is illiquid, so anyone buying it should use limit orders.

Disclosure: I am long TSRI.

How to Get Rich Trading Penny Stocks

I first heard about Timothy Sykes at the beginning of this year. I was skeptical of his claims of making lots of money trading and even more skeptical about his ability to teach others to trade successfully. My article, “Timothy Sykes is Full of Bullship,” started a dialogue between Tim and myself. I started reading his blog and following his trades. I read every single blog post he had ever written. I became convinced that he was a talented and profitable trader and that his trading system worked. I then decided to subscribe to his TimAlerts trade service, where he sends out pre-market watchlists and alerts of his trades via email, to see if I could profitably follow his trades.

In the chart below you can see my profits from trading Tim’s system. Sometimes I followed his trades, sometimes I didn’t, and sometimes I traded stocks he did not even find. I started out trading small and increased the size of my trades over time (the red and fuchsia dots indicate where I increased my max position size).


(note: while the blue squares represent trades, many of them are me just adding to or gradually closing positions in what is essentially the same trade)

As you can see from the chart, I have done well. In just over 3 months I have made $40,000 trading his system. In one trade yesterday I made $19,000 in two days. But the amount of money I have made is not nearly as impressive as the lack of drawdowns that I have had. The one large (percentage-wise) drawdown I had (on 7/29) was my first trade after increasing my position size and it was an accidental trade that I did not even mean to make! Otherwise, my maximum drawdown was 15%, and even that was due to making a dumb mistake–getting too large of a position in an illiquid stock.

After my success trading Sykes’ system, I became the first lifetime subscriber to TimAlerts and wrote a blog post, “Why I Paid Timothy Sykes $2,000.” So, if you ever consider trading stocks (and not just buying and holding index funds as an investment, which everyone should do), then why not learn from Tim Sykes, one of the few people who makes money trading and has demonstrated an ability to teach others how to profitably trade. I recommend reading his blog, buying his book, and signing up for TimAlerts.

If you doubt my performance of Sykes’ performance, I suggest visiting Covestor, where all of Sykes’ trades and some of mine have been verified directly from our brokerage accounts.

Disclosure: I am a customer of Timothy Sykes and am the first TimAlerts for Life member. I am an affiliate of his and make a 25% commission on any sales he makes through the links on this article.

Request for help – Looking for a direct market access broker

As my regular readers are aware, I have sold short a number of penny stocks over the last year. However, that strategy has not worked recently due to my broker, Interactive Brokers, forcing me to close out short positions without notice due to an inability to continue to borrow shares. I am therefore searching for a new and better broker. If you happen to know of any brokers that are good at getting long-term borrows on hard-to-borrow OTC BB and Nasdaq stocks (it would also be great to be able to get pre-borrows) and that would be willing to deal with a sophisticated individual investor, please contact me or leave a comment below. If you know what kind of account / trading minimums I would need for them to give me the time of day, please let me know.

I am currently looking into Genesis Securities as well as RBC Professional Trader. If you have experience with either of these, please let me know by leaving a comment here or sending me an email.

Thank you for your help.