Editor's Note: TheStreetSweeper has prepared a more comprehensive report on Sunpeaks Ventures (SNPK) and the promotion of its stock, which can be accessed by clicking here.
Sunpeaks Ventures (SNPK.OB) may sport a humongous $725 million market value right now, but it's still the same dinky vitamin distributor that captured little business - or attention - before AwesomePennyStocks decided to aggressively pump up its shares. A bleeding company with just $3,562 in revenue at the time of its latest financial report, Sunpeaks operates from an "executive office" that resembles a garage and peddles a vitamin supplement that costs three times as much as a similar product found on the shelves of CVS drugstores today.
As is often the case in the microcap arena, of course, the SNPK story is more about the extraordinary promotion of the stock than it is about the company itself. Until recently, SNPK remained an empty Nevada shell with plenty of stock - some 370 million shares - but no real business yet at all.
SNPK morphed into a vitamin seller a couple of months ago, however, with its stock bursting onto the market a few weeks later in a flurry of trading activity. Although SNPK initially rose just 1 cent to 43 cents a share on March 8, its opening day of trade, it enjoyed massive volume from the start, with 160 million shares of the stock instantly changing hands.
At that point, AwesomePennyStocks - the most powerful promoter in the business - had just begun touting SNPK to a vast network of subscribers who soon rushed to scoop up the brand-new shares. Barely one month later, with 50 promoters in charge of 351 different newsletters pumping the stock, SNPK has literally quadrupled in price and now commands $1.70 a share.
Like a select group of early investors, Whetu Inc. - a mysterious Panamanian firm that inherited a big chunk of SNPK as it emerged from its empty shell - now sits on an outright fortune as a result. After issuing a modest $110,000 promissory note to SNPK last summer, records show, Whetu wound up with 50 million of its highflying shares. That stock, if sold at current prices, would command a whopping $85 million today.
For its part, APS struck it rich even before the big SNPK promotion began. Last spring, for example, APS successfully pumped an outfit known as Portage Resources (OTCPK:POTG) from mere pennies all the way to $1.24 a share. A past target of TheStreetSweeper, POTG now trades for pennies once again.
After that, APS touted a string of other penny stocks as well - including CXLT, HDSI, MILV, AMWI, NSRS and AWSR - and reportedly scored a massive windfall by the time that 2011 came to an end. All told, a confidential source told TheStreetSweeper ahead of this story, the faceless players behind APS pocketed at least $250 million on their stock promotions last year.
This time, an APS sister site actually kicked things off with a "pre-promotion" blast when SNPK first hit the market. In a move designed to catch attention, the tout sheet told investors that it would begin "official" coverage of SNPK between March 19 and March 26, while merely (if disingenuously) suggesting that its fans add the name to their watch list until then.
"If you plan on telling your friends about this new pick, we'd ask you not to do it quite yet," the editor craftily advised, "as we want to issue the official announcement first to all our members before non-members get the opportunity of buying SNPK."
As intended, that message produced the opposite result, with dozens of other "affiliates" piling on and APS itself taking the lead. SNPK did its part as well. The company began hunting down a big-name spokesman for its flagship product Clotamin - a vitamin K-free supplement suitable for patients on anticoagulant therapy -- and soon came through with a helpful announcement: SNPK was now in the "final stages" of negotiations to sign a former NBA star and current head coach to endorse its vitamin supplement.
With that, the big pump was officially underway. SNPK dutifully followed up with more good news - about sales agreements with several drugstore chains - but the stock nevertheless stalled around 70 cents before outright disasterstruck. On March 16, barely one week after its big debut, SNPK suddenly announced that it had "initiated a review, through special counsel, in connection with the high volume of trading and price rise in its common shares on the OTC Bulletin Board."
Why? As it turns out, the Financial Industry Regulatory Authority (FINRA) had called SNPK to inform the company that it had "commenced … an inquiry" of its own.
The stock, which had touched an intraday high of 68 cents before that jarring news, crashed to 29 cents, as jittery players bailed. Thanks to a sudden wave of buying power just before the close, however, SNPK handily recovered to end that volatile trading session on a strong note at 50 cents a share.
For his part, SNPK Chief Executive Officer Mackie Barch automatically assured investors that, as the only insider who owns the stock, he still held all of his own shares. Barch instead blamed "persons unknown to current management" for the curious trading activity that had set off the alarm. In a further effort to calm frazzled nerves, SNPK then followed up with a special Saturday press release that officially identified former all-star NBA player Paul Silas as the spokesman for its expensive vitamin.
APS soon came to the rescue as well. In a bold message to its followers, APS claimed that FINRA simply wanted to "make sure everything is fine over there, and it definitely seems to be fine" after news of the inquiry. By the following week, the crisis had blown over, and the stock resumed its climb. Some traders, besotted with ASP and its apparent invincibility, even viewed the recent setback as part of a grand plan.
"The FINRA investigation, picture of SNPK HQ, sell-off 4/30/2012 were all moves in a game like chess," one investor cheerfully proclaimed. And "APS is the chess master. This stock is going to shock people with the PPS it will reach."
With the stock back on track, the promotion entered a new phase. The company launched a television commercial that featured people on blood-thinners - like those suited for its own product -- hugging one another on screen. Meanwhile, APS enlisted the help of a notorious outfit known as Capital Financial Media (CFM) to promote SNPK through the mail. Armed with a generous production budget of at least $500,000 (but potentially stretching into the seven-figure range), CFM hired three different distributors - Penny Stock Pillager, Penny Stock Hunter and Wall Street Reaper - to flood mailboxes with bullish promotions about the tiny vitamin company.
As those mailers made their way through the country, SNPK rode a fresh wave of rising volume past the $1 mark for the very first time. APS followers responded with a religious show of faith: "Listen ONLY to APS AND HER AFFILIATE sister newsletters," one proclaimed, "and you can't go wrong $$$$$$$."
As it turns out, however, APS had actually introduced its current pick on the heels of a botched job. On Feb. 23, the newsletter preannounced American West Resources (AWSR.OB) - an obscure coal miner - as its next "pick" by including specific details that clearly identified that company. As a result, AWSR suddenly rocketed a full $1 to $1.29 a share.
At 3 a.m., however, APS followed up with a lame correction explaining that the newsletter had "contained a symbol that was not meant to be here" and blamed its editors for the mistake. AWSR promptly dropped, although it retained some temporary support provided by APS fans who viewed the "correction" as part of the overall plan. Once SNPK surfaced as the "real" pick, however, AWSR totally collapsed and - badly damaged at that point - spiraled all the way below its original price to just 15 cents a share.
Early SNPK investors actually paid far less than that for their lucky shares. As noted above, Whetu Inc. spent the equivalent of just $110,000 for 50 million shares of SNPK stock before it burst onto the market. Blue Lagoon, another Panamanian outfit, looks like it hit the jackpot, too. That firm issued SNPK a $40,000 promissory note that could be converted into 667,667 shares of stock (at a conversion price of 6 cents a share) ahead of a 45:1 stock split that left it entitled to millions of those valuable shares instead. At least eight other early investors scored sweetheart deals of their own, with each one buying 175,000 shares of SNPK stock - at just a penny apiece - ahead of that stock split as well.
Thanks to the big APS promotion, even ordinary SNPK investors look like big-time winners right now. If history serves as any guide, however, the stock will soon collapse. After all, the stock charts of past APS favorites all tell the same old story.
Shoot, look at SNPK itself, once APS moves on to its next hot pick.
* Important Disclosure: No member of TheStreetSweeper's staff or advisory board has ever taken a financial position in Sunpeaks Ventures (SNPK.OB) or received any compensation from others who have positions in the stock. As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking positions in any of the companies that they cover. To provide feedback on this story, please send an email to email@example.com or contact the author directly at firstname.lastname@example.org.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.