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My main research concerns investigating penny stocks and the industry of unethical stock promotion.
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  • Red Giant Entertainment Is The Latest Victory Mark Promotion

    At the market open on Thursday February 28th, the promoter group commonly known as "Victory Mark" (which owns the websites Preferred Penny Stocks, Select Penny Stocks and Penny Stock Heroes) announced their latest promotion Red Giant Entertainment (OTCQB:REDG). Prior to being covered by Victory Mark, REDG had barely traded at all. But upon Victory Mark's announcement that REDG was their latest pick, the stock opened at 0.075 and hit a high of nearly 0.15, with a volume of 78,976,741 shares traded for the day. Refer to the intraday chart of REDG for February 28th below:

    (click to enlarge)

    What does REDG do?

    It is not generally important what area of business a heavily promoted stock claims to operate in; usually the only thing that matters is what promoter group is behind the stock and what their track record is. Victory Mark is a powerful promoter and this fact is more relevant than the actual business operations (or lack thereof) of REDG. On their website REDG says "it is our goal for Red Giant Entertainment to become the largest comic book publisher in the world", and that "Red Giant is the largest publisher of exclusive comic book format material on the internet." REDG earns income from advertising revenue, publishing revenue and creative services related to its comic book and film projects.

    REDG earnings and fundamentals

    REDG is not a stock to invest in for the long term. In their latest 10Q (currently unaudited) they had total assets of $95,923 on November 30th, 2012 (including only $2,441 in cash), and sales of $105,937 for the three months ended November 30th, 2012 (net income before taxes was $38,143). With these small numbers, it makes no sense for REDG to have a market cap of tens of millions of dollars (at the time of writing its market cap is over $50,000,000). It is actually unusual for Victory Mark promoted stocks to have any revenue whatsoever - most of them are pure shell companies for the sole purpose of selling stock. It would seem that REDG is not completely worthless, but it is certainly still ludicrously overvalued.

    How will REDG behave in future?

    I do not recommend trading REDG if you lack experience trading stocks of this nature, as they are highly volatile, and getting orders filled can often be difficult. From here on, I expect that REDG will be a day traders stock that only smart traders will profit from. We could easily see REDG spike much higher, in which case there will be opportunities to profit either by buying breakouts to new all-time highs, or shorting (assuming shares become available) once the stock begins to run out of momentum. While risky, there will also be opportunities to buy for a bounce if the stock drops a large amount very quickly.

    As with all Victory Mark promotions, we know that REDG will definitely collapse monumentally at some point; the only question is when. The vast majority of losses from Victory Mark promotions in the past have been from naïve investors who held for the long term, and saw their investments collapse. Refer to the following charts of the past 4 Victory Mark promotions:

    VuMee Inc (OTCPK:VUME) - announced by Victory Mark on 9th January 2013

    (click to enlarge)

    Pub Crawl Holdings (PBCW.OB) (now PBCWE) - announced by Victory Mark on December 3rd 2012

    (click to enlarge)

    Solo International (OTCQB:SLIO) - announced by Victory Mark on 14th November 2012

    (click to enlarge)

    Pacwest Industries (OTC:PWEID) - announced by Victory Mark on 14th November 2012

    (click to enlarge)

    Readers should refer to PromoBuyer for a more detailed history of Victory Mark promotions. Quite clearly, there is not a lot of consistency in how Victory Mark stocks have performed. Some (such as PWEID) have performed very well, eventually doubling or tripling in price over the course of many days. Others (such as SLIO) have been complete disasters, lasting less than one day before crashing. It should be obvious looking at these charts that there is a high amount of risk and volatility in Victory Mark stocks and REDG will be no different. At this stage it is impossible to accurately predict how REDG will perform in the coming days. It could become a great success, or it could collapse completely without ever making new highs. Either way, I most likely will not be trading REDG at any time, and will only be watching from the sidelines.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: REDG
    Mar 02 4:09 AM | Link | Comment!
  • Beware Of GRZG: A $1M+ Mailer Promotion That Could Break Any Day

    Grizzly Gold Corp (OTC:GRZG) is a dangerous stock to be holding long at this stage. If you're new to stocks of this nature, you may be wondering why. After all, GRZG currently has a beautiful, gradually up-trending chart with increasing volume, and broke to a new all time high of $1.75 on Friday. But professional traders know that this stock could fall off a cliff any day. It's not a question of if, but when. GRZG will crash 50%+ at some point and the collapse will be quick. It is quite possible that GRZG will continue running for a few days (maybe even break past $2), but the ending is coming, and it's going to be brutal.

    (click to enlarge)

    (Update November 12th: while I was submitting this article, GRZG just had a minor collapse down to $1.5, followed by a minor bounce, which is not shown in the above chart)

    Make no mistake: GRZG's recent activity is NOT because of any news or business developments from the company. Rather, GRZG's current aesthetically-pleasing chart is a result of a $1,100,000+ stock promotion campaign from "pennystockschaser.com", "pennystockmomentum.com" and "Wealth Generation Report", who have been contracted to hype up GRZG so that the insiders (and there are a few of them) can dump their shares. There is nothing new here. GRZG is just yet another gold pump & dump, with a generic company website and horrible fundamentals.

    All those who believe in GRZG are encouraged to read the latest 10Q, where it is revealed that GRZG has a mere $93,404 in total assets and no revenues, despite having a current market cap of around $80,000,000. GRZG is not moving upwards because of any business developments, or because intelligent investors feel it's a good buy. It's being manipulated upwards by promoters, who are paid to con gullible 'investors' into buying this stock thinking it's a real company. The insiders of GRZG who hold stock (and there are a few) are selling into this artificial buying. As GRZG has 47,900,000 outstanding shares, there is quite a lot of stock to dump, and that's why "Wealth Generation Report" has been paid over $1 million to send out a mailer advertisement to try to bring in as many suckers as possible to buy this essentially worthless stock.

    Thanks to @iancassel for posting this picture of the GRZG advertisement (this is the only one I can find, as I don't live in the USA and don't get these promotional mailers - but if you do have a GRZG mailer and have a better picture please email me):

    It strikes me how similar this GRZG advertisement is to other gold pumps of the past, and there have been many. GRZG has land in Nevada which is being hyped up in these advertisements as containing huge gold deposits, although there is absolutely nothing to indicate that this is the case. There have been plenty of gold pumps just like GRZG that have all had spectacular deaths (LBGO, LSTG, SAGD etc.), but in particular I am reminded of AAGC, a past gold pump and dump that took place back in September 2011 which was very similar to GRZG (a gold exploration company based in Nevada, whose stock had a slow gradual uptrend before collapsing 90%+ in the months ahead). If you go ahead and take a look at some of the gold-based pump & dumps of the past, and compare them to GRZG, you'll find the similarities are uncanny. There is nothing unique about the GRZG promotion and very little creativity going on here. It's just the same old formula which has worked before and is still working due to the abundance of sucker investors who still get taken in by these horrible schemes.

    As this excellent research report on GRZG shows, the primary stockholders of GRZG who are trying to dump stock (especially Paul Strobel) have a dirty history, having been involved with pump and dump schemes in the past - Strobel in particular was a director for the past pump and dump RNGC. It is very common with pump and dump schemes for the main insiders and shareholders to have a fair amount of experience running these operations. Since sending out advertisements to buy worthless stock is still technically legal (as long as there's a disclaimer), the people who run these schemes can just rinse and repeat and do it as many times as they want.

    Running a pump and dump like GRZG is fairly straightforward as long as you have a few hundred thousand dollars in capital to invest. I believe (based on the volume some of these pumps get) that the ROI's can be very high, although it's difficult to determine exactly how much of a stocks volume is from gullible investors and how much of it is from day traders and wash trading. GRZG traded over $1 million in stock on Friday and I believe AT LEAST $200K-300K of that is from gullible investors who are buying it for the first time (again, it's really difficult to say, I'm just guessing so that number could be well off) who receive a mailer advertisement and decide to buy, and it's these people who are going to suffer horrible losses in the near future as the stock price plummets and they'll be left wondering why.

    Make no mistake: GRZG is going to fall 90%+ in the months ahead. Do NOT hold this stock long-term. I am writing this post only to hopefully stop at least one person from losing their retirement savings on this stock. It's horrible and I see it happen too often. If you're still confused on how pump and dump schemes like GRZG work, or you disagree with anything here, please contact me and I can help you out.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: short-ideas
    Nov 12 3:55 PM | Link | Comment!
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