How To Short Sell Pump & Dumps: Example #1
Posted by Timothy Sykes on Tue 26th of May, 2009 08:15:06 AM
Tags:
The past few weeks have been crazy–every single day there have been great pump and dumps as the soulless stock promoters, unethical message board pumpers & dumb company insiders have helped and/or combined forces to pump the stocks of some of the worst publicly traded stocks around
Besides profiting $3,400+ shorting pump & dumps NVGN (detailed post coming), and $1600+ on UOMO (detailed post comingggggg when I have time), there was a smaller pump from which I profited:
I shorted 1,000 shares at $2.40 in the middle of that chart after the soulless promoter Lebed sent out an email (stock promoters throw out “real” picks every now and then to mask their real business of getting paid by companies to push prices higher so companies can raise capital/shareholders can sell at excessive prices) which had pushed the carcass stock up from the mid $1s in less than hour.
I wanted to short 3,000 shares, but since it was a true pump, only some of my order executed before the stock backed down to $2.20ish (it later rebounded to my entry, allow me and/or TIMalert subscribers a decent short, but I was doing a video interview for TheStreet.com that day)
This was the email that pumped the stock 50%+:
I am extremely excited to announce Agria Corporation (GRO) as my new stock to watch with a speculative rating of 1, my highest level of confidence!
My last speculative rating of 1 pick CDE went from $0.63 to $1.74 for a gain of 176%!
GRO is a China agriculture company that produces and sells high margin corn seeds, sheep breeding products and seedlings. My last speculative rating of 1 China agriculture play GFRE went from $0.22 to a high last week of $0.70!
GRO, at its current price of $1.65 has a market cap of just $104.2 million. GRO is sitting on $175.3 million in cash! That’s $2.78 per share in cash!
(GRO has almost no debt, a tiny $1.3 million in short-term borrowings.)
GRO has shareholder equity of $270.7 million which equals a book value of $4.29 per share!
GRO’s 3Q 2008 revenues were up 19.8% over the prior year to $12.9 million with net income (excluding non-cash compensation charges) of $3.9 million or $0.06 per share.
The 3Q is typically one of GRO’s weaker quarters because revenues come almost solely from their sheep breeding products. GRO’s 4Q and full-year 2008 results are due out by the end of June, and 4Q is typically one of GRO’s strongest quarters because it is corn growing season!
The reason I believe GRO is so ridiculously undervalued right now is due to confusion regarding their earnings. If you read GRO’s 3Q earnings press release you will see the company reported a loss over the past nine months of $109.1 million. This was NOT a real loss that affected shareholders in a material way. GRO took huge non-cash charges related to the transferring of shares from the majority shareholder to a key employee and deferred tax liabilities.
These one time charges have nothing to do with the actual performance of GRO’s agriculture business. To cut through the confusion and get a look at GRO’s real earnings situation, GRO finished 2008 with shareholder equity of $253.4 million and a book value of $4. GRO’s shareholder equity at the end of the 3Q was $270.7 million with a book value of $4.29.
GRO’s shareholder equity improved by $17.3 million over the past nine months with a $0.29 increase in book value!
Therefore, when you take out all the nonsense… GRO is extremely profitable! After 4Q results are released in June, it is possible GRO’s full year shareholder equity improvement over 2007 could be somewhere in the neighborhood of $0.40-$0.50 per share! If I am right, GRO’s real P/E based on their improving shareholder equity is only 3 or 4!
The way I look at GRO, if you buy the stock below $2.78 it’s almost as if you are getting paid to buy the stock… because they have $2.78 per share in the bank… plus you are getting their extremely profitable agriculture business for free!
As always, don’t trust my research. Do your own research and make your own investment decisions.
Don’t be fooled by all “the research”–numbers, PRs, none of that crap matters in the carcass world of Penny Stocks, it’s all about hype & manipulation and Lebed’s email was a nice bit of hype, destined to fail over time.
In fact, it just took a few hours for the price to fade back down to reality and I covered my measly 1,000 shares at $2.08 for a miniscule, if predictable, $300…TIMalert subscribers did even better:
Out of GRO for a +$386. This more than makes up for my last $100 loss.
-wooshman
Shorted 3800 gro made 550 today. Third straight win in a row on the alerts.
-BGW
GRO = +$330
-Sillyguy
So now you see the chart came back up just last Friday, another Lebed pump, but this time commodities were surging…as were COIN & FEED–Lebed didn’t create the rise, he just piggybacked it…so I didn’t short this time around…yet.
Lessons in Short Selling pump & dumps part one…for more, see some upcoming posts or my PennyStocking instructional DVD.
TIMstore Monthly DVD Specials:
See all TIM DVD specials HERE
Related Reading
-
Skip Ledeebop
-
dave
-
Louie
-
Timothy Sykes
-
Timothy Sykes
-
Skyminor
-
timothysykes
-
akbar
TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Nov 6 | QXM | $4.31 | $4.80 | $1936 |
| Nov 4 | COT | $8.66 | $8.88 | $642 |
| Nov 4 | QXM | $4.61 | $4.89 | $822 |
| Oct 30 | DDRX | $25.70 | $26.53 | $812 |
| Oct 29 | CTDC | $4.00 | $4.42 | $781 |
| Oct 26 | AWSL | $3.24 | $4.10 | $2516 |
| Oct 23 | RODM | $5.27 | $5.23 | $301 |
| Oct 22 | AMLM | $2.69 | $2.97 | $820 |
| Oct 22 | USEG | $6.12 | $6.09 | $85 |
| Oct 20 | CBOU | $8.93 | $9.06 | $243 |
| Oct 16 | VRMLQ | $16.79 | $18.65 | $2773 |
| Oct 13 | YONG | $11.05 | $11.66 | $1202 |
| Oct 13 | NPHC | $0.59 | $0.71 | $583 |
| Oct 12 | IMGG | $0.60 | $0.70 | $682 |
| Oct 9 | ZAGG | $5.50 | $6.10 | $2380 |
| Oct 7 | GVBP | $0.03 | $0.27 | $702 |
| Oct 1 | NPHC | $0.70 | $0.85 | $1482 |
Total: $92,304 (644%)
