Trading The Latest Hot Beverage Stock: Skinny Nutritional (SKNY.OB)

Skinny Nutritional (SKNY.OB) (oxymoronic?) just launched the latest zero calorie water brand, Skinny Water, lured in some third-tier Coca Cola executive to serve on their board, basically entirely for his title (giving him 2mil shares–and many others many millions more–while unsuccessfully / humorously / amateurishly trying to ticker spam that announcement to get included in the Yahoo! news of Coca-Cola bottling (COKE), Pepsi (PEP) and of course Coca Cola (KO) (silly pumpers, for some strange reason, you guys haven’t read my book An American Hedge Fund, if you had, you’d know ticker spam is for kids…back in 1999-2000!), all the while trying to pitch themselves as the next Vitamin Water.

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Mr. Hankey And Richard Nixon Are Teaming Up For Your Benefit!

In recent posts like THIS, you might’ve noticed some small cartoons featured on several stock charts—namely Mr. Hankey, The Christmas Poo, of South Park fame and Richard Nixon, of “I am not a crook” fame, exemplifying the kind of crappy and crooked companies out there.

Like my blogging adventure, these cartoons are just starting to help make this stuff more understandable / visually stimulating. So, I need your help in finding small pictures of cartoons and pictures that represent common themes such as: so hot right now, too popular, indecisive, volatile, about to take a dive, full of fluff, heavily gossiped, solid company (yeah right, when are we ever gonna find a volatile stock with that quality!), poor management, cool products, bright future etc.

So, let’s see what you guys got, please help this overworked blogger out and link away!

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My Take On Visa Inc (V) aka Baseball Card Collecting In The 1990s

No matter how many times I say stick to trades with ideal risk-reward ratios for the smaller investor—those being media-hype plays and pumps and dumps courtesy of your friendly local stock promoter, the questions about random real companies keep streaming in—none moreso than Visa (V). The emails came from far and wide and helped inspire the thesis of THIS AOL article I wrote about the company the morning before its IPO. Yup, I was dead right. So how did I know it’d follow a VMware (VMW)-type trajectory; because simple theories work best.

Think about it, everybody and their other mother is comfortable with the strategy of buy what you know, buy blue-chip companies—blehhhhhhh! The absurd popularity of that strategy makes me gag because while it’s worked well in the past, it’s sooooo old news now. I’ll use the example highlighted in my book An American Hedge Fund by comparing this strategy to baseball card collecting—everybody growing up in the 1980s and 1990s who collected those stupid little pieces of cardboard dreamed of their values soaring into the thousands of dollars, just like those cards from back in the 1950s and 1960s.

Unfortunately, the card companies took advantage of this great track record and us suckers, producing those cards en mass and us kids—ignorant to the laws of supply and demand—bought them en mass, only too happy to pack them away and wait to collect our inevitable rewards.

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Pirates Pretending To Be Pig Farmers (Seriously)

Wow and I thought I liked money—the pig f#@!ers over at Agfeed Industries (FEED) raised another $25mil just 7 days after their first $10 mil plundering financing. The short time span between blatant dilution financings tells us now it’s gonna get interesting, a.) we’re def. gonna see more pig farm acquisitions (no doubt at the typical 2-5x income), which given soaring commodity prices, investors are gonna like (good short-term, but dangerous long-term aka why can they get them so cheap?) and b.) whoever bought these shares is even more motivated to turn this into a Wall Street darling telling clients and paying off/bribing getting others to tell their clients “with the Olympics coming up and food prices soaring, this is how you invest in both trends” (BS generalization).

Other than scalping, the rise is too gradual to warrant any shorting and if done right, this could become a great pump and dump story stock, meaning the potential upside is enormous…so respect the pump, buy if it suits your personality, don’t short too soon and never ever believe the hype. When this thing dies down—and it will eventually die, as 995 out of 1,000 piece of poo companies do (seriously)—its chart will resemble similarly flawed fraudulent microcrap lover of acquisitions ZVUE.

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If At First You Short A Pump And Dump And Succeed, Try, Try Again!

As I’ve posted HERE and HERE, EDEN was a great pump due to a 100% spike caused by a fluffy inaccurate article written by a major media outlet—my former employer—for a bit—TheStreet.com (they later corrected it, but the damage was already done). The first time I shorted at $2.55, impatiently/conservatively covering at $2.35 for a decent $180 profit. But given its tiny tiny tiny $6 million marketcap and annoying illiquidity, I don’t regret covering quickly…that much…cuz as I’ve shown on fellow microcap pump and dumpers PSTI, REED and SHZ, these suckers remain good shorts for many days.

So, when I re-shorted EDEN mid-day yesterday on a slight low volume bounce up from $2 to $2.20, I had every confidence in the world we’d see $2 again and then the question would be if there were stop losses there—as often happens at big fat round numbers. Despite some ever surprisingly determined buyers and a solidly bearish close at $2.04—caused by a 49,000 share sell order—I was even more confident of a big drop today.  

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TigerLogic (TIGR): The Piece Of Crap Formerly Known As Raining Data (RDTA)

Over the weekend, microcrap speculators everywhere have been debating (RDTA). While I wrote about the briefly HERE (Friday morning pre-market…before its 40% surge…thank you, thank you), I was right not to touch it in the morning cuz it was just too illiquid, but ‘twas wrong of me to be neck deep in fundamentally flawed / factually inaccurate but sub-par-chart-play EDEN, failing to see RDTA get pretty damn liquid mid-day after they released this fluffy PR about some crappy revolutionary new web search “add-on” and announcing a name/ticker change to blah bah blah.

Unlike ignorant financial journalists, I’m not even gonna dignify these laughable pieces of s#@! news pieces by detailing their BS contents). Those of you who’ve read my book An American Hedge Fund know these crappy companies loveeee trying to hype themselves with meaningless name changes—no different than adding a “dot com” to the end of their name back in 1999-2000…except now they’re just trying to get prospective suckers investors to forget their stock is 70% off its 2000 highs aka they’ve still got some bitter shareholders.  

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How To Short Sell A Media-Sponsored Pump & Dump

I went into today thinking I wouldn’t trade cuz they were no ideal setups. But when $23,000-in-revenue-joke-of-a-company-TheStreet.com-pump-and-dump (EDEN) became a big 2-day runner, my market inefficiency sense kicked in and I immediately reserved 1,000 shares to short, just in case it might show signs of reversal. By 11am, it was up 40% on the day in the $2.60 range, and while there were some big buy blocks just below at $2.55 and $2.50, the sellers were persistent. This is what I call “a wall of sellers” and when stocks are up big already on little to no news with fading volume, this wall signals the end of any runup, at least usually.

Sure, sometimes the wall collapses and the stock surges, but since TheStreet.com’s article was factually inaccurate and it’d already proven three times over the past 2 days it couldn’t break $2.75, I figured it’d be better to be early than late as I’d just try to double up if it went higher.

When some sellers came in to try to take out the big 10k buy block at $2.55, I could stand aside no longer, shorting into that block and posting my findings HERE. Sometimes when a big buy block gets taken out, it signals an immediate panic, but even with my rather harsh article, that didn’t happen here. For an hour or so, it went slightly higher to $2.65, but I held, convinced my argument was sound. 3 hours later, the stock was only down to $2.30ish and buyers held strong—after all, my blog doesn’t have anywhere near the traction of TheStreet.com, so the truth doesn’t really matter…yet.  

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Why I Just Shorted Eden Bioscience Corp (EDEN): TheStreet.com’s Factually Inaccurate Pump And Dump!

As I mentioned in this post, this near 100% runup is entirely due to THIS laughable Thestreet.com article mentioning this failure of a company as a “below-the-radar company that produces Messenger, a highly effective and revolutionary agricultural product.”

I could easily rip the company apart for its $23,000 in revenue in their latest quarter down from $189,000 just a few quarters ago—wow, their product must be really great! Even funnier is their yearly results—revenue of $350k vs. $4 million a few years back. Or before this miraculous article, EDEN was a $3 million company that was forced to do a 1-3 reverse split just two months ago in order to stay listed on the Nasdaq

But I shorted 1,000 shares at $2.55–that’s all I could find, trust me, I wish I could borrow 50k–because I prefer to go to the heart of the matter, the fact that EDEN SOLD OFF THIS “REVOLUTIONARY” TECHNOLOGY AS IS DETAILED IN THEIR ANNUAL REPORT!

From that beautiful annual report, filed on March 28, 2008:

“On February 28, 2007, under the terms of the Asset Purchase Agreement, we sold our Harpin Protein Technology to PHC for $1,396,824 in cash, net of transaction costs incurred after January 1, 2007 totaling $103,176, a promissory note in the principal amount of $700,751 payable on December 31, 2007 and the assumption by PHC of certain of the liabilities relating to or arising out of our Harpin Protein Technology…”

That’s right, EDEN isn’t even in the home and garden business anymore, they’re just a licensee! Gotta quote some more of this fine work of literature  

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The SmallCap Pump & Dump Capital Raising Game: AgFeed Industries Inc. (FEED)

What’s the ultimate goal of publicly-traded smallcap companies? They sell shares when their stock prices surge to raise the most capital possible. This morning, recent high-flyer Chinese pig-farmer (FEED) did just that, becoming the latest victor in the smallcap pump and dump capital raising game, raising a cool $10 million, selling shares at $16, less than 10% below their closing price of $17.40. What are they gonna do with this newfound capital—buy more pig farms of course!

You can look at this two ways—it’s great for the company that they could raise so much $ at such high prices—usually these financing deals are done at much bigger discounts, think 25%+. The capital gives them a shot at true business glory, even if the odds are still decidedly against them. Then again, it’s dilution below market prices—the rich get special deals—so this stock should open lower as poor people sell their shares—wondering how to buy stock 10% below market prices (hint: you either need to give the company a lot of $ or convince them you and your connections can and will pump up their stock price)

Don’t get me wrong, agri stocks are hot and this is a clear chart breakout so I have only two concerns:  

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