Friday, May 07, 2010

Plug Nickel Among Pennies

Seems like a natural for the Twitter mini-blog to be used as a platform for stock pundits, The Small Cap Strategist included. Our most recent “tweets” appear on this page at the right.

Twitter as a stock forum is evolving at a fairly fast pace, in part due to the aggregating function provided by BoardCentral, an on-line resource that allows visitors to search by stock symbol all the “tweets for a particulary company as well as weblog posts and chat room entries. Every day BoardCentral offers a list of the top most searched stock symbols.

We thought it would be worth watching to see what investors were looking at “on the fly” so to speak. In recent weeks the top searched stocks have been dominated by penny stocks - some that are trading in fractions of a penny! On today’s list ten of the top fifteen searched stocks would be classified as penny stocks by SEC and several were not reporting companies, i.e. have no public filings with the SEC.

It is no surprise that Dendreon Corp. (DRDR: Nasdaq) is on the list with its recent cancer break through. Likewise CitiGroup (C: NYSE) has been in a pickle lately, garnering considerable attention among shareholders. Both are obviously well established operations.

Then there is Wild Brush Energy, Inc. (WBRE: OTC/PK), which is apparently focused on renewable energy. Since it is a non-reporting public company, investors have to rely on the company’s press releases for information. The last release claims “discussions” by management with potential partners. Thresher Industries (THRR: OTC/PK) is another non-reporting public companies that is getting considerable attention on-line given its business of manufacturing castings from recycled aluminum. A March press release disclosed the company was up for sale in “an accelerated manner” and that “an exorbitantly admirable” offer of $0.01 per share had been received. (Yes, the decimal is in the right place - it is one penny.)

Count me among the first who would argue that even small companies with many rough edges can deliver valuable products and services, rising over time to become strong, profitable companies with highly liquid, compelling stocks. That disclosure made, perhaps investors need to gird themselves against unscrupulous “pump and dump” schemes. It is quite expedient, in my view, to take advantage of free forums such as Twitter and Google’s Weblog platform to make claims of corporate success that can not be verified in the usual SEC filings or by contacting the company.

You may on occasion find to so-called “ten-bagger” among penny stocks. Just make certain you do not get stuck with a “plug nickel.”

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

No comments: