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How do I begin writing a blog post that could ultimately mark the beginning of the end for the stock of Zagg Incorporated (ZAGG)?
Should I link to THIS blog post when I bought the stock at $1.50, recognizing its potential to be pumped like Forward Industries, Inc. (FORD) was a few years back? Hmmm, maybe that won’t help my credibility much because while I turned out to be dead on accurate in that prediction, I sold at practically the same price because when doing research, I saw how sketchy this company actually was (pump & dumps ARE great to buy, I’ve just never been good at it because I’ve seen how fast they can collapse)
Perhaps I should mention THIS blog post where I bought in high $6s, thinking it’d breakout after months of stalling…and while I was right there and my TIMalert subscribers banked $8,000+ on that breakout to $7.90, the surge ultimately failed…but that’s not really relevant now, it’s just an obvious attempt to get you to sign up to my TIMalerts real-time trade alerts newsletter…similar to me pointing out that TIMalert subscribers are up $350,000+ in 2009 (see details HERE) on the back of my 65%+ performance (now I’m up 465%+ in the past 21 months…every trade detailed HERE…maintaiing my ridiculous lead as the #1 trader out of 30,000 on Covestor, the only wbesite that verifies all trades and performance (every single financial commentator should be on it, problem is most suck so they don’t want to show their mediocrity…actually, when including July’s numbers, TIMalert subscribers have made in excess of $450,000, I’ll post details soon)
Maybe I should just get right into why I sent the following to TIMalert subscribers yesterday afternoon:
Shorted 2000 ZAGG at $6.33…this thing is just falling apart, I know I’m a little late, but if the reaction to these boring, skeletons-in-the-closet-type earnings is as bad as I think it is, we’ll take out support at $6 and have a huge freefall which will be ZAGG’s ultimate top…risk is this drop is just a few weak hands…we’ll see, I’ll play this one with a little added risk just because of all those skeletons which I’ll write about in detail later
…and my premarket warnings to TIMalert subscribers for the past few days:
Zagg Inc. (ZAGG) reports earnings today, it really could go either way…potential buy on any strong buying volume which will probly lead to a breakout or at least a retest of the old highs in the high $7s or a long-time-coming-type breakdown if the earnings prove to be hyped-up, technical support at $6…this is my #1 stock to watch today
ZAGG reports earnings this coming Thursday morning…they’ll try their best to make themselves look great, as will the stock promoters they hired, but the chart looks like it’s rolling over…potential short or long, depending on how the reception to earnings news goes…it’s gonna be in interesting battle!
Make no mistake: ZAGG is a pump & dump. As defined by the SEC HERE because ZAGG has chosen to pay stock promoters in cash and stock (details below) so those stock promoters will tout ZAGG to no end in order to get people interested, get the stock up so they can sell…they pump it…then they dump it….and right now I think we’re at that magical moment where the ‘p’ in front of ‘ump’ turns into that all-too-predictable ‘d’ before the ‘ump’. (not saying these stock promoters lied/are frauds like true pump & dumps, just that they got compensated by the company to put out positive stuff…which is still pretty bad)
Allow me to explain, (and please don’t get me wrong, aside from not understanding how stock promoters sleep at night (they either delude themselves into believing in the companies or they load up on Xanax) I have nothing against promoters, I love their work—they did an especially good job with ZAGG—all I’m trying to do is teach people, most of whom are total babes in the woods when it comes to this stuff, to learn how the pump & dump game works and how to profit from it…just as how it made me a millionaire by my 22nd birthday), as pump & dumps like SPNG, UOMO, GWSC almost ALWAYS drop 50% off their highs…so if ZAGG is the next to dump, there’s some nice downside potential!
Because no matter the headline numbers (revenue growth does look good), ZAGG
earnings press release (and all other press releases) and conference call are proof they prey on people’s greed and blissful ignorance, showcasing a Japanese guy who compared ZAGG to Sony (LOLOLOLOLOL), name-dropping retailers that will sell their product (so what…very Spongetech Inc. (SPNG) –like, doesn’t mean much with such small margins) making investors believe the sky is the limit for their Crocs Inc. (CROX)-like faddish product (remember what that stock did?)
Long story short, these are the ugly truths that really matter:
-margins suck and they’ll continue to get worse in an effort to increase revenues (good for the company overall, not good for shareholders who already have an excessive valuation)
-revenues look like they beat estimates, but it was due to a last minute Best Buy order…that won’t happen every quarter…they guided full year revenues to $35 million, but Yahoo! Finance shows the consensus of 3 analysts to be $38 million (not a huge miss, but could be the beginning of a baaaaaad trend…especially for a company we know whose margins are gonna get hit…especially surprising for a product supposedly linked to the hot hot hot Apple iPhone…and full year profits of 20 cents/share also failed to match the consensus estimates of 22 cents (let the great margin slippage begin!)…message board pumpers were looking for $40 million in revenue and 25 -30 cents/share (LOL…silly always-excessive pumpers!)
-despite management’s and stock pumpers on message boards insistence that there is institutional buying, Yahoo! Finance shows institutions have stayed far away from this pump, investing chump change, probly as a result of favors owed (yes, these are ALL the institutions in this, LOL…even though they can’t beat the S&P 500, they do know how to do basic forms of due diligence, which is more than I can say about most penny stock investors):
Marathon Capital Management 58,000 .29 $119,480 31-Mar-09
KENNEDY CAPITAL MANAGEMENT, INC. 46,650 .24 $96,099 31-Mar-09
PARSONS CAPITAL MANAGEMENT, INC. 10,000 .05 $20,600 31-Mar-09
CONDOR CAPITAL MANAGEMENT 10,000 .05 $20,600 31-Mar-09
-Zagg no longer wants to use stock promoters, bringing investor relations in house (a noble gesture, good for the company long-term, but very bad for shareholders…remember what got you to $7, reminds me of a young politician who used the mob’s influence to get powerful and then turned on them…anybody remember what happened to him?)…RedChip was paid $30,000 for basically a research report, Small Cap Voice was paid $7,000 for a few mentions every now and then
(Zagg, I’m doing this for free…because I feel compelled to cut through the BS here….guess which will stand the test of time? It doesn’t pay to sugarcoat things…penny stock people are stupid, but some with $ and available shares to short ARE NOT) and always-positive-on ZAGG promoter Ian Cassel has been loving his few grand per month contract and his 100,000 options priced at 90 cents (making $600,000 in a few months isn’t bad Ian, but you better lock those in before you know what)…oh yes, very sketchy, I love it…don’t give me any crap that all penny stocks hire promoters…nope, only ones that usually dump 50%+ do!!…and according to Ian’s own disclaimer HERE, his stock promotion contract ends this month…so I’ll go ahead and guess, his positive posts will stop right around then too (or until he sells his shares)…and again his own disclaimer says he WILL sell his shares:
Zagg Corp: 8 month contract starting January 1, 2009 consisting of $3000/month and 100,000 options priced at $0.90.
IAN CASSEL LLC and/or its affiliates intends to sell its shares. IAN CASSEL LLC and/or its affiliates may sell its shares for less than target prices given in opinions. IAN CASSEL LLC and/or its affiliates, officers, directors and employees may have also bought or may buy the shares discussed in this report and may profit in the event those shares rise in value. IAN CASSEL LLC and and/or its affiliates will not advise as to when it decides to sell and does not and will not offer any opinion as to when others should sell; each investor must make that decision based on his or her judgment of the market.
-the first caller on the earnings conference call Q&A was Alan Davidson, a private investor who used to run a hedge fund, who owns 1 million shares of ZAGG, making some nice change, but whose track record shows he loves loves loves investing in sketchy companies with amazing-sounding stories like Premier Exhibitions, Inc. (PRXI) (whose sketchiness I wrote about HERE when the stock was $14+, now it’s under $1), Tix Corp. (TIXC) (another pump & dump from $1 to $7, which did make it to the Nasdaq, but the stock has been in a typical pump & dump downtrend for months now (is this ZAGG’s fate?) and of course Health Enhancement Products, Inc. (HEPI) and Genius Products, Inc. (GNPR), two more pump & dump-looking stocks as evidenced by their price action….my guess is Alan knows when to get out, so I wouldn’t put it past him to reduce some of his 1 million shares here, Alan, please be sure to tweet when you sell (see Alan’s profile HERE), gratzie! (follow me on Twitter already HERE)
-and most importantly to me, the stock reacted very badly to these latest earnings…maybe all the good stuff, including upcoming NASDAQ listing (remember TIXC went Nasdaq the stock still tanked because it was pump up 700% just like ZAGG…Alan Davidson, how do you pick such eerily similar winners? Hmmmmmmm…tell us Alan, tell us pleaseeee!), is priced in…technical support is at $6, after that, it’s hasta lasagna, don’t get on ya, which is why I’m looking to cover my small 2,000 share short position at $5ish (despite this dog’s many fleas, I’m still scared of what the stock promoters can do since they are still employed until the end of the month…so if it can’t break below $6, I might just cover for quick profits/losses…doesn’t matter, I’m going for hte big drop here, if the stock doesn’t want to do it, I get out…those are some of my time-tested rules that you can learn HERE)
Let’s hear the pumpers combat try to combat the facts of what really matters (aggressive marketing/sugarcoating/stock pumping) with some BS about ZAGG becoming the next Sony (last time I checked ZAGG doesn’t make electronics, they make a flimsy piece of plastic…the comparison is laughable)…don’t blame me, just learn the game folks, look HERE, I’ve created several stuffy guides to help you learn faster…they’re not optional and they WILL save you from suffering thousands upon thousands of dollars in it’s-not-your-fault-you-didn’t-know-any-better dumb losses.
Posted in Story Stocks