Anyone out there have experience or have good reading material on shorting these smallcap frauds? Is it worth it, or will you get burned more often than not?
Ive recently had the pleasure of researching some old pump & dumps. I also spent my whole day today reading through hype material posted on VIC and seekingalpha, as well as some "research reports" that "investor relations consultants" publish.
On a similar note, I have identified what I think is soon to be a hyped stock. Volumes have spiked to the 100x-1000x level per day in the last 2 weeks, the Company has reported that they have hired a known IR consulting team, and the company recently did a massive reverse split immediately prior to spiking volumes. Should I have qualms riding this on the long side? Is it even legal?
If you can do it do it but I say avoid it honestly. It's like gambling. You'll probably get burned, these things get thrown all over the place and it may never go where you want it.
You found a hyped stock on VIC...?
tim sykes does it turned his bar mitzvah money of like 14k into $2.1m, but might not be for everybody...
It's really difficult to short penny stocks.
UNXL is at $30ish per share with a stratospheric market cap (think $200MM). What was LTM sales? $70,000. Yes, 70 THOUSAND dollars.
The Company has huge accumulated losses. Most of which are derived from the company being a vehicle to raise capital in the equity markets, then funnel that cash to management in the form of cash compensation. They have been doing this for years.
In fairness, most pump and dumps are penny stocks. Some get pushed higher for a temporary period of time.
I've been short UNXL on a fake money account that I toy with to perfect some strategies. I would have gotten margin called in real life.
If I was you, I would buy puts instead of going short.
It was Keynes, actually. Ironically, per Wikipedia:
I thought about buying puts, but they are priced too high for my liking. In addition, I have no idea when this irrationality will end.
Exactly why puts are a better bet, no matter how expensive they are. Long-dated puts are going to be pricey, but at least you won't get margin called.
Good call, were you able to short?
What do you guys think about the stock HERB? All its financial statements are made up.
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