***TOO ALL***
THE NAPEAGUE LETTER
Monday, May 18, 1998
Editor: Bob Davis napeague.com
- BLIVIT ALERT -
SJI Group, Inc. (OTC BB:SJIG)
I've just received the "May Stock Pick" from The Future Superstock
(http://www.futuresuperstock.com). Once again, their positively rosy
write-up of the prospects of a small "non-reporting" bulletin board stock
runs counter to the real facts.
The "Pick" is SJI Group, Inc. (OTC BB:SJIG), which FSS incorrectly
describes as being listed on the NASD Bulletin Board. The write-up opens
by stating "the revenues of our May Stock Pick have grown at even a more
rapid rate", a claim which is difficult to analyze because this "Pick"
does not report its financials to the Securities & Exchange Commission.
FSS then states that "The SJI Group, Inc.(SJIG) has developed into one of
the fastest growing companies in the premium cigar industry." And then
the write-up claims that "Over the past two years, cigar sales have
skyrocketed as the demand for premium cigars has grown by over 45% per
year. It is now estimated that there are over 10 million cigar smokers
in the United States who spend more than $6.0 billion per year on cigars."
This is the basis for a set of projections which FSS uses to demonstrate
that SJIG can reach a share price in excess of $30,00 by the millennium.
However, more legitimate sources refute this rosy picture. An article in
the February 22, 1998 edition of the St. Louis Post-Dispatch is headlined
"SMOKE ON HORIZON OF CIGAR FUTURE IS NOT THE BLUE PLUMES OF SUCCESS -
SUPPLY IS CLEARLY OUTSTRIPPING THE DEMAND". The Post-dispatch article then
states that "While the market is growing, those increases are slowing - by
how much, no one is sure. That 80 percent growth of imports last year, for
instance, represents what was brought in, not what was sold. Consumption
probably rose by just 14 percent or so, analysts say, and this year's rate
isn't likely to be significantly different."
The article goes on to point out that "In the peak year of 1973, some
11.2 billion cigars were smoked in the United States. That fell to a low
of just 3.4 billion in 1993, the lowest on record. And many experts note
that, even with recent gains, there are still just 5 billion or so cigars
smoked in the country each year, or less than half what it once was." In
fact, smaller participants in the cigar industry are already falling by
the wayside and the Post-Dispatch article mentions several of them.
Probably the most interesting element of the Future Superstock's write-up
on SJIG is included in the lengthy "warning" note at the bottom of the
e-mailed message, which states that "The Future Superstock was compensated
three hundred thousand dollars for its services and for the electronic
dissemination of this report. Such compensation received by The Future
Superstock for its services should be viewed by readers as a potential
conflict of interest." Well...that certainly creates a respectable amount
of "conflict of interest".
It would appear that FSS is having trouble earning its $300,000 fee on
this "pump and dump" job. After closing at 4 1/8 on Friday, the stock
opened this morning (5/18/98) into a wave of selling, and as a result it
dropped 1/2 to 3 5/8 before noon, a decline from which it did not rebound
as the afternoon went on.
NOTICE
This analysis is based on publicly-available information, and is in no
way warranted by me as to accuracy or completeness. I do not guarantee
to advise you as to any change in this information. I am not a stockholder
in this Company and will undoubtedly never purchase or sell this Company's
securities on the open market. I otherwise have no affiliation with this
Company, or with any entity involved with this Company, and I am not
compensated by anyone in any way whatsoever for writing or distributing
this report.
Regards
GB |
