Stockwatch: Video Network Communications Inc - Street Wire
Video Network features Howe Street's Hamouth
Video Network Communications Inc U:VNWC
Shares issued Apr 16 close $3.01
Wed 17 Apr 2002 Street Wire
by Brent Mudry
Controversial West Vancouver promoter Rene Hamouth has taken a big
interest, or so it is being made to appear, in another penny stock
promotion, Video Network Communications, a U.S. video networking company
listed on the OTC Bulletin Board market. In a recent regulatory filing, Mr.
Hamouth revealed he controls more than 201,000 shares, a 9.4-per-cent stake
in the tight little promotion, as of March 13. The Howe Street promoter
claims he spent almost $486,000 since Jan. 30 building his stake. (All
figures are in U.S. dollars.)
Mr. Hamouth, reportedly flush with money these days, suggests loudly that
his buying spree may be far from over. "It is the intention of the
reporting persons to own as much of these securities as they can afford to
purchase," states Mr. Hamouth in hear-ye, hear-ye fashion. (The reporting
persons are Mr. Hamouth, his wife Leona Hamouth and the well known Hamouth
Family Trust.)
The usually secretive Mr. Hamouth's rise to prominence on the bulletin
board contrasts somewhat with Florida promoter Rajiv Vohra, his former
partner in the Penway Explorers scandal, a high-profile Canadian stock
manipulation a decade ago that featured Vito Rizzuto, a top Canadian
mafioso who is dubbed the John Gotti of Montreal. Both Mr. Hamouth and Mr.
Vohra were acquitted in 1993 after a criminal trial in Toronto, and there
is no suggestion that either have been involved in any stock promotions
featuring Mafia figures since.
Mr. Vohra had the misfortune last week of being permanently banned by the
United States Securities and Exchange Commission from any involvement in
any penny stock offering, stemming from his rig job of New Directions
Manufacturing. Mr. Vohra's lifetime ban comes two and a half months after
he was fined a total of $843,000 by the SEC over the New Directions affair,
including disgorgement of $599,000, prejudgment interest of $134,400, and a
civil fine of $110,000.
Fortunately for Mr. Hamouth, he parted ways with Mr. Vohra sometime after
the Penway scandal, and there is no suggestion the pair have done any
business since.
Mr. Hamouth has recently taken an unusually public shine to Video Network,
but it is unclear exactly how long he has been actively trading the stock.
His Hamouth Family Trust actually sold 97,000 shares in January, then
flip-flopped and bought back a similar amount before a rollback in early
February.
The apparently sloppily prepared trading blotter published by Mr. Hamouth
shows he has been a dominant player in the stock on a number of days. In
the first-noted transaction, the Hamouth Family Trust sold 45,000 shares at
35 cents on Jan. 17. (Over-the-counter records suggest the total market
volume that day was 42,000 shares in 14 trades, with a high price of 32
cents. It is not clear whether the OTC-BB records are inaccurate, as they
sometimes are, Mr. Hamouth's figures are off, or his trust sold the shares
in off-market transactions.)
The Hamouth Family Trust sold a total of 97,300 shares at prices between 27
cents and 35 cents by Jan. 24, when Mr. Hamouth abruptly shifted direction.
On Jan. 30, the trust bought 64,000 shares at 30 cents. (Over-the-counter
records indicate the total market volume that day was 65,500 shares in a
total of 19 trades. By Feb. 8, the Hamouth trust bought a total of 94,000
shares at prices ranging from 27 cents to 32 cents, almost identical to the
prices and total volume of its reported selling in the previous weeks.
This left the Hamouth trust with 121,180 shares on Feb. 8, or 24,200 shares
after a rollback that day of five old shares for one new share. The last
trade under the old symbol, VNCI, was 22 cents, suggesting an effective
price of $1.10 after the rollback, when the stock resumed trading under the
new symbol VNWC. The stock is a tight little number now, with just 2.13
million shares outstanding post-consolidation, according to Mr. Hamouth.
While the new shares briefly sagged as low as 75 cents for the first few
days, the stock abruptly firmed up, rising 26 cents to $1.03 on Feb. 12 and
54 cents to $1.57 on Feb. 13.
The real action, however, came after Mr. Hamouth ended a nine-day breather
from the market on Feb. 20. That day, Video Network shares broke through
the $2 level, although the Hamouth trust officially bought a modest 6,500
shares of the total 45,000 shares traded that day.
Since then, the stock has been on a roll, peaking at $3.58 on April 1. The
Hamouth trust bought a total of 138,000 shares between the consolidation
day and March 11. Mr. Hamouth was particularly active during a
six-trading-day stretch ending on Feb. 28, a period in which the stock rose
from a low of $1.85 to a peak of $3.18. His trust accounted for as much as
32 per cent of the total daily trading.
On Feb. 22, the Hamouth trust bought 17,500 shares at $1.87. Market records
indicate this was 19 per cent of the total volume of 91,300 shares.
Bulletin board records note the stock's low that day was $2.40. Possible
explanations for Mr. Hamouth's discrepancy, with a $1.87 price that day,
could be that he was a day off or that his trades were below the market and
not recorded.
Similar discrepancies exist on other days. Mr. Hamouth bought 13,000 shares
at $2.02 on Feb. 25, 10.3 per cent of the total volume of 125,700 shares
that day, although the lowest market trade was at $2.55. On Feb. 26, the
Hamouth trust bought 21,600 shares, an impressive 28 per cent of the total
market volume, although its $2.38 price was below the lowest market price
of $2.65.
The next day, Feb. 27, Mr. Hamouth's 21,800 shares of buying accounted for
28.9 per cent of the total market volume of 96,800 shares. The Hamouth
trust's biggest day was Feb. 28, when his trust bought 30,800 shares at
$2.95, accounting for almost 32 per cent of the total official market
volume. Market records, however, indicate a price range of $2.56 to $2.88,
so perhaps Mr. Hamouth switched from below-market buys to above-market
buys, or maybe he is just out by a day, or maybe something else.
All Mr. Hamouth's buying up to this point was through the Hamouth trust,
but he and his wife Leona Hamouth began buying shares in their own names as
well in early March. March 5 was quite a notable trading day. Mr. Hamouth
claims he bought almost 36,000 shares at $2.76, on a day on which just
24,500 shares traded on the whole market at a top price of $2.74, if OTC-BB
records are to be believed.
Goofy discrepancies aside, Mr. Hamouth and his associated accounts bought a
a total of 201,000 shares by March 12. The Hamouth Family Trust paid a
total of $342,400 for 141,900 shares, Mr. Hamouth paid a total of $120,300
for 43,300 shares, and Ms. Hamouth paid a total of $36,000 for 16,000
shares.
Mr. Hamouth designated Vancouver accountant Bill Gannon of Gannon and Co.
to receive correspondence related to his Video Network filings. Handling
securities filings for a controversial client like Mr. Hamouth is a change
for the veteran certified management accountant. Mr. Gannon was hired in
1974 as chief accountant of Daon Development, the now defunct former
flagship of Vancouver developer Jack Poole, who now heads Vancouver's bid
for the 2010 Winter Olympics. Some of Daon's numbers also did not work out.
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