Ron, I came across a passing reference to GRNO (in a source I do not recall) in November 1996 while doing internet research connected with the portfolio of tech stocks that Brenda and I hold. Since I have an interest in environmentally friendly activities (member of The Nature Conservancy, etc., etc.), I pursued more information--read all the SI posts, subscribed to your e-mail newsletter, read all the available SEC documents and the info on the company's website, obtained the investor's packet, read up on the current state of waste oil and diesel fuel on Department of Energy and various petroleum-related sites, etc. On the basis of these, I wrote a 5-page, single-spaced "stock analysis" (tried to be neutral, no recommendations to "buy" or whatever). I circulated these to a few people I know to be experienced and successful investors (including an independent stock broker who is a personal friend) for their discussion and comment. In December of 1996, Brenda and I began to take a position in GRNO, buying at various times through early January. Later that month, I believe through a post from you on SI, we found out about the availability of the processor partnership. At that point, I contacted both Microcap and GRNO directly to raise questions (fully answered, I think), obtained the partnership prospectus and information, and discussed these with an investor I know very experienced in limited partnerships. Eventually, I went to Charleston for three days in February to talk to and evaluate managers and operators, to get more detailed information in certain areas (including badgering the late, unlamented GRNO lawyer, Jon Anderson, about various peculiarities in the partnership), and to observe and evaluate the physical plant facilities. I posted several of these evaluations on SI. Brenda and I then invested in the partnership, selling about 1/4 of our GRNO stock holding in order to help raise the necessary cash. Since February, I have regularly been in contact with the company. I do not ask about specific future events (like a sale to a particular buyer), but I do ask about apparent changes in the business plan or goals, as well as about the current state of the partnership's processor. Later during the spring we purchased enough stock to replace what had been sold. Brenda and I both attended the shareholder and partnership meetings in May. During August and September this year, while the stock was at a deeply depressed price, we increased our position by about 30%.
Obviously, we remain committed to GRNO for the long term. Without information available over the internet--including filings with the SEC--we would never have been able to perform sufficient "due diligence" to be willing to invest in a company like this one. I have yet to run into any individual--including several brokers--in this area who had even heard of GRNO before I brought it up. I know several people who have since undertaken their own research and bought small positions (in discussing the stock I always included an explicit statement that I was explaining why I bought it, but that I was not a broker or analyst and that they should not buy the stock without doing their own due diligence). To the best of my knowledge, none of them have sold. The independent broker also took an interest (so it was me who "cold-called" the broker, rather than vice versa) in the stock and now follows it regularly.
I will add that the independent broker set up her own office because of the restrictions imposed upon brokers by the "distinguished, highly regarded" firm for which she worked: 1) Brokers were specifically ordered never to perform their own research on a company, and were denied internet connections on their office computers for fear they would violate that rule. They could only say or use information that the research and sales departments wanted used. 2) Brokers were specifically ordered never to suggest buying any stock, bond, or mutual fund that was not on the firm's recommended list (they could, of course, respond to specific security information inquiries from clients, but could only make their own specific suggestions to generic inquiries from the approved list) as developed by their analysts, market makers, and sales people--she knew for a fact that some of the recommendations were made because the market makers had too big of an inventory, or acquired too much at higher prices, and needed to unload it. Recommendations for bonds other than government securities could only refer to those the bond traders had in inventory. Stocks handled by market makers were always on the recommended-buy list. She readily agreed with my opinion that I never trusted any retail broker's recommendation because they are being paid not to "advise clients" but to push whatever it is that the central firm authorities want to sell today. My friend said that she has a hell of a lot more work for the money as an independent broker, but that she can now sleep soundly at nights because she can apply her own best ethical standards to meet her clients' needs, rather than the brokerage firm's profit desires. And in the long run, she believes that fair profits will best flow from providing client service and satisfaction, and not from morally problematic client manipulation.
So, SEC, who are the "real" hypsters in the financial securities industries? And I haven't even mentioned all the mutual fund managers who go on the financial talk shows to tout stocks they have _already_ purchased for their funds. I have yet to hear from one who does what the Motley Fool does on the internet--tell you in advance what they are going to buy or sell within the next week.
But of course the SEC gets its primary managers and policy makers from these mainstream industry sources, and they expect to return to lucrative positions as partners in the same types of firms when they have enhanced their resumes by doing their government service duty. I agree that we need a government organization to investigate, prosecute, and suppress illegalities and fraud (perhaps, as in most states, a division of the attorney general's office, in cooperation with the secretary of state's corporate record-keeping division). But the present SEC has a vested interest in helping to maintain the kind of legal fraud that is now perpetrated on small investors by the securities industry, so of course they will continue to wave a few microcap frauds as red herrings to keep our attention diverted from the fact that illegal hypsters can succeed as well as they do because they sound so much like the legal hypsters that investors hear from all the time. And I hardly expect any serious Congressional oversight or investigation of the SEC (pro-Democratic propaganda here) from a national Republican party fueled by these same Wall Street profiteers.
=+=+=Norm |
