Patrick: I'm afraid I can't help you on the trading question. I have no idea who has been buying, who has been selling, or why.
My perspective is different. To me, DHMG is a company that is worth virtually nothing. Eliminate the transactions with insiders and you have a company with few real customers that makes little or no money. The real question is not, why has the stock suddenly become so volatile, but why is it selling for more than a few pennies per share? Going from $6.25 to $4.50 yesterday, whatever the reasons, isn't going to hurt the shareholders nearly as much as a collapse to pennies would.
The announcement that DHMG put out late yesterday confirmed perfectly my analysis of the September 10-Q. By claiming big profits from transactions where the customers were controlled entities incapable of paying cash, DHMG was running up a tax bill it couldn't pay. To escape, DHMG is planning to acquire a "large collectible retailer" that is well into the red, which will cancel out most or all of DHMG's profits for the year.
I strongly suspect that the retailer in question is none other than our old friends, Universal Network. I recall you said that you bought some of that company's stock in the private placement last winter. So, is my guess correct?
If it is Universal, then is the structure of the scam clear to you? All year long privately held Universal "buys" things from DHMG, and "hires" DHMG for "consulting", paying most of its bills in its own stock. That lets DHMG show great profits all year long, but it also creates similar losses for Universal. Then at the end of the year DHMG acquires Universal, and by consolidating its losses with DHMG's profits, causes the combined company to have negligible profits for the year, saving it from having to pay much in taxes.
Presumably next year the game starts all over with a new partner. Maybe it is Frama, Inc., or some other entity, that is used to manufacture bogus profits for DHMG, letting the stock be hyped and allowing insiders unload even more of their shares on the market.
Even if it is not Universal that DHMG is trying to acquire, but some other money loser, the fact that DHMG is taking this route shows my attack on the quality of its so-called earnings was accurate. Eventually this kind of party must end, either because the SEC finally stops trading, or the stock promoters run out of suckers and the stock collapses on its own.
The proposed dividend spin-off ploy is a desperate attempt to keep the stock afloat a little while longer. I have seen this done by companies who are paranoid about short sellers in the past, and it never works.
I particularly loved the part of yesterday's news release where Hagen attacked those of his own shareholders who have sold the stock and thus "play into the short seller's profits instead of your own". The 30,000 shares he just reported selling--does that count, I wonder? Also, there was no mention of the company's attempt to get listed on NASDAQ; I wonder if that might be because the NASD figured out the truth about this company and told it to get lost?
In summary, Patrick, whatever the various market makers are, or are not, doing in the stock, no matter how unfavorably you might think of their behavior, they are all Mother Theresa's compared to the company's management. That is the real problem here, not some trading squiggles all occurring well above where the stock should trade, IMO. |
