Disclosure
This is intended to tie in with many of the picks on The Microcap Kitchen thread, which I believe is perhaps the best place to pick microcaps and that includes newsletters, e-mails and other promotional devices.
Subject 50570
With any list of potential gems, there are always a few "clunkers" and disasters. Those on The Microcap Kitchen thread who list stocks usually urge others to do extensive due diligence on their own. The enormous number of stocks listed make it impossible for anyone to catch all, or even most, potential problems.
The bottom line is that there is no substitute for hard work. This thread is meant to help put together a central listing of potential problems.
Working together, we can begin to understand the pitfalls of
Potential dilution
Management that gets cheap, discounted and free shares (that are sometimes sold, sometimes held).
Vulture financing, i.e., financing that leads to massive dilution or potential dilution
PIPE's - private investment at less than market value
Toxic deals - financing and equity deals and combinations thereof, that encourage shorting by promoters, financers, management and others, leaving investors holding the proverbial bag. Incuded here are toxic spiral deals, i.e., mathematical formulae for conversion that encourage a stock to be shorted.
touts, newsletters, e-mail solicitations - I've been bombarded with all these things and I'm sure many of you also have been. Some can be great, if you do your own DD. However, I'm looking to focus on Disclaimers, which are required, and I would never even think of investing if the disclaimer from a promotion does not disclose the promoters' payment, particularly shares, free, discounted or otherwise, and whether they can be sold.
I look at a promotion as a substitute for an ad. If it's reasonable, then I don't see a major problem in spreading the word. If it's a deal that gives monthly payments, perhaps in discounted stock or options, etc., then it would be great to see some discussion here on the potential pitfalls for shareholders and the nature of conflicts of interest.
Management - one of my favorite topics. In corporate America, it's gotten to the point where it seems that shareholders work for management as opposed to the legal reality that is the other way around. I had always hoped that shareholders would come together and use message boards to organize and fight excesses of management, that include,
massive cheap, free, discounted shares and options
golden parachutes even in cases of bad performance
Naked Shorting
Discussion is encouraged about this issue. Is it a myth or the one of the greatest financial scams of the new century? Who is involved? Hedge funds, management, touts, Market makers?
Also posts are welcome from any really good looking naked shorts.
BANKRUPTCY
Bankruptcy is often used to eliminate current shareholders. From the ashes often, debt holders become the new shareholders, with management re-issued the same perks they had before they ran the company into bankruptcy.
RULES:
This thread is not intended to be one to bash others, particularly because of their stock pics.
This thread is not intended to be one just to bash stock picks. Negative posts, ideally, should have links to filings or accurate statements of facts. A statement that XYZQ is a POS will likely cause the dreaded "BAN," perhaps with a prior warning, but maybe not.
Financers, vulture or otherwise, equity investors such as PIPE's, etc. This is a little tougher. I'd prefer something like "Here is a deal that may lead to lots of potential dilution. This financer has a history of doing them and then provide some links." I'd prefer that we don't have blanket statements that ALL their deals "suck," but maybe all their deals do, in fact, suck.
Touts, bashers, promoters, IR - etc. I would welcome posts from anybody, even if connected to a company, with opinions and factual links. For example, "This is a good promotion because the promoter is only getting a one time payment of $5000." or This is a SHAREHOLDER-FRIENDLY management. They are in there with shareholders and not raping shareholders with massive dilution. Their salaries and perks are reasonable, etc.
THIS IS NOT INTENDED AS A THREAD JUST TO POINT OUT BAD STUFF ALTHOUGH THAT IS HUMAN NATURE. LET'S FIND SOME COMPANIES THAT CAN BE CALLED "SHAREHOLDER FRIENDLY." Many consider those last 2 words to be an oxymoron, so let's see if we can find some that can be considered relatively friendly to us small retail investors.
Disagreements - Once opinions start getting repetitive, without adding anything, they start to become just mindless bashing and we all have been there. Warnings and ultimate "bans," may be remedies.
Legal CYA - no legal advice or opinions and no recommendations to buy, sell, hold, play with yourself or just stare into the sun, (just checking to see if you are awake) are provided on any message boards. Anyone who relies on message board posters deserves and will likely lose all their money and wind up sitting in a homeless shelter, with no friends or relatives admitting to even know his or her name. Consider everything posted here and elsewhere on the internet as being from someone with his own personal agenda, misdirected, wrong, a lie, foolish, or some combination thereof.
Personal crap - I'm probabably too busy to enforce all the rules or to get personally involved with defending them. So, the decisions of the moderator are final, binding, but can be changed at his total discretion. As I'm pretty argumentative, I'm trying not to get involved in this type of waste of time crap. I can usually out mindlessly bash most bashers, but no need to prove it again. LOL. Got it?
Thanks to all those great posters who have made me lots of money and who have been complimentary, deservedly or not.
Now for a little "get off the stage" oscar awards music..... |
