February 2011 Newsletter: Fill & Download for Free

I typically like to invest in stocks that…Nobody is talking about, which is what makes them undervalued.A “when-not-if” opportunity, meaning it’s a matter of when, not if, the stocks go higher.Uranium stocks fall within this category. Just look at the popularity of uranium stocks in 2016 (when I bought my first shares) versus 2021…Now, compare the above chart with a uranium developer like Paladin. Hmm, I wonder if they’re correlated…If you’re new to the uranium sector, don’t worry, you still haven’t missed the train (as of 2021).Some fun facts about uranium…Uranium has been in a bear market from 2011 to 2020.All uranium companies combined have a market cap (~$20B). When a tech company IPOs, most of them are $50B+.Uranium is a reliable source of clean, carbon-free source of energy and accounts for ~10% of the world’s electricity.Either the price of uranium goes up, or the lights go out. It’s that simple.Between 2011 to 2020, the cost of producing uranium has been much higher than what uranium can be sold for.As a result, capital expenditure for uranium exploration dried up, and operating uranium mines are put on care and maintenance, which decreased the supply of uranium available to the world.In fact, there is actually a supply deficit this time, as opposed to the peak of the last uranium bull market in 2007/2008 when there was still a healthy supply of uranium.In fact, at the end of 2020, there was a ~59.35 million-pound uranium supply deficit.Take a look below…On the demand side, there are more than 50 reactors being built and set to come online between 2020 and 2025.With the world crazy about “going green,” China and the U.S. have said publicly that they want to go carbon-free by 2030 and 2035, respectively.Plus, if you believe in the mass adoption of electric vehicles (EVs), would you really bet against a stable and carbon-free source of energy like uranium?I certainly wouldn’t.As of February of 2021, the uranium sector is still small enough that a small to medium-sized hedge fund can literally move the price of small uranium miners.Did you know that someone with a fat finger tried to buy $200,000 worth of Forsys Metals in a day, and they moved the stock by 36%?This is what you get when you’re early and are able to front-run mass institutional and retail capital.As this sector gets hotter, just imagine what the Robinhood millennials will do to bid up the price of uranium stocks…Anyway, my favorite uranium names are as follows…Paladin EnergyGlobal AtomicEncore EnergyBoss ResourcesBannerman ResourcesMy core position for uranium consist of these names, so do your own research and see if they’re right for you.I don’t own any of the major uranium producers because any uranium stocks between 3x-5x upside just isn’t worth it.My capital can be taking on more leverage with uranium junior miners.Last uranium bull market, the worst uranium miner 20x’ed. That said, the bull market has already started, so who knows if this time will pan out to be the same.But again, the world actually has a uranium supply deficit this time around, as opposed to the last bull market cycle.So buckle your seatbelts.Uranium is going to the moon.And it’s a matter of when, not if.Uranium aside, there are many “when-not-if” sectors that have 5x-10x+ upside as well. (Offshore oil, anyone?)If you’re interested in “when-not-if” investment ideas targeting 5x-10x+ upside, I’d check out Chris MacIntosh’s weekly newsletter.Chris retired in his late-20s, having turned pennies into pounds in when-not-if investments like…The New Zealand real estate (64x return)The last commodities bull market (10x)Bitcoin (35x)Shipping (17x)I’ve personally been subscribed to his newsletter since 2016, and he has helped me a lot in my journey as an investor, so I highly recommend checking it out.PS - If this was informative, SMASH upvote and share :)

Update as of 12/2014: The company in question sold their ticker and changed their name and the original 'founders' moved on. In other words...they got away with it.I've had personal experience dealing with a pump & dump stock scam. I should point out that the scam hasn't been busted yet and is still ongoing to this day (and is highly profitable.) Several top professional athletes are involved who I will mention.For some background (Wikipedia):"Pump and dump" (P&D) is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price. Once the operators of the scheme "dump" their overvalued shares, the price falls and investors lose their money.Years ago I was researching several stocks when I came across one that appeared to be a pump & dump. That wouldn't have been interesting to me by itself, but as I researched further I began to see that the company was roping in top professional athletes to endorse the fraudulent company. As I later learned, the execs had a pattern of doing this. I was sickened enough by this that I eventually decided to make it my personal hobby to expose and destroy the company.Digging into the past history of these founders was like walking through a graveyard of destroyed and fraudulent companies. As I researched, I also learned that the perpetrators were absolute marketing geniuses. It's one thing to market an actual product, but these guys were making millions by marketing products that didn't even exist yet.Set up for the ConThey began by purchasing the 'shell' of another company. The prior company was liquidating in bankruptcy and its assets included a publicly listed ticker plus some pending patents for a gel that could be applied to the skin or consumed orally.The company changed it's name to "Fuse Science" and changed it's ticker symbol from DEGH to "DROP" because their product line would focus on gel drops that could deliver 'electrolytes' and energy through the skin or mouth.The technology itself actually had nothing to do with athletics. Per the company's regulatory filings:FUSE has a patent pending system […] that when applied in conjunction with heat and moisture increase(s) the overall health and beauty of your skinThe thing you have to understand about P&Ds is that the real product is always the stock. They may have a 'real world' product on the side, but it's never intended to be a sustainable business; it's all just a tool to prop up stock in a worthless company.The compensation packages for each of Fuse's 3 sole employees at the time (as per their SEC filings) included $18,000 per month in salary and a $1,000 per month 'car allowance' for the CEO. Most startup investors would probably find it peculiar that every employee at a pre-revenue, pre-product company was making $216,000 a year plus a free Audi R8 lease for the CEO.Oh by the way... the compensation package also included stock and cash performance bonuses based on the sole discretion of the board of directors, which consisted of the same 3 employees. In other words: shareholders ain't seeing a dime. Ever.How is the money made?The price of a P&D is actually easy to manipulate. For example, if you own stock in a worthless company with no trading volume, you could sell the shares back and forth with a friend and bid up the price. You could easily take a stock from a penny to $5 with little effort and make an instant paper profit of millions.But how then would you liquidate your shares without driving the stock right back down again? The answer is the key to making money in these scams: volume. You need to convince other people (the suckers) that the stock is worth buying from you at the pumped up levels. The easiest way to do that is to convince them to 'ride the momentum' of the current stock price (which you already created, of course). In this case, even before a 'real world' product was released, the company went on an all-out marketing blitzkrieg.Enter the Penny Stock marketers. There are several seedy underworld organizations (often connected with the mafia [i] ) that provide services to P&D frauds.Professional Con ServicesThese fronts operate by collecting email addresses, either semi-legitimately by offering a free newsletter to investors, or by outright trawling the web for email addresses and spamming people with 'hot stock picks'. The disclaimers on these services always indicate that they accept payment from the companies in exchange for producing 'research'. In other words, they are paid by the company to tout the scam (aka the pumpers of a 'pump' & dump). They are generally paid with stock. If a touter does a good job, the previously worthless stock will have some value which they then sell for a handsome profit. In this case, the company hired Xtremepicks, an outfit called Direct Global Media, and several others:Grassroots AdvertisingThe marks in these scams are always 'dumb' Mom & Pop investors who are looking to make a quick buck. The dumb money sees that a stock rose 1000% last week and thinks "who knows, maybe it will go up another 1000% this week. I'll just buy a little."A very effective way to propagandize a stock is to set up 10-20 dummy accounts and flood Yahoo Finance and Google finance message boards with enthusiastic posts about how much the stock is going to go up. Nothing attracts a crowd like a crowd. My favorite exchange on one of these message boards went something like this:Fake Investor: "I'm really happy DROP took a dip-- what a great entry point! This company is going to release their product soon and go through the roof!"Real (sarcastic) Investor: "Yeah...that's the great thing about this stock. You can find a better entry point every week. I can't wait til it drops to zero so we can all really start making some money."Celebrity EndorsementsEverything prior to this point is standard P&D procedure. What really made this P&D special and took the fraud to a kind of sociopathic art form were the celebrity endorsements.Once the company had a stock price and some volume, the execs had a currency which they could trade. They began to approach pro athletes to have them 'endorse' the company in exchange for stock. An endorsement often simply meant that the athlete would put the Fuse logo on their gym bag or let the company use their name. At face value these deals were worth a lot of money for the athletes-- 500 thousand shares of a 50 cent stock is a $250,000 endorsement deal for almost no work.Unbeknownst to the athletes, the face value of the deal was worth nothing in the absence of any trading volume. The deals would often restrict the stock from being sold for 6-12 months while the shares vested, under the guise that they wanted to align the athletes pay with the long-term goals of the company. Unfortunately, these companies only have short-term goals. By the time the shares would be tradable they'd be almost worthless to the athletes.But none of that mattered to Fuse, who would announce each new endorsement with a glowing a press release. Those releases would show up all over the airwaves and fuel stock volume.The company started to build up a celebrity endorsement portfolio of low to mid-level NFL and NBA professional athletes who were probably just happy to get some attention and revenue:After about 8 of these small deals the cons went for the bigger targets.After being released from prison for running a dog-fighting ring, no endorser would touch Michael Vick; he was the PR equivalent of cyanide.Fuse signed him in July 2011.This was truly a brilliant move. The execs undoubtedly showed Vick their portfolio of other athletes in order to demonstrate a track record. The deal was good for Vick because it made him seem endorsable at a time when he lacked credibility, and it was good for Fuse because it generated a ton of attention (and massive stock volume.)As intended, the media worked itself into a frenzy over the news. People were so angry that they called for a boycott on Fuse. Keep in mind that at this point FUSE DIDN'T EVEN HAVE A PRODUCT YET, but that didn't stop social media boycotts from sprouting up everywhere:"time for the dog community to come together!"Trading volume during the Vick endorsement scandal spiked to about 20 million shares per day at stock price of 30 to 40 cents. *cha ching*The next big credible athlete to sign with Fuse was Arian Foster in October 2011. Arian had won the 2010 NFL rushing title before being slowed down by injury the following year. Fuse approached him at a moment of weakness when others likely wouldn't risk signing an injured athlete:Skip to about the minute mark to see Arian rubbing what appears to be some kind of gel stick into his leg and talking about how great the product is for muscle recovery and energy enhancement. (Not bad for a patent-pending beauty product!) Arian Foster bumped up stock volume but would prove to be peanuts compared to the next big score.If you recall, Tiger Woods was just emerging from his big cheating scandal around 2011-2012. At the time, most of his endorsement contracts were cancelled on him outright. He went from being the world's most winning, wealthiest athlete, to doing Japanese back-rub commercials in 2011 while losing every tournament he touched.Fuse signed him in October 2012 in what is surely the pinnacle of con-artistry.The founders began only two years prior by discovering a currency-- a manipulated stock that was intrinsically worth a pile of beans. They used that stock to buy credibility with small to medium sized athletes; picking them off at their weakest moments. Eventually a company with no product, no revenue, and no future emerged from nowhere to sign the biggest athlete in the world on a pure confidence trick.The deal, characteristically, was announced to the financial press on CNBC. Skip to the 3:10 mark to hear the then CEO, Adam Adler, speak about the deal:The stock went ballistic, peaking at $1.25 on volume of 32 million shares a day.DeclineFrom there, as with all these scams, the stock began its decline. The company had a brief volume and price bounce in February 2013, when FUBU CEO and Shark Tank co-host Daymond John decided to endorse the company:That brief boost aside, the stock continued to slide to about 20c several weeks later.In August 2013, Wimbledon Tennis champion Andy Murray signed with Fuse Science when it was trading at about 8c, but by that point nothing was helping the stock. It dropped to 2c almost immediately.ESPN put it like this:Industry insiders had speculated that Murray was ready to land a big windfall and could pick the blue-chip brands of choice to join adidas, RBS, Rado watches and Head rackets. So when Murray announced last week that his first post-Wimbledon deal was with a penny stock company, many in the sports marketing world let out a big "Huh?"When asked this very question, Murray's response was:"It's obviously important to pick the right companies to work with," Murray said. "But getting equity in a company like Fuse allows me to have a greater vested interest in its future, and to help them get to the next level."http://espn.go.com/tennis/usopen13/story/_/id/9609830/us-open-andy-murray-post-wimbledon-endorsementIn retrospect, Murray's hope in the future of the company just resonate as sad.The stock is still hovering at the 2c mark from an all-time peak of around $1.25.Current Fuse CEO Brian Tuffin can likely soon add Fuse to his list of bankrupt penny stock scams. The filings indicate that the company loses millions regardless of sales or the market. Mr. Tuffin's previous company, Title Sports (Ticker: BGEM) employed the same marketing strategy of using celebrity endorsements to pump up the stock. BGEM was able to land an endorsement deal with Terrell Owens, who was also a troubled athlete that no one wanted to endorse at the time. At one point BGEM was sent a cease and desist letter in the State of Texas for violating securities laws. Tuffin eventually left the company after the stock imploded.Officers at BGEM were connected to other Penny Stock Scams including Red Rock Pictures Holdings, Purple Beverage Co., Dynamic Response Co., Apple Rush...the list goes on. All of the companies were publicly traded; all are now defunct. Many used celebrity endorsements to pump up the stock. One similar company was run by the former actual "Rudy" that the famous movie was based on. The company was eventually indicted by the Feds:SEC Charges 'Rudy' In Pump and Dump Scheme It should be noted Fuse did release products eventually. Dozens of press releases were made all along the path to launch, including the day they listed on Amazon with an amusing announcement entitled: "Internet Retail Giant Amazon Now Carries EnerJel™". (I can't wait til they list on eBay.)AftermathI submitted my findings to the S.E.C. in Mid-2011. They promptly did nothing and didn't bother to respond. I re-filed my research with the whistleblower office to see if they might respond but they didn't either. To be fair, they didn't respond when the $30 billion Bernie Madoff case was put on a silver platter in front of them so I guess a $50 million dollar penny scam doesn't even show up on radar.I later spoke to a friend at a major financial publication about the story. He wanted to run it, but needed the SEC to make the first move so that he could break an announcement that the SEC is investigating. He called their offices several times and received no response either.Oh well. I suppose the moral of the story is to do your due-diligence on stocks, and be cautious with who you lend your credibility to. Also, stick with coffee--a lot of energy products are actually just baloney.Note: If I learn that the SEC is actively investigating the case I'll remove my anonymity.[i] Organized Crime on Wall Street. http://www.sec.gov/news/testimony/ts142000.htm

contribute to the economy?FRESH BUSINESS THINKINGPosted in General businesson 20th March 20132 minute readNewsletter SignupShare:By Daniel HunterA new report by Deloitte reveals the important economic impact made by the betting industry to the British economy.The study, called The Full Picture: Measuring the Contribution of the British Betting Industry, was commissioned by the Association of British Bookmakers and aims to provide a quantitative and qualitative analysis of the economic contribution of betting.The report reveals that:– The British Betting Industry is a key contributor to the UK economy, directly supporting 38,800 jobs in 2011, and in doing so, generating £2.3billion towards GDP;– The sector is smaller than it was in 2008, when last reviewed, but the retail component contributes an equivalent level of taxation to the exchequer as it did then;– The effects of the recession and a move to offshore betting may have been significantly worse for Licensed Betting Offices (LBOs) had electronic gaming machines not increased in popularity in recent years;– The industry has a far reaching impact on the rest of the UK economy, with a total economic footprint of £5bn in terms of Gross Value Added (GVA);– The industry as a whole faces a number of challenges from macroeconomic and regulatory factors, such as the proposed ‘point of consumption’ tax;– There is little doubt that the industry will continue to contribute economically and socially.Simon Oaten, betting and gaming lead at Deloitte said: “The betting industry continues to make a significant contribution to the UK economy. Changing technology, such as mobile, smartphone and contactless payments, and regulation, including point of consumption and machines, will have a direct impact on the future contribution of the sector. Each will have the potential to drive significant change in the next 24 months.”Neil Goulden, Chairman of the Association of British Bookmakers, said: “Betting shops serve over eight million customers a year, and while we see major retailers closing down and shedding jobs almost weekly, betting shops continue to invest in the UK’s high streets. We are a highly regulated and socially responsible sector, which can provide economic growth, jobs and retail footfall given a fair and balanced tax and regulatory framework.“However, the Licensed Betting Office sector is under huge financial pressure, driven by 9% retail inflation, and growing tax burden. We are a ‘soft target’ for HM Treasury – the new Machine Games Duty (MGD), for example, introduced in February at 20%, will cost the sector £60million (£7,000 per shop).“2,700 LBOs make less than £300 per week (£15,000 p.a.). These shops employ 11,000 people and their profits fell by fell by 15% in 2011. MGD risks making these shops unprofitable overnight.”