Resolute Energy Corp. (REN): Overloaded And Ready To Tank
by Sonya Colberg, Senior Editor, 8/25/2016 9:52:19 AM
TheStreetSweeper issues an investor alert for Resolute Energy Corp. (REN).
Considering this stock's flight to a mind-blowing $20 per share early this week, investors would never guess the pathetic condition of this Denver-based oil and gas company's finances nor its junk status nor its huge 2Q loss of $-2.44.
The stock jumped following the Aug. 8 2Q report that the board had approved continued drilling in 2016 and average daily oil production improved from 9,016 barrels the quarter earlier to 11,865 barrels. What wasn't announced is the recent production level is a ~4% to 7% drop from the previous two years.
The market pushed up Resolute and other oil companies' stock with the crude oil rally on Aug. 15.
In a heartbeat, everything changed.
Mr. Sutton owns 2.1 million shares of the company stock. Considering the stock price has nearly tripled this month, TheStreetSweeper thinks it wouldn't be a bad idea if he chooses to sell a bunch of shares and ride off into the sunset.
It's unclear how smoothly the company can replace the man who has been CEO since the company's founding in 2004. Mr. Sutton will stay on as executive chairman but the new chief executive will be Richard Betz, a manager since 2004 and chief operating officer since 2012.
Below are five more big reasons TheStreetSweeper is warning investors that this stock will almost undoubtedly suffer a rapid, tooth-rattling drop from the current ridiculous levels.
*1. Reverse Stock Split: Stock Flies
Resolute stock looked like one big empty oil tank when it pulled a 1-for-5 reverse stock split effective just two months ago, on June 8.
The maneuver worked better than anyone might have imagined, rocketing the stock nearly 3,000%.
The stock split put Resolute in compliance with the $1 per share minimum requirement. The reverse split also helped improve the valuation following its latest New York Stock Exchange delisting notification received last November. The company had been out of compliance because market capitalization and shareholder equity have each dropped below $50 million. The exchange will continue to monitor those factors.
*2. Wandering In: Wunderlich, Etc.
Within days after this stock split, investment analysts began lining up to put in their two-cents worth about Resolute.
Barclays analysts on June 14 maintained an "underweight" rating and raised the price target from $1 to $4.
On July 11, Wunderlich Securities upgraded the stock from "hold" to "buy" and set an $8 price target, up from $4. The very next month, the firm raised the PT two more times ...
On Aug. 10, Wunderlich raised the price target again... this time to $15.
Despite no Resolute news (and bad news about oil prices and the CEO departure just two days away), on Monday, Aug. 24, Wunderlich raised Resolute's price target to $25, triple the July figure.
Other firms' Resolute ratings are shown below.
Wunderlich, Barclays and Johnson Rice each shared underwriting responsibilities for the company's 16.25 million share offering at $8.22 back in May 2013. We can only imagine that these firms would also be interested in handling any future underwriting duties.
*3. Downgraded: Junk Status
Resolute had already been suffering from a junk rating when its deteriorating credit quality spurred Standard & Poor's further downgrade ... just four months before the reverse stock split and the odd glut of analyst attention:
Zagg (ZAGG): Why Investors Should Zag Away From This Stock
by Sonya Colberg, Senior Editor, 8/23/2016 10:36:14 AM
We couldn't blame Zagg Inc. (ZAGG) if it's quietly suffering buyer's remorse.
But the cell phone accessory company will really be in trouble when investors understand the reason for the disappointment ... and that buyer's remorse rubs off on them.
The troubles can be traced back to shortly after February, when Zagg bought Mophie, maker of an iPhone battery case called Juice Pack Air. Mophie's pretty battery cases seemed to be flying off the shelves. So Zagg, looking to diversify, rushed in and bought out Mophie for $100 million.
It was supposed to be a fire sale.
Enter the PokemonGo craze. The augmented reality game launched July 6 and immediately became a phone battery hog. Zagg's stock ran up 38% on hopes that Zagg could help address the need with its Mophie battery-extending case.
But now Zagg is positioned to run out of steam.
Investors may find other viewpoints here and the company website here. Meanwhile, TheStreetSweeper examines why Zagg's stock is now incredibly risky.
*1. Set Up For Failure
As it turned out, Mophie had been losing multi-millions. As competition has grown, business has deteriorated, handing Mophie last year a loss of $29 million.
So Zagg management justified the $100 million cash-and-debt acquisition by touting sales and growth figures.
"Mophie’s 12-month sales are estimated to range from $210 million to $230 million, or sales growth of 3% to 13% compared to 2015 estimated sales of $203 million," said chief financial officer Bradley Holiday during the March 9 earnings call.
Then two months later, after everyone had forgotten about management's estimates, the pro forma numbers came out. Sure enough, Mophie sales grew only slightly to about $186 million. ... The reality was $24 million to $44 million less than those fancy touted numbers.
(Chart 2 Source: Zagg SEC filing)
Those exaggerated numbers have set Zagg up for failure ....
*2. Touted Growth Despite Deteriorating Business
Since 2015 sales turned out puny compared to those touted by management, the Mophie segment will have to sell a ton of cases this year:
The Mophie segment must be gulping over those expectations ... because the business has been deteriorating over the last couple of years.
JAMN Finally Spills the Beans -- And It's an Ugly Mess
by Janice Shell, 6/2/2011 10:32:51 AM
To be sure, the 10-K offered investors little reason to sing. For starters, the filing reveals, this once-hot “coffee company” sells no coffee of its own at all. JAMN relies on a supplier based in frigid Canada – far away from the tropical Jamaican home of its co-founder Rohan Marley – to provide the company with an actual product to sell to its customers instead.
Back in April of 2010, JAMN inked a “supply and toll agreement” with Canterbury Coffee of British Columbia that gave it access to some brew. According to that agreement, JAMN relies on Canterbury to fulfill every role – save a minor one – normally satisfied by a firm that classifies itself as a coffee company. Canterbury purchases the coffee beans. It roasts them. And it then packages them in bags supplied by JAMN – the company’s only real product – for sale to the public.
JAMN signed this deal more than a year ago, right before Shane Whittle – a notorious Vancouver stock promoter – officially resigned as CEO of the company. But the company never mentioned that agreement, seemingly material enough to warrant at least a quiet 8-K report, in a single regulatory filing until now.
Jammin Java (JAMN): Hot Stock ... Bitter Aftertaste?
by Janice Shell, 6/2/2011 10:30:25 AM
It’s time to wake up and smell the coffee! That’s exactly what Jammin Java (OTC: JAMN.OB), a heavily promotedcoffee company, and – for very different reasons – TheStreetSweeper would like investors to do.
Since the beginning of the year, JAMN has miraculously risen from the ashes of the “Grey Market” graveyard to become one of the liveliest – and richest – stocks in the entire microcap arena. JAMN has seen its stock shoot straight toward heaven, soaring from 55 cents to peak above $6 a share on massive daily volume, with its market value nowtopping $355 million despite the company’s limited resources and operating history. (As covered in more detail below, two of the Internet tout sheets pushing JAMN the hardest effectively vanished -- disabled by their Internet servers -- on the day the stock’s trading volume exploded past 20 million shares.)
CCME: Few Signs of Life at 'Healthy' Chinese Firm
by Roddy Boyd, 3/23/2011 9:30:34 AM
Also, and this cannot be understated, hanging out on a sidewalk in Fujian–the sidewalks double as parking spots when the streets, which appeared to have been designed in the Han Dynasty, fill up–was not a viable option. There was also the matter of the world-class headache the Financial Investigator was developing from Fuzhou’s diabolical smell, an epic conflation of poor sewage treatment, air pollution and the smell of cabbage that made getting the hell off Dongjie street a matter of vital importance.
The Financial Investigator and his traveling companion for the trip, an American investor with extensive experience in China, decided to head upstairs despite our interview with the CFO having been cancelled at the last minute (with no explanation given.) We thought a quick tour of the offices and meeting a few other executives might open our eyes to a few things.
Though the language barrier was a little steep with the young receptionist–when we asked for writing paper, she provided Kleenex–we were in short order shown to their conference room and told to wait. It did not escape notice that pride of place in the conference room belonged to a framed certificate of participation from the Fall 2010 Rodman & Renshaw conference, the World Cup for reverse merger companies and the pumpers and touts who peddle them.
Eventually chief operating officer James Yu came down and after spending 30 minutes trying to understand who we were, concluded that giving us a tour wouldn’t hurt. Soon enough, his colleague, Vinne Ye–the chairman’s assistant–came out and took us around.
It was most eye-opening.more...
When new stories are published
CNBC on TheStreetSweeper's coverage of Miller Energy Resources: (MILL):
"Melissa Davis at TheStreetSweeper … wrote a piece on this thing that obviously scared investors a little bit … It was an excellent reporting job (and) has moved the stock dramatically."
Watch the Video
Read the MILL Story
Investors must be properly armed in order to protect themselves against the dangers of Wall Street. To help out, The Street Sweeper has mined the Internet for the most powerful weapons available to investors researching publicly traded companies. In our “Loaded Weapons” section, you’ll find direct links to corporate documents filed with the SEC, conference call transcripts published by Seeking Alpha, insider stock sales tracked by Insider-Monitor.com and popular investment tools offered by Yahoo! Finance. You can also identify the promoters behind current penny stock campaigns – and the compensation they are receiving – by connecting to StockPromoters.com. You can link to other websites that are conducting topnotch stock investigations as well. Click here now.