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PDFCramer raked in millions during his past life as a hedge fund manager, but he has still made mistakes – and suffered withering criticism – as a celebrity stock picker willing to make his calls in public. He cannot avoid offering at least some bad tips, given the unpredictable nature of the stock market, and he cannot avoid taking some real heat when that inevitably happens.
With this in mind, I was initially hesitant to track the performance of stocks we cover here at TheStreetSweeper. We focus on exposing risky stocks that look poised for massive losses, after all, in a broader market that typically delivers consistent gains instead. To me, it seemed, we would be working without gravity – or even luck – on our side.
That was nine months ago. Remarkably, as the official "Stock Report" to the right shows, we have gone on to achieve a near-perfect track record since that time. (At the end of last week, Suntech -- which rebounded this month from a steep decline – stood out as the sole gainer in the pack.) Even better, we have helped our readers escape more than $2 billion worth of stock-related losses along the way.
Penny stocks, which carry the highest risks but – according to hype from paid promoters – also promise the greatest rewards, account for almost half of those losses. Traditional stocks, including some big money-losers such as Genoptix (Nasdaq: GXDX) and Toreador Resources (Nasdaq: TRGL), make up the rest.
Three penny stocks, which traded furiously when TheStreetSweeper first examined them, have racked up more than $100 million in market losses apiece. Of those, with $390 million in market value now gone, Imaging3 (OTC: IMGG.OB) – a heavily promoted device company – ranks as the biggest loser by far. Big Bear Mining (OTC: BGBR.OB) and China Tel (OTC: CHTL.OB), two stocks endorsed by mainstream television commentators, round of that group.
All three companies look almost the same as they did when we first started covering them. IMGG is still waiting for regulatory approval of a “breakthrough” medical device. BGBR is still hunting for its first ounce of gold. And CHTL is still trying to become a broadband powerhouse in the Far East.
The price of their shares, down 47% to 81% at this point, stands out as the biggest change.
Two other penny stocks, which we labeled “Siamese twins” because of their striking connections six months ago, look even uglier. NXT Nutritionals (OTC: NXTH.OB), originally lifted by a valuable (paid) endorsement from basketball legend Shaquille O’Neal, has plummeted 91.7% to 19 cents a share. Clear-Lite Holdings (OTC: CLRH.OB), which shares a CFO and auditor with NXTH, has fallen an even greater 94.8% to just 7 cents a share during that same timeframe.
Both companies, once loudly endorsed by high-profile TV analysts, have racked up losses that now approach the $100 million mark.
TheStreetSweeper has taken aim not only at dubious microcap companies but also at the paid promoters who tout those risky stocks. Past targets include big-name TV personalities, such as Charles Payne and Tobin Smith, who lent credibility to penny stocks that later collapsed. They include prolific newsletter writers, such as Jarret Wollstein, as well. (Wollstein, who promoted multiple penny stocks that caught our attention, has grown oddly silent in the wake of all that scrutiny.)
Last month, one of our earliest targets – a promotional website known as PennyStockChaser – came under heavy regulatory fire. The U.S. Securities and Exchange Commission filed charges against the website and its owners, Dan Ryan and Carol McKeown, for allegedly selling shares of the same companies they were urging investors to buy. Notably, the SEC singled out PennyStockChaser’s lucrative trades in Atlantic Wind & Solar (OTC: AWSL.PK) and MSE Enviro-Tech (OTC: MEVT.PK) – the very companies scrutinized in our past coverage of the website – when lodging its complaint.
We savor those victories when they come along. That justice, coupled with the gratitude of our readers, represents the payment we receive.
We have never shorted any of the stocks that we’ve covered (and I wouldn’t even know how to try), so we don’t make any money if those stocks later fall. We do plan to finance our site with advertising – and a possible TV show – at some point, but we wanted to establish a solid reputation, backed by an impressive track record, first. After less than a year in operation, we are well ahead of schedule in accomplishing that goal.
We now regularly complement our own stock coverage with that produced by similar investigative news sites – such as ShareSleuth, iBizReporting and TheFinancialInvestigator – to better serve our readers. Meanwhile, we have caught the attention of several respected media outlets – including The Vancouver Sun, StreetInsider, DealBreaker and Benzinga – that have cited our groundbreaking work.
While young, TheStreetSweeper already ranks high on the “Top 20” list of financial websites evaluated by reviewers at Investimonials.com (a relatively new, but valuable, website itself). We have scored perfect five-star ratings from most of those reviewers, and enthusiastic four-star ratings – coupled with high praise – from the rest.
“This website is awesome,” one investor wrote last month. “They do in-depth and detailed write-ups about many pump-and-dump and other penny stock scams. When almost no one else is covering these stories, it is refreshing to see great journalism in this niche.”
We do cater to an underserved market that’s hungry for real news. We’re still picky about the stories we choose to cover, though.
Take Ecosphere Technologies (OTC: ESPH.OB), one of our latest subjects, for example. We actually began examining ESPH months ago, when the stock first hit record highs, but found little (aside from the company’s connections to a stock-promotion firm) that seemed newsworthy at the time.
Since then, however, we have uncovered enough material – with the CEO’s criminal record topping that list – to pack multiple articles. We’ll wait for real news, whenever necessary, and move on to other projects if that information fails to materialize.
We know that, like Cramer, we risk hurting our track record with every new stock we review. We also realize that some of the companies we’ve covered, particularly the larger ones, might resolve the problems we’ve exposed and reverse course down the road.
We understand that. For the sake of innocent shareholders, we even hope those changes come. But we plan to hold those companies accountable – and keep saving investors money – until that happens.
To contact Melissa Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
