Once bitten, twice shy. This is the first thing that comes to the mind of any investor who has fallen victim to paid pumping schemes with penny stocks. Because, this is exactly what you end up with once you take on the challenge, especially if the stock you have chosen is promoted by BlueWave Advisors and/or its subsidiaries.
Following two massive promotions earlier this month, the stock of Genius Brands International, Inc. (OTC:GNUS) got another promotional injection yesterday as a total of four advertising emails reached our database. Bearing one and the same disclaimer, the emails disclosed a total compensation of $30 thousand and the link between the three different promoters, i.e Micro Stock Profit, Penny Stock Finder and Stock Preacher. As it is, they are all subsidiaries of BlueWave Advisors. The latter are notorious for paid pumping activities which have been occurring for quite a while and have had devastating after-effects on traders.
Let us take Stock Preacher for example. It was this promoter that got paid $40 thousand plus an option for another $100 thousand (see disclaimer here) to raise awareness about HWIC on Feb. 15. Back then, you could buy HWIC stock at around $0.05 per share. The promotion ogranized by Stock Preacher pushed the price up 15%. What has since happened, though? At present, HWI Global, Inc. is in bankruptcy and its market value has shrunk by 80% for the last five months or so. Check the accompanying chart for reference.
GNUS, on the other hand, has not started bankruptcy proceedings. Yet. The company closed the 2011 fiscal year with a net loss of $1.36 million and net working capital of $300 thousand. At the same time, however, the fact that GNUS’ latest amendments to its stock option plan made for a five-fold increase of the number of common stocks issuable thereunder deserves traders’ attention, especially that of dilution-averse players.
