Weekly Summary

My portfolio is down to a more reasonable level this week. That's mostly because GOGB is normalizing (after being artificially inflated - high price, low volume) and I decided to cut and run on PGPM, given some suspicious activities I mentioned a few days ago. Here's how things stand now:

My main portfolio (mutuals and big-boards) also took a hit this past month, so I can't justify putting any additional funds into the pennies at this time. I'll ride it out for a while and see what shakes.

Cut and Run

Today, I dumped my position in Pilgrim Petroleum at a loss - something very fishy going one. I'll get to the details in a moment ...


The reason I dumped my shares and ate a loss is that I stumbled across something very suspicious: Two companies have been blasting press releases about Pilgrim. Under the byline of "tradersworks.com" and "tradergains.com," fifteen press releases have been put in under two months, pumping the stock.

I suspected that these were two (of distressingly many) services that companies hire to keep their name in the media, in hopes of attracting attention - and I even suspected they were owned by the same company. Their Web sites showed the same address, and I looked up the address to find it was a UPS store in a strip mall, a few miles from Pilgrim's headquarters.

And it gets worse: I looked up the domain name registrations for those sites, and I discovered that they were registered to someone with the same last name as the CEO of the company. I searched on that name, and found a page on facebook for a young girl who's in high school in the same town as the company is located - possibly the CEO's niece or daughter.

And at that point, it was clear that something is very wrong.

At best, the CEO has set up bogus media firms under his daughter's name to pump the stock - which strikes me as something highly unethical. At worst, the CEO is using this company to embezzle funds from his own company (writing checks to his own daughter as payment for "services").

And to make matters worse, there has been a lot of after-hours movement on the stock, suggesting that someone (possibly the same CEO) is loading up on cheap shares to dump on the market when the value rises.

There may be some reasonable explanation for all of this - I don't know the law or the facts well enough to say for sure that there are any ethical or criminal violations, but even a layman can tell that the situation stinks to hell.

And so, I've dumped my holdings and taken my losses ... and dropped a tip to the SEC so that they can take a look at the situation.

Petel Inc Upgraded on Pink Sheets

In a press release today, Petel Incorporated announced that ...

Petel Incorporated received approval by Pink Sheets OTC upgrading the company from 'Limited Information' to 'Current Information' having achieved full disclosure status.

"Attaining 'Current Information' is a vital step towards our goal and the board is now discussing and researching the next step to 'Premier' status with Pink Sheets QX. We are dedicated to moving the company forward and will continue to work exceptionally hard to develop our status further for future growth," says CEO David Morton.

"We quickly instigated the filing of our 15c-211 in June giving the company the benefit of 'solicited' status with greater transparency and exposure and at that time signaled our intention to work our way up to the OTCBB."

I'm heartened by this slow progress - far too many small companies attempt to leapfrog their way onto the OTC boards by reverse-splitting, only to see the prices plummet back to the same level they were at before the split within a week of trading.

Weekly Summary

In spite of an up-and-down week, my portfolio has fared pretty week overall: a net gain of about $50 in value, not so much because anything has taken off, but a handful of my picks that have recovered a bit from their earlier losses.


I've added roughly one stock per week this year, and have only a little cash left (being as I generally put $500 into each purchase, it's not enough). I'll wait for the end of the month and see how my main portfolio (mutuals and big-board stocks) is doing, possibly funnel some additional funds into the pennies.

Bell Buckle Holdings (BLLB)

Here's one I probably missed the boat on: I've been watching Bell Buckle Holdings (BLLB) for a couple of months now. The company recently hired a few marketing firms to get their products into wider distribution, and have done a few press releases to announce their progress, which includes regional supermarket chains, a national discount chain, television shopping, and e-commerce. It was looking good, but I didn't think that it was looking good enough to buy into just yet, so I bought a different stock instead.

The price has nearly doubled since then, as the word has gotten out that they're gearing up for a move to the OTC board. I expect it will rise a bit more, then probably fall back down to its previous level (or lower) when the company takes a downturn, which is most often the case when a small firm with little capital invests too much in trying to boost its stock.

On the other hand, this could be one of the few that makes the grade. While I probably won't buy in (that window has passed), I'll keep an eye on it to see what happens. The stock closed today at .0017 - and I wonder where it will be next month?

Miva, Inc. (MIVA)

Company:	Miva, Inc.
Web Site:	http://www. miva.com
Purchase Price:	$1.64
Current Price:	Click Here

Miva is a small and growing firm in the Internet advertising space, which salvaged the remains of several companies in the wake of the dot-com crash and has been quietly gaining momentum for the past four years. Its value proposition is aggregating several best-in-breed solutions offered by individual companies, enabling its customers to balance and adjust their campaigns to adjust to changing trends in new media promotions.

Admittedly, there's nothing on the immediate horizon that I expect will cause a dramatic, short-lived increase in value, but the company remains strong and stead, albeit small, and seems to be greatly undervalued, so I sense that it 2008 may be the year that the company turns itself around, or gets bought out. Given that the shares are selling at close to their book value, I sense there's a profit to be made, either way.

Weekly Summary

Another week has passed - GOGB has managed to hold its seemingly inflated price, but volume remains too low to dump shares to lock in profit - but even discounting that, performance remains pretty good:


So far, even the poochiest of my holdings have retained a fair amount of their value - no clear write-offs yet, which is unusual in small-caps, especially in a down market.

Soyo Group (SOYO)

Company:	Soyo Group
Web Site:	http://www. soyo.com
Purchase Price:	$0.97
Current Price:	Click Here

The Soyo Group is a small consumer electronics firm that has been struggling for years, but recently has seemed to have gotten its act together. They have been running in the black for the past three years, and their net income is growing at a remarkable rate, and they are making significant inroads into Latin America.

My expectations are that the investment community will eventually take notice of this company and demand for its stock will spike. It may take a few months or a few years, but my sense is the firm will be viable for the long-run.

SexQube Business Update

Petel Incorporated announced that:

SexQube [P3tel's adult broadband TV and VOD service] announces a significant boost in viewers and subscriptions. ... Following recent marketing initiatives including .... magazine campaigne, database marketing, and online affiliate programs, traffic and subscription figures between December and February have increased 150% month by month. ... A highly targeted online campaign starts this week and is forecast to generate additional sales of $60,000 per week based on a 10% buy rate of 1 movie per week.

Unlike other companies I could name, Petel tends to be conservative in its predictions, and its past growth has historically surpassed the estimates they originally published, so chances are good that the revenue they expect, and more, will be obtained.

Given that the company has a gross margin of 70% (not unusual in the adult entertainment e=industry) and only $500,000 in overhead expenses (annualized from the 2007 Q3 report), this means a base profit of $1.6 million - or about 9 cents per share - triple the current price.

Zeon Fuel Considers Biodiesel Fueled Power Plants

In a press release today, Zeon Fuels (A subsidary of BlueStar Health) announced:

[Zeon Fuels] has formed a new division to evaluate the economic viability of delivering electricity to the local electricity grid through biodiesel fueled power plants.

BlueStar Chairman, Naved Jaffrey, observed, “… It is a natural extension of our business objective to increase the awareness and pursue the expanded use of environmentally friendly fuel to meet our everyday needs."

The company anticipates the evaluation phase to be completed in 4 to 6 months at which time it will determine the best structure to implement this new business opportunity.

This strikes me as an excellent plan. The main problem with biodiesel companies is that they are focused on producing fuel for which there is no significant commercial demand, in hopes of some day being able to sell it.

By establishing power plants and entering the power industry, BlueStar is both generating a demand for its own product and diversifying the company’s holdings. It’s a very smart move.

Granted, this is an exploratory phase, and there’s no guarantee that they will actually move in that direction – but it demonstrates that they are thinking outside the box, and given the present performance of rival firms that remain pigeonholed, it’s an excellent sign.

E*Trade Marks Progress on Turnaround Plan

In a press release dated February 11, E*Trade announced that ...

[The company] has signed an Asset Purchase Agreement to sell substantially all of the assets of RAA Wealth Management, LLC (RAA) to PHH Investments, Ltd (PHH). This transaction ... [is] anticipated to be completed within the next 90 days; as a result, the Company expects to generate approximately $80 million in proceeds.

... The Company is actively working to improve capital and liquidity. Management has identified non-core assets with high market demand that will create value for the franchise through the orderly sale of such assets. The Company has also streamlined certain corporate functions to reduce expenses and will allocate these savings, as planned, to growth initiatives for its core retail business.

The albatross around this company's neck, and that of many others, has been subprime lending - and unloading its mortgage receivables on another company, even at a loss, shores up the company's own portfolio and eliminates a drain on its resources. This is an excellent sign that they are actively implementing their turnaround plan, and the stock price has reflected their success.

Weekly Summary

There's something fishy going on with one of the stocks in my portfolio - GOGB looks like it's way up, but it's been low-volume trades, so I believe someone is gaming the market. I expect it will go back to normal soon. On the other hand, the increase for E*Trade (EFTC) is genuine.


Discounting the $1250 for GOGB, I'm still up about 10% for the year. Not bad for just over a month.

GoIP Signs Agreement With Publishing Company

In a press release dated February 7, GoIP announced ...

... the completion and signing of an agreement with a major worldwide publishing company to provide mobile outreach technology ... in an ongoing book promotion effort aimed initially at the Young Adult community.

Opt-in subscribers will be able to receive and exchange information on books, reviews, authors, illustrations and book content likely to be of interest to the Young Adult demographic, yielding highly profiled, personalized databases that have intrinsic marketing value to the publisher.

Mitchell Leiser, GoIP Strategic Business Director, stated, "Our joint objective is designed to help GoIP achieve its goal of serving networks of mobile-linked affinity groups. These communities of common interest are an increasingly significant social phenomenon of Tsunami proportions."

I had been concerned about the recent dramatic rise in stock price, and assumed that, given the low level of activity, something fishy was going on. While that remaisn a possibility, I'm no longer as apprehensive in general, given this news.

Given the potential for content providers to latch onto a standardized soltuion for making the medium usable, GoIP's value proposition is a bit dicey - but by going after the youth market and capitalizing on the power of social networking can help them to lock in a loyal customer base with strong peer influence. It's a very innovatin and promising approach.

Given this disclosure, my sense is that demand will be more long-lived, and while I still intend to lock in profits should the volume increase to a sufficient level, I'll hang onto the remainder for the long run.

False Profits

One of the problems with penny stocks, especially sub-pennies, is volume. Case in point, my shares in GOGB jumped a whopping 300% in the past few days. Under normal circumstances, I'd sell at least half of it off, but there aren't any buyers.

I strongly suspect that someone is gaming the market, buying small quantities at greatly inflated prices to prop up the value of the stock, in hopes that others will notice and start a feeding frenzy that will enable the to dump their remaining shares. It might even be someone in the company itself, or just some rogue individual who hopes, for a few hundred bucks a day, to cash in and make several thousand.

In the end, a lot of people could get burned, and the reputation of the company will suffer - so my strategy has changed: instead of holding this one in hopes the company will pay out in several months, I'll liquidating my shares as soon as possible, at cost if necessary.

Northstar Neuroscience (NSTR)

Company:	Northstar Neuocience
Web Site:	http://www.northstarneuro.com
Purchase Price:	$1.56
Current Price:	Click Here

Northstar is a biotechnology research company specializing in cortical stimulation therapies for the rehabilitation of stroke victims. The price of their stock tanked after a disappointing clinical trial, dashing the hopes of investors that the company will gain FDA approval in the near future.

This is not unusual in this industry sector: speculators flock to a firm that has a product in trial in hopes that it will succeed and turn a fast profit. Some people even buy the stock on the margin in hopes of making an exponential profit, then have to dump their holdings when the price falls below a certain level, which causes a glut in the market, exaggerating the downward trend.

The key word there is "exaggerating." Failing one trial seldom sinks a firm, and Northstar has sufficient capital (over $80 million in liquid assets, according to the same press release) to recover. '

My plan for this investment is to accumulate shares at its deflated price, cash out enough to cover my costs when the base price recovers, then hold the remainder in expectation that their next trial will create a similar feeding frenzy. I've had mixed success with that tactic in the past, but given their capital reserves, I feel that Northstar is a reasonably good candidate.

GoIP (GOGB)

Company:	GoIP Global, Inc.
Web Site:	http://www.goipglobal.com
Purchase Price:	$0.002
Current Price:	Click Here

GoIP is a small company that will soon be rolling out a suite of mobile services. The precise nature of these services is being kept quiet (their Web site provides little to no information and their press releases contain very few hard facts), but the potential is enormous. A good analogy is that GoIP wants to become the AOL of mobile computing.

That analogy may seem laughable now, but in the early days of the Internet, there was very little information, it was difficult to find, and it was even harder to use once you found it - so consumers needed a service to aggregate useful information and make it user-friendly. In their day, services like AOL were very popular, and the companies did quite well.

If mobile computing plays out the same way, companies like GoIP will enjoy a few years of success before the rest of the world learns to leverage the channel, at which point the services that people buy from them will be available for free - but there's a lot of potential for profit in the gap.

Pilgrim Petroleum Reports 2007 Record Profitability and Performance

In a press release this week, Pilgrim Petroleum announced:

Exceeding expectations, Pilgrim's Net Revenues for the year totaled $410,096 as compared with $1,471,507 in 2006, a decrease of 72% compared with 2006 as a result of debenture of properties last year. Net Income, on the other hand, was $33,725,949 compared with $516,814 last year, demonstrating an escalating increase year after year.

This announcement has had absolutely no effect on the price of the stock, and here's why: the vast majority of this "revenue" is from the sale of properties in exchange for stock in an unknown company. It's not profit (generated by operations), it's not liquid assets (I expect they can't sell the stock to generate capital for a long period of time), and it's probably not worth as much as they claim (they're reporting value at the time of sale, not present value of the stock).

Pilgrim has a long history of making outlandish claims about money they don't have, especially in terms of "estimated" reserves of oil - which isn't profit until it's pumped and sold, and the figures are usually drastically revised (with a great deal less fanfare) at a future date.

In spite of all the grandstanding, I have faith in the company's potential for future growth. Provided that oil prices remain high (and there's no sign of that changing), there's good money to be made in squeezing shale ... and the company has sufficient (legitimate) resources and income to stay afloat until they strike oil. So while the constant stream of outlandish claims may be destructive to the price of their stock, it's of little consequence to the long-range prospects.

Weekly Summary

This week marks a turn-around for my portfolio: the market has bounced back and three stocks have made some excellent returns. The others are still down, but that's to be expected with penny stocks - some take a whiel to gain steam (if they gain steam at all). Here's the summary:


Two important notes: I sold of some stock earlier this week, so the value of my portfolio doesn't reflect my net gains (realized gains are now in case, not in stock). Also, I've added the commissions into the total price of the stock so that my numbers add up.