MGT Capital Investments Promoters Blatantly Call Themselves a “Stock Tout” firm
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Don’t Just Take Our Word That MGT Capital Investments is a Classic Pump & Dump (P&D)
By now you are probably aware of the spectacular move shares of MGT Capital Investments (AMEX:MGT) have made. The stock has taken center stage during the last several trading days, enjoying a robust 10-day run resulting in a peak increase of 1,150%. The stock caught our eye at around $2.00 per share on May 16, at which time we alerted our members of the stock’s continued momentum and likelihood that the stock was a pump and dump play. But don’t take our word for it.
We made the additional observation that new pump and dump promotional outfits are in town, a duo of entities that are chock full of speculative stock coverage, serving as vessels through which companies can release news and/or receive additional investor attention:
Basically, it appears that Techstockinsider.com uses Financialnewsmedia.com to publish some of its promotional material. Both outfits receive compensation for profiling certain companies, offering full disclosure that these promotions are paid for in cash or shares.
This is where it gets crazy, and maybe that is appropriate given that some believe that John McAfee, the newly touted shareholder of MGT, has himself flipped his lid.
The disclaimers on techstockinsider.com state that they “tout”, a term that in the past has validated our recognition of red flags associated with pumps and dumps.
“We are paid advertisers, also known as stock touts or stock promoters who disseminate favorable information (the “Information”) about publicly traded companies (the “Profiled Issuers”).
Here are more excerpts from their website.
The source of our compensation varies depending upon the particular circumstances of the Campaign. We are compensated by the Profiled Issuers, third party shareholders and other parties related to the Profiled Issuers such as officers and/or directors who will derive a financial or other benefit from an increase in the trading price and/or volume of a Profiled Issuer’s securities.
We publish the Information on the Website, in newsletters, audio, and live interviews featured reports message boards and email communications for specific time periods that are agreed upon between us and the Profiled Issuer. Our publication of the Information is known as a “Campaign”.
Most, if not, all of the Profiled Issuers are penny stocks that are illiquid and whose securities are subject to wide variations in trading price and volume. During the Campaign the trading volume and price of the securities of each Profile Issuer will likely increase significantly. When the Campaign ends, the volume and price of the Profiled Issuer will likely decrease dramatically. As a result, investors who purchase during the Campaign and hold shares of the Profiled Issuer when the Campaign ends will likely lose most, if not, all of their investment.
The Information is a snapshot that provides only positive information about the Profiled Issuers. The Information consists of only positive content. We do not and will not publish any negative information about the Profiled Issuers; accordingly, investors should consider the Information to be one sided and not balanced, complete, accurate, truthful or reliable.
Talk about having some large “huevos.” After reading these disclaimers we find it hard that any investor can conclude that MGT is not a P&D.
A key component to the P&D formula
The promotional websites are carving out a promotional engine that is working well. One of the tactics they use is to sprinkle sensational news and commentary on the profiled companies, coupled with commentary on legitimate “competitors” when issuing press releases. The MGT pump was helped along by two pieces of news:
- The company announced that they have agreed to acquire specific technology and assets of McAfee’s anti-spy software company, D-Vasive for a cash and stock sum. This would give them approximately 47% controlling interest in the company.
- They’ve acquired technology incubator The Round House LLC. This will offer co-working space, accelerator services, and additional angel investments for companies meeting the organization’s criteria. Of the current equity ownership that Round House has in some of its companies includes ownership of RecMed First Aid. RecMed was founded by an Alabama teenager, Taylor Rosenthal, who according to a report issued by CNBC, actually turned down an initial buyout offer of $30 million.
How much legitimacy should investors really garner from these developments? As The Street Sweeper and SEC filings pointed out, MGT only paid $300k for the software assets. As for RecMed, the company appears to only have received $100k in funding and we have no idea how much Round House invested in RecMed.
In other releases where Techstockinsider.com profiles other stocks it is paid to tout, it makes sure to mention recognizable companies to wet the investors’ pallets. Reference Appiphany Tech (OOTC:APHD). APHD , touting itself as a cyber security company, pumped from $0.005 to $0.20 on May 17, hitting an intraday high of $0.47, on the heels of pump news that it landed a contract with a $900 million recognizable brand, TOMS shoes. This run has already lost its steam as the stock has settled under $0.10 per share today. We would like to know more about this “contract.”
Back To Reality
MGT may be coming back to reality, reversing an early day spike in price, with the decline possibly related to The Street Sweeper’s coverage of MGT here, potentially spooking investors out of the stock. Whether or not this reversal is temporary remains to be seen, as we are used to the extreme ebb, flow and resumption of pump activity in stories like this.
Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newletters disseminating information on pump and dumps, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D’s. Please see more about our disclosures here.