CYAD

As many others do, I often find in my email inbox totally unsolicited stock alerts, stock tips and similar promotions, invariably concerning penny stocks. I never follow the tip. I just move them to a folder named "stock promotions".

From the where-are-they-now dept. let's take an email that I received on June 22 2004 by "Michelle Goldman" bedixhd@aaiworldmarket.com, promoting CyberAds, Inc. (CYAD).

The key points mentioned in the email are that this company was allegedly featured on CNBC Squawk Box, analyst Katrina Wolf of Blue Star Trading Group had stated that "CYAD seems poised to move much higher, and this could be the last time we see the extremely undervalued prices available at the moment", setting a price target of $10.00 per share from a current price of around $1 and that real estate development had become the primary focus of the company.

The email claims that "over the past year, the Company has grown its assets to over $10 million from zero, while liabilities have improved from $7.5 million to approximately $2 million. Based on letters of intent for new acquisitions, including the Long Island development in the Bahamas, we expect net assets to improve to $50 million by the end of Q2 and reach $100 million following Q4 2004".

The email also mentions that CyberAds is originally an internet marketing company with a number of web sites catering to the the sub-prime credit market.

The email does contain the standard disclaimers, written as a note in small characters, such as: "In compliance with Section 17(b), we disclose the holding of independently purchased shares of CYAD prior to the publication of this report. Be aware of an inherent conflict of interest resulting from such holdings due to our intent to profit from the liquidation of these shares. Shares may be sold at any time, even after positive statements have been made regarding the above company."

This chart shows the price of CyberAds stock from the day I received the email to this day.

Click on the chart to see it full size.

As everyone can see, if I had bought at $1, as of today I would have lost 75% of my money.

Now, let's forget about CyberAds, Inc., for a second, and try to figure out who is really sending this stock tip. If I search the sentence "analyst report from Katrina Wolf of Blue Star Trading Group" on Google I get links to several archived copies of the very same email that I received. This happens because they are sending emails to mailing lists that have archives available on the web.

Blue Star Trading Group is, according to their web site, a " private fund focusing on venture capital investments", and Katrina Wolf is the Chief Analyst. The web site advertises two services to Companies: professional writing of documents for shareholders and potential investors, such as PR material, and proof-reading of similar documents, through a sister company, Investors Relations Network. IRN is clearly a Stock Placement Service business, that is a business that creates and executes stock promotional campaigns.

Interestingly, they showcase CyberAds, Inc. report, dated December 2004 (I downloaded it, in case they remove it).

Categories: penny stocks

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