Another Million-Dollar Pump – Endeavor IP Inc (OTCBB:ENIP)
Seven active trading sessions and not a single red close. That’s right, Endeavor IP Inc (OTCBB:ENIP)’s stock (a public company since May) is off to a flying start. It might not be the fastest mover around (the daily gains over the last five days have not exceeded 3%), but the fact that more than $435 thousand worth of shares changed hands yesterday means that more and more people are paying attention. So, what have we got?
Well, ENIP is a patent play and if you’ve been around small cap ventures for a while, you know that these sort of investments are one of the riskiest. Often referred to as “patent trolls”, such companies acquire a portfolio of intellectual property and then file infringement lawsuits against big enterprises with lots of cash. As you might imagine, the outcome of the legal proceedings is uncertain which brings long-term investors lots of sleepless nights and makes for some erratic day-to-day stock performance. All in all, putting your money in such companies is, more often than not, a bit like shooting in the dark and hoping for the best. A definite plus point of these tickers is, however, that they rarely get the promotional treatment. At this point, we should point out that ENIP is not your typical small cap patent troll.
For one, while other companies using the same business model like Worlds Inc (OTCBB:WDDD) and Vertical Computer Systems Inc. (OTCMKTS:VCSY) often have to wait for years until they get their legal actions resolved, ENIP have already managed to reach some settlement agreements which means that they have some revenues in their latest financial statement. The balance sheet, while not perfect, isn’t as horrific as we expected as well. Here’s a quick rundown of ENIP‘s financial situation as of July 31:
- cash: $450 thousand
- current assets: $501 thousand
- current liabilities: $640 thousand
- quarterly revenue: $100 thousand
- quarterly net loss: $262 thousand
The news sounds good as well. A lawsuit against Con Edison Solutions started in September and last week they announced that they have filed some complaints against Aclara Technologies, Inc. and Sensus USA, Inc. Once again, the outcome remains unknown, but some of you might be thinking that if everything goes according to plan, the outlook should be good. There is one more thing to consider though.
There’s a paid pump for ENIP and it’s quite a big one. A page called 900 Percent Stocks has put together an eight-minute-long video in which an unnamed person explains in detail why investing in penny stocks gives you a great opportunity, about the slow and boring movement of large cap enterprises and, last but not least, about the huge advantages provided by ENIP. Scroll to the bottom of the page and you’ll see a disclaimer written in an annoyingly fine print saying that a $1 million promotional budget has been set aside. It also says that Central A Marketing, the entity that received the colossal compensation, holds “a large amount of shares” in ENIP and that the people who stand behind the campaign intend to get rid of them.
This puts things into a completely different perspective. It means that someone is willing to splash out a gigantic sum on increasing ENIP‘s price and that the same people will probably want to get their investments back soon.
In case you are wondering, the massive promotions for Northumberland Resources Inc (OTCMKTS:NHUR) and Sanborn Resources Ltd (OTCMKTS:SANB) were organized by the same entity and the charts on the right show that after the initial surge given by the artificial hype, the two tickers crumbled to the ground. Will the same thing happen to ENIP? We’ll leave it up to you to decide, but we would like to urge you to consider the risks associated with the $1 million pump carefully and remember that if things sound too good to be true, they probably are.