Pumps Within Pumps for Global Resource Energy, Inc. (PINK:GBEN)

6GBEN_chart.pngGlobal Resource Energy, Inc. (PINK:GBEN) caught a bit of a further boost up the charts on Friday, helped by a round of pump emails sent out by promoters Stock Digest Report, among others. GBEN closed up 38% at $0.045 per share on unprecedented volume.

Promoters Stock Digest Report sent a round of pump mail to their subscribers, stating that a ‘major analyst report’ set a price target of $0.25 for the stock. After several clicks and some reading, however, it turns out that the ‘major analyst’ is really another pumper touting the stock. Examining the so-called analyst report, it becomes obvious that the report is nothing short of a paid pump run by Murphy Analytics, who bagged a modest $5 thousand for promoting the stock, along further disclaimer explanations of how MA made no effort to independently verify the accuracy and reliability of the report’s information. In turn, such a source can be anything but reliable in this case.

Another newsletter going by the name of Research Driven Investor, run by pumper David Cohen, disclosed a compensation of $100 thousand for a three-day promo effort, touting GBEN. It’s always somewhat disturbing when the money paid for a company’s stock promotion exceeds both the company’s cash and quarterly revenue last reported. Here is what GBEN had as of the date of their latest 10-Q – October 31, 2012:

  • ZERO cash, total assets of $1415
  • $286 thousand in liabilities
  • ZERO revenue since inception
  • $68 thousand net loss for the last fiscal quarter

Now, traders may try pausing for a moment and taking a long hard look at those numbers, then considering someone paid $100 thousand to advertise this stock. Even if the stock runs for another day, driven by the seemingly massive pump campaign, the underlying financials can hardly support the inflated stock price.

GSAG_fail.pngDavid Cohen previously pumped other penny stocks and they ended up crashing fast and hard. An example of one such pump is the recent promotion of Global Security Agency, Inc. (PINK:GSAG). On the very next day after the pumping stopped, GSAG dropped and proceeded to lose value in consecutive sessions, erasing investor money in the process.

Traders are advised to be very very careful with stocks targeted by such large paid promotions as the drop happens almost immediately on the day the promo ends and the losses are usually ugly. Do your own research, look at official company filings and don’t trade on hype alone.

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