Did a Value Investor Unwittingly Promote a Penny Stock That Crashed?

[WarrenWatsa]

LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

 

I'm not going to judge him just based on this situation.

 

I had his site in my rss reader for a long time. Used to be a decent one for value investing news. I erased it a while ago as it had become way, way too spammy and promotional. Seems like yet another guy who has found a way to make money off the investment community without actually investing.

 

+1

 

I started to see way too many articles about Facebook. And not even about the stock, just articles about the website. It was strange.

 

Fully agree with this. The site continues to become increasingly spammy and increasingly less useful. Less than maybe 10% of the articles Jacob posts each day are actually worth a glance. It used to be that at least a third would be.

[alwaysinvert]

LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

Go easy with the hyperbole, no one is calling for his head. I don't think anyone in the thread said anything improper, and as long as no one does, the existence of the thread is good. It makes him think twice and it makes everyone else think about the implications of their behaviour. Today's version of the front page test :)

[Kraven]

LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

 

Again, some of us are only saying that we think it is unethical and that we regret his decision to head this way, young guy with a family or not. If you don't care for opinions on a public forum, you can always leave. No one forces you to read this thread.

 

 

Maybe I'm sounding harsher than I think, idk. Off to the gym to lose some stress!  ;)

 

Unethical?  Maybe.  I don't know.  I think you've got it backwards.  I am quite fine with the opinions and am posting my own.  I'm not the one crying about how unethical it is.  I just said to leave him alone.  I think you should read your own text.  You don't like what he wrote, then don't read him.

[Kraven]

LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

Go easy with the hyperbole, no one is calling for his head. I don't think anyone in the thread said anything improper, and as long as no one does, the existence of the thread is good. It makes him think twice and it makes everyone else think about the implications of their behaviour. Today's version of the front page test :)

 

Great!  I'm glad the board is on the case.  He'll think twice now.  The board has spoken.  You said to go easy on the hyperbole.  Perhaps.  But I think saying that now he'll think twice and this is the version of the front page test is equal parts hyperbole.  Ok, I'm done.  I don't know him and I've never met him.  I just don't like some kid getting picked on by a bunch of virtual bullies.  If he wants to stick up for himself, he can do it or someone else can step in.  I'm sure he's read the thread by now or someone has alerted him to it.

[Liberty]

My natural inclination is to avoid these types of conflicts.

 

But if I try to be rational about the situation, I gotta recognize that from a game theory perpective, things are better when there are consequences to getting caught promoting something that is probably a scam, or at least not as good a deal as you made it sound (it's a well-known  cognitive bias that being paid by someone to "review" their stuff clouds judgement -- we should all know better and not pretend to be immune). He probably did it in good faith, but the public opprobrium will make him and others think twice next time about taking money to promote a penny stock and increase the chances of more due diligence being done.

 

Otherwise, if there are no consequences to something like this, the good names of people can be bought more easily and the signal-to-noise ratio gets worse. 

 

So as much as I find threads like this uncomfortable, it's probably better than a world where, say, Parsad gets paid to created "sponsored threads" on his site and after one of his recommendations crashes by 95% and is revealed as probably a pumped up scam, everybody goes "oh well, it said 'sponsored' and he did it to make money for his family, so it's ok".

 

Some will say: "But that is common! Most analysts are paid by organizations with conflicts of interests and there are tons of stock pumpers out there! Everybody should alway do their due diligence and never trust anything any one says!". Maybe, but something being common doesn't make it right, and since due diligence can't always mean rediscovering the atom, you have to end up trusting certain sources at some point, so weeding out untrustworthy sources publicly is a service that reinforces the whole system. And at least analysts always publish as analysts, while web-publishers can wear two hats and make things a bit fuzzier.

 

My 2 cents Canadian.

[alwaysinvert]

LOL.  Off with the kid's head then.  Let's take him to the gallows pole.  Yes, he is a guy who posts here.  Lots of people do.  These aren't hallowed grounds we are talking about.  Whatever.  So he made a mistake.  I doubt he was forced to post it or his family would starve, but obviously he wanted the money.  At the end of the day, he disclosed what it was he was doing and people are required to do their own due dilly anyway.  It just doesn't bother me.  The uproar about it though is quite humorous.

Go easy with the hyperbole, no one is calling for his head. I don't think anyone in the thread said anything improper, and as long as no one does, the existence of the thread is good. It makes him think twice and it makes everyone else think about the implications of their behaviour. Today's version of the front page test :)

 

Great!  I'm glad the board is on the case.  He'll think twice now.  The board has spoken.  You said to go easy on the hyperbole.  Perhaps.  But I think saying that now he'll think twice and this is the version of the front page test is equal parts hyperbole.  Ok, I'm done.  I don't know him and I've never met him.  I just don't like some kid getting picked on by a bunch of virtual bullies.  If he wants to stick up for himself, he can do it or someone else can step in.  I'm sure he's read the thread by now or someone has alerted him to it.

No, that really isn't hyperbole. The front page test doesn't deal with nuances, or grey scale or what's objectively wrong - it's all about impressions. And some people who know about this case (not me) says it doesn't look so good. And from that everybody can take what they want.

[bathtime]

Parsad, thanks for posting links to those newspaper articles - great investigative reporting.

 

I used "unwittingly" in the title for this thread as I didn't know to what degree Wolinsky had researched SNPK.

 

I had run across SNPK in April and was surprised at the incongruity of Wolinsky covering it as I remembered him having his own value blog and then writing for Gurufocus. Perhaps I'm off the mark, but I don't think it's a stretch to refer to him as a value investor.

 

I was appalled by the SNPK saga as a whole and still can't understand how such a questionable company achieved a billion dollar market cap - let alone in five weeks. The regulators were nowhere in site.

 

Yesterday I happened to check the stock price of SNPK for the first time in a few weeks and remembered Wolinsky's article. Since he is familiar to this community I thought the unusual  incident noteworthy of discussion and that I might learn more about it as a result.

 

While I would be the first to admit that I get more from this board than I give in return, I am not a newcomer to the site.

 

 

 

 

 

 

[Ballinvarosig Investors]

I don't see a problem in what he did (anyone dumb enough to buy based on his analysis deserves to be parted with their money), but I do think he is hurting his reputation.

[oddballstocks]

Parsad, thanks for posting links to those newspaper articles - great investigative reporting.

 

I used "unwittingly" in the title for this thread as I didn't know to what degree Wolinsky had researched SNPK.

 

I had run across SNPK in April and was surprised at the incongruity of Wolinsky covering it as I remembered him having his own value blog and then writing for Gurufocus. Perhaps I'm off the mark, but I don't think it's a stretch to refer to him as a value investor.

 

I was appalled by the SNPK saga as a whole and still can't understand how such a questionable company achieved a billion dollar market cap - let alone in five weeks. The regulators were nowhere in site.

 

Yesterday I happened to check the stock price of SNPK for the first time in a few weeks and remembered Wolinsky's article. Since he is familiar to this community I thought the unusual  incident noteworthy of discussion and that I might learn more about it as a result.

 

While I would be the first to admit that I get more from this board than I give in return, I am not a newcomer to the site.

 

I'd recommend the book Wall Street Verses America by Gary Weiss.  The book's thrust is markets can't be trusted and people should invest in index funds, ignore that message.  The book details a number of frauds, boiler rooms, pump and dump schemes it's really crazy.  The message I got from the book is that each stock is a buyer beware no matter who talks about it.  The book's a quick read, I remember reading 60% of it on a plane ride down the East Coast to Florida, round trip would be long enough to finish the thing.

[Parsad]

Folks,

 

Let's not get carried away one way or the other.  I don't think what he did was the brightest thing, but at the same time I think as the title originally said, it was done "unwittingly". 

 

Jacob's site has gone from like two to three thousand unique users to something like 50 thousand plus in a little over a year.  With that comes the guys who want you to "analyse" a stock for them through "paid coverage".  A young guy, whose business is suddenly booming, and someone comes to you and says hey if you write a report on our stock, we'll pay you x dollars for your work, it's hard to say no. 

 

I think he felt that the disclosure that it was "paid coverage" would indicate to any readers that it is buyer beware, but in my opinion, with that readership comes the responsibility of not putting your readers in that circumstance to begin with.  I would not have done it, but I'm alot older than he is and I only have to feed myself.

 

With the vociferous outcry on here, I think he probably got the message, but I think everyone can tone it down again.  Now it's up to him to decide how he deals with the attention he is sure to continue to get from these types of promoters as his site grows and grows over time. 

 

Personally, I chalk it up to a learning experience and best of luck to him with his site.  Has anyone thought about the fact that he could flip this completely around and do an expose on these guys instead?  Maybe Jacob's site would do better and better if it investigated these types of shenanigans.  I'm fed up of watching these types of guys feed on unwitting investors in Vancouver, let alone everywhere else.

 

So give the kid a break...I think he heard you all loud and clear!  ;D  Cheers!

[bathtime]

Lovely post Parsad, I admire your large-hearted ways.

 

Thank you for the book recommendation, oddballstocks. Looks fascinating, I will check it out.

[ragnarisapirate]

Folks,

 

Let's not get carried away one way or the other.  I don't think what he did was the brightest thing, but at the same time I think as the title originally said, it was done "unwittingly". 

 

Jacob's site has gone from like two to three thousand unique users to something like 50 thousand plus in a little over a year.  With that comes the guys who want you to "analyse" a stock for them through "paid coverage".  A young guy, whose business is suddenly booming, and someone comes to you and says hey if you write a report on our stock, we'll pay you x dollars for your work, it's hard to say no. 

 

I think he felt that the disclosure that it was "paid coverage" would indicate to any readers that it is buyer beware, but in my opinion, with that readership comes the responsibility of not putting your readers in that circumstance to begin with.  I would not have done it, but I'm alot older than he is and I only have to feed myself.

 

With the vociferous outcry on here, I think he probably got the message, but I think everyone can tone it down again.  Now it's up to him to decide how he deals with the attention he is sure to continue to get from these types of promoters as his site grows and grows over time. 

 

Personally, I chalk it up to a learning experience and best of luck to him with his site.  Has anyone thought about the fact that he could flip this completely around and do an expose on these guys instead?  Maybe Jacob's site would do better and better if it investigated these types of shenanigans.  I'm fed up of watching these types of guys feed on unwitting investors in Vancouver, let alone everywhere else.

 

So give the kid a break...I think he heard you all loud and clear!  ;D  Cheers!

 

+1

[thomcapital]

I have nothing against Jacob, but I stopped visiting his site several months ago after he added a premium pay-for-access section. Once upon a time, Jacob was the sole author of valuewalk, and he had some great connections and could get hedge fund investor letters, interviews, etc that no one else had. After using a free trial of his premium service (which I will not bash here, but was incredibly disappointed in) I'm not at all surprised with the path he has chosen for himself.

[Guest bengrahamofthenorth]

I'm with parsad here. we have all made mistakes, just important to learn from them. sometimes these conversations can get a bit heated but I do enjoy everyone's views.

[14value]

I know I have made my fair share of bad decisions.  Now he has to live with the fallout.

For those who were burned, I am with Kraven, you need to do your own "due dilly".  I like that.

For those who are disappointed, don't read his info or go to his site.  pretty simple.

I feel your reputation is like glass, easy to break and hard to mend and should be handled with care.

hopefully he learns from his mistake. 

I only wish him the best.

 

[west]

Assuming this post is for real, it looks like Jacob is trying to sell ValueWalk.com:

 

https://flippa.com/2770343-premier-financial-news-website-w-increasing-traffic-and-revenue-every-month

 

I can't say that I know everything that's going on with the SNPK scandal, but dumping ValueWalk.com seems pretty drastic.  Assuming he didn't design the site from the get-go just to flip it/use it as a pure anything-it-takes cash flow generation website that is.

 

west

 

 

[west]

Attached is a print out of the website listing for future reference.

 

west

valuewalk.pdf

[Parsad]

Assuming this post is for real, it looks like Jacob is trying to sell ValueWalk.com:

 

https://flippa.com/2770343-premier-financial-news-website-w-increasing-traffic-and-revenue-every-month

 

I can't say that I know everything that's going on with the SNPK scandal, but dumping ValueWalk.com seems pretty drastic.  Assuming he didn't design the site from the get-go just to flip it/use it as a pure anything-it-takes cash flow generation website that is.

 

west

 

No, I don't think he's selling it for any reason to do with SNPK. 

 

It looks like he's making better than $5K a month in profit, so $60K a year.  He could easily get 2 times that for his site and maybe as high as 4 times. 

 

In the comments section he says he has children and that he is interested in pursuing another degree, so he probably would like the money put away while he studies.  I'm pretty sure Valuewalk takes a ton of time for him to run as well.  Cheers!