Time for a little nostalgia as we revisit an advisory we wrote a year and a half ago on Southern Home Medical Equipment ( SHOM ) a Pump & Dump that is restarting today. We called it a sham back then and our opinion still stands. 99% of the funds invested in SHOM back then were turned into vapor.
We're redistributing our advisory from back then to you today. We took a lot of flack for calling SHOM a Pump & Dump but we were dead on. See if we aren't just as right now as we were then.
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Southern Home Medical Equipment (SHOM)
Sells Stock and Little Else
May 23, 2011: One of the current SHOMs 'er SHAMs on the street is this P & D call Southern Home Medical Equipment. This thing is so easy to pick apart that we are going to call it Research 101 for those subscribers who are still learning the keys to recognizing a Pump & Dump.
Let's start with something basic. One of the first things we do when we investigate a company is verify their contact information. SHOM doesn't even come close. Over a period of 3 days, we sent 17 emails from 6 different email addresses and each one bounced back with the message:
Technical details of permanent failure:
Google tried to deliver your message, but it was rejected by the recipient domain. We recommend contacting the other email provider for further information about the cause of this error. The error that the other server returned was: 550 550-5.1.1 The email account that you tried to reach does not exist . Please try
550-5.1.1 double-checking the recipient's email address for typos or
550-5.1.1 unnecessary spaces. Learn more at
550 5.1.1 http://mail.google.com/support/bin/answer.py?answer=6596 5si13453165icb.155 (state 14).
Read the message carefully. This didn't bounce back just because we couldn't connect to their mail server. THIS EMAIL ADDRESS DOESN'T EVEN EXIST. Now is SHOM a SHAM or is it just poorly managed? We'll accept SHOM's gratitude for pointing out this oversight and expect that it will be corrected promptly.
Now let's talk about all this hype about their business. First rule when conducting a Pump & Dump: Make a claim but don't substantiate it. Look at SHAM's 'er SHOM's recent announcment.
"Southern Home Medical Equipment, Inc. (PINKSHEETS: SHOM), a holding company providing healthcare services, staffing and durable medical equipment to medical institutions, announced today that it has signed a letter of intent to merge with a network of medical clinics based in the Washington, DC area. "
Do you think a real company like say, a bank, could come out with a merger announcement without identifying who the merger candidate is? What's the big secret? Are they afraid that somebody will try and verify this claim? Somebody like say www.pumpsanddumps.com ?
This company is full of ambiguity.
"The Company has contractual agreements with partner businesses located in Charleston, Columbia, Greenville, Florence and Lake Hartwell, of South Carolina; Nashville, Tennessee; Baltimore, Maryland; Dunwoody, Georgia; and Philadelphia, Pennsylvania."
Really? With whom? They don't identify a single solitary partner, customer or the nature of the agreements. Are we supposed to guess? These answers are guarded more carefully than the nuclear launch codes.
SHOM's President, Jeffrey Sarvis, took over without ceremony or announcement after a 2 1/2 year dormant period for the stock when there were no press releases and very little trading in the stock, even though the company was still presumably in business. Or so it would seem, since the line of business did not change during the dormant period. Mr. Sarvis' resume is very nice (ahem). He went from being a salesman at Spartan Foods, which specializes in frozen pizzas, to being a real estate agent, to the medical staffing business. Well that is certainly a solid and logical career path to becoming the President of a publicly traded Medical Supply Company, isn't it? We're sure that Mr. Sarvis can tell the difference between a hemostat and a large with no anchovies.
SHOM's address, 50 Lawrence Street, Lyman, South Carolina 29365 is a residential address and in fact a tiny home. We'll suggest the Mr. Sarvis bought this one-man company for the value of pumping its stock and selling it into the market to people like you. Indeed, the entire value of this company is in its stock because from all evidence, it does nothing. Never has. Never will.
Pumping and dumping is not new to this company. It went public at the end of 2006 with a couple of million shares that quickly grew to 2 billion. Then a 2008 1 for 1000 reverse split took it back down to just over 2 million shares. Now there are over 200 million shares outstanding again and on its way back to the billion mark in a hurry. The printing presses are alive and well.
Finally, a footnote. As we were about to send this advisory to our subscribers, we noticed that SHOM released a new press release projecting $7 million in revenues from the newly announced merger. Apparently, SHOM was not impressed with the results of the P & D campaign up to this point and felt that the efforts needed to be juiced a little more. Again, no merger partner was identified and no justification was given to the $7 million projection. We don't know if the revenues are coming from medical services or pizza sales. And while we're at it, a NETWORK of medical clinics with only $7 million dollars in revenues? Shouldn't one clinic generate more than that, never mind an entire network? Hmmmm. Sounds like SHOM's a SHAM more and more, doesn't it?
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