PUMPs dumpS Red

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Jan 18, 2013 at 8:02 AM

PUMPs & dumpS

Red Flagging DANGERS In The Penny Market

ZPPB: A Tale Of Two Con Jobs

Best Damn Penny Stocks (BDPS) continues on with its promotion of the Zippy Bags, Inc. ( ZPPB ) scam with a pair of schemes designed to convince new suckers that this company that has no assets, only 64 bucks in the bank and is doing absolutely no business, is a bargain investment at a $25 million market cap.

Wednesday morning's first move was to execute a "Burn & Turn", an elaborate scheme designed to crash the share price in order to build new interest in getting in at "bargain basement" prices. A Burn & Turn is most effective when the insiders control most of the stock at the outset of a Pump & Dump. At yesterday's commencement of the ZPPB Pump & Dump, we estimate that insiders controlled all but 100,000 shares of the 91,250,000 shares issued and outstanding.

A Burn & Turn is executed when it appears that the share price has reached a level that is no longer attracting interest in the stock, i.e. a point of resistance. At that point, the insiders will feverishly dump stock, often creating a discount of as much as 50%. As the lifespan of a Pump & Dump is usually only a matter of a few days, the insiders are eager to divest themselves of their intrinsically worthless stock while the campaign is relatively new. It is important to note that there really is little concern for the price received for each share, as they are really just empty paper and can easily be replaced by turning on the printing presses. The insiders will never relinquish control of the company, for there are too many safeguards built into the deal that protects their interests, such as preferred stock or convertible debentures. So whether they receive 30 cents a share or 20 cents, it's all just air anyway.

Today's Burn & Turn commenced in the open minutes of trading, as insiders quickly realized that there were few buyers beyond 30 cents. Seeing a plethora of bids in the .20s, the decision was quickly made to "burn" the existing shareholders and the share price by hitting the bids all the way to 20 cents. By 10:30am, shares traded as low as 18.5 cents, as those left holding the bag from Tuesday, quickly rushed to the exits. Many of those who bailed, were among the 37.87% of Tuesday's buyers who closed that day in the red, and had concluded that they had lost more than enough in the deal.

By the time the low of 18.5 cents was hit at 10:30am, 905 trades transacted a total volume of 4,340,481 shares with a value of $1,029,435. That first hour of trading, when many traders, especially in the western time zones, hadn't even looked at their screens yet, represented almost 52% of the entire day's volume. Coincidentally, the 905 trades that took place in the first hour, also represented 52% of the number of trades that took place over the entire day. We conservatively estimate that 75% of the selling was conducted by ZPPB insiders, who still owned the lion's share of stock, netting them just under $800,000.

ZPPB Chart for January 16, 2013: The Perfect "Burn & Turn"

Notice how more than half of the day's volume traded during the first hour's "burn" and then the share price "turned", practically on a dime. It took most of the remainder of the day and almost as much volume for the stock to regain 70% of its losses .

The key to the "turn" was for the insiders to change their tactics from aggressive selling to systematic buying, which they did once the share price crossed below the 20 cent level. This created the illusion of renewed interest in the stock, and relieved the selling pressure that they themselves had instigated. Under this tactic, the insiders spend some of their newly realized ill-gotten gains to buy stock and create stability in the share price. They then resumed selling into renewed retail buying. All the while, they supported the share price at lower levels, encouraging it to step up slowly but surely. By way of example, the insiders might have countered a 100,000 share sale, with a 100,000 share bid a couple of pennies lower. By using several market makers to place their bids and offers, Level II support looked deep and encouraged naive players to step in. This is evident when looking at the ZPPB trades that took place after 10:30am and all the way to the close, during which time, the share price slowly regained 70% of the first hour's loss. It is telling that the loss was not fully retraced, even though the number of trades and volume over the last 5 1/2 hours was almost identical to that of the first hour of trading.

The other con job that BDPS and ZPPB is perpetrating on the naive who believe that you can get something for nothing, comes with the after-the-close announcement of a "stock dividend". This illusion pretends to give those shareholders of record on a yet to be determined date two "free" shares of ZPPB for every share of owned on the record date. Well hold on Sparky, that does not mean that if you own a $1,000 worth of stock you will suddenly own $3,000 worth of stock. In reality, this is nothing more than a stock split. After the "dividend" is issued, ZPPB 's share price will trade the next day at a 66.66% discount, rendering the pretend windfall meaningless.

Not coincidentally, this con job was performed on investors last June in another BDPS scam promotion on EWRL . That promotion was also at the end of its second day, when the phony dividend was announced to counter the hammering of the share price. The announcement fulfilled its intended dirty deed, as the lemmings created a buying frenzy. It would be over a month before the "dividend" was paid out as nothing more than a stock split, as noted on the company's own filings . In the meantime, those that bought into the frenzy are enjoying an 80% loss in the value of their holdings. In fact, they were already down 50% on the day that the split took place. EWRL has yet to earn its first dollar in revenues or record any significant assets, even though insiders pocketed about $20 million. We promise you that ZPPB is an identical scam.

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