We welcome spam. Don't get us wrong. We wish that spam would disappear for good, relegated to the junk heap of history. But that horse has left the barn for good. Spam is here to stay, finding its way into our computers each day, notwithstanding all of the proposed "no spam lists" and anti-spam software.
So we are prepared to accept reality; spam will continue to circulate until e-mail gives way to the next revolutionary communications system. And spam will continue to be a cheap, speedy way for stock promoters to communicate with gullible investors.
So we go out of our way to receive spam particularly when it features potential investments, "hot" stocks and get-rich-quick scheme. Now, admittedly, we have a somewhat unusual perspective. We want to know what promoters are pushing and keep on top of the latest pitches. Of course, there is a downside to being on every scammer's list we are deluged with ads for Hoodia, Viagra, offshore pharmacies and sexual enhancements that are as fanciful as a stock tout's predictions.
Stock spams have not changed significantly in recent years. Promoters seek to entice investors, even when the companies they promote have little substance and scant prospects. All too often, those promoters fail to identify themselves or adequately describe their relationship with the company they are promoting. They use aliases, send their missives from generic, non-traceable, email addresses, and hide their hype behind phony "subjects." An e-mail that purports to be about ""our meeting last night," or "in response to your request," or that bears a message line of gibberish, turns out to be another unsolicited stock tip from an anonymous promoter.
One of these promotions caught our attention in recent days. The first email bearing the subject name "cancer" bore an address in the Netherlands. Before the day ended we had received a series of similar messages from different senders and email addresses all conveying the same skimpy story.
The emails recommended an obscure company called HLV Trading, Inc. The promoters were, as usual, enthusiastic but why? Was there some value in this gem? Was "cancer" a worthy recommendation? We were intrigued, so, of course, we decided to take a look.
Damn the Facts. Full Speed Ahead
Getting an email address is simple, which is why most of us, even the technologically-challenged, have one. Email provides a virtually anonymous means of communication, is frequently free of charge, and can create the illusion that the sender is in one place when, in reality, he or she is far, far away. Since anyone with a few Euros in their pocket can sign up for an .nl, or Netherlands address in cyberspace, we figure it is a safe guess that the email touting HLV Trading, Inc. (Pink Sheets HLVC) might have originated in Hoboken or Hong Kong, or possibly Holland.
Then again, the email address might have been "borrowed." Some spammers "mimic" email addresses, copying address books from unrelated, innocent third-parties and then using them to spam the globe. Your email address can be used, without your knowledge, as a launching pad for all sorts of scammy promotions. Indeed, we received a succession of emails on July 14th promoting HLV Trading each from a different "sender" using a distinct email address. One of them apparently "borrowed" an address from a small law firm in Wayzata, Minnesota.
Ever wonder why promoters who are so proud of their stock picks hide behind pseudonyms and phony addresses?
No matter. The contents of the messages are what struck us. The promoter's message, dated July 14, 2006, was called "Pure Energy Report: Special Alert (HLVC). The author claimed that he or she "just put the final touches on this special alert, because I wanted to get it into your hands as fast as possible. It's that urgent. The short story is that I found another company that will be an absolute blockbuster for us."
Those "finishing touches" could not have taken long. The "report" consists of several sentences of hyperbole and not a single fact about HLV. Here is the gist: "It's got all of the ingredients for a winning play Top notch management, plenty of cash, and one of the best undeveloped plays I've ever seen We see this going to $.05-$.07 in the next 7 days!!."
And then the promoter added this "Fact" even called it a "Fact:" "Own the right stock, in the right space, and you could reap a handful of money-doublers. But if you own the wrong investments, you could easily lose 25%-35% or more!"
That one is right up there with "Buy low. Sell high."
The promoter offered these final sage thoughts: "This 'magic plug' stock has really started to move recently up 30%. Get in now for money-doubling gains. If you wait any longer you will miss out."
The email did not offer a single clue about HLV's business other than the claim of "top notch management and plenty of cash." How did the promoter come to that conclusion aside from pure speculation? HLV does not file regular public reports either through the SEC's Edgar System or Pink Sheets. How could anyone possibly know its cash position or the bona fides of its management team?
Trading Places
Information about HLV is sparse but there certainly are tidbits the promoter could have found. Like many other tiny over-the-counter entities, the Company has lurched about in search of a viable business changing its home, its name and its management.
The Company, which was formed in Nevada, operated first as Turner Group, Inc. and then as Auto Auction.com until relocating its corporate home to Wyoming in early 2005 and morphing into HLV Trading. At the time it ceased corporate life in Nevada, HLV listed individuals named Patrick Paterson (President) and Linda McDonald (Secretary and Treasurer) both at addresses in Winnipeg, Canada as its sole officers.
Based upon current corporate records in Wyoming, HLV now has changed its name to X-Tra Petroleum. Peterson remains a "contact" for the Company, and McDonald has continued in her role as Secretary, but an individual named Charles Vaccaro is the Company's President and CEO.
Despite its Wyoming home and Canadian connections, the Company maintains its offices in New York City.
A modest amount of information about HLV can be found in recent press releases and on the Company's website although those two sources provide distinctly different pictures of existing operations and future plans.
Take the website. The website describes HLV as a "New York based public equity trading firm" which trades U.S. equities for its "own account" and is "among the fastest growing proprietary trading firms in the nation." The firm says that it maintains offices in New York City, West Palm Beach, Las Vegas, Holland, Spain and Sweden.
The firm's methodology was described in a January 2004 edition of "Active Trader Magazine," which still is available on the HLV website. HLV apparently looks to attract "traders" who are not prepared to pony up the necessary capital to comply with regulatory requirements that ordinarily require day-traders to maintain equity of at least $25,000 in their accounts. Day-traders how do not deposit sufficient equity are limited in the number of transactions they can execute daily.
In order to circumvent that capital requirement, and open the trading spigot, HLV's "traders" become subcontractors who trade the firm's account rather than their own. Still, they are required by HLV to deposit at least $5,000 as "risk capital."
HLV is not a licensed securities firm and its "subcontractors" are not required to maintain securities licenses. None of this presents a problem, according to the Company's President, Charles Vaccaro who advised "Active Trader Magazine" that "three different attorneys" could not find anything improper with the firm's structure. Vaccaro, according to the article, had prior experience in the field as the former head of a "direct-access" outfit called F1 Trading.
Could this be the basis for a successful venture and, if so, how is HLV doing? Is the Company profitable? Does it have cash in the bank? That information is not available on the website or, apparently, anywhere else that investors can look.
And if this is a formula for success, why does the Company seem to be changing course, adopting a new name, abandoning its trading ambitions and moving into an entirely unrelated business? A June 26, 2006 press release said that the Company was about to focus on "responsible development of oil and gas resources in North America." HLV revealed that it would soon divest the trading business to focus on this new enterprise.
The press release offered few details and no explanation for the sudden shift, although Vaccaro insisted that "we are totally committed to delivering the highest value to our shareholders." HLV said it was pursuing opportunities in Texas and Canada, and promised to "apply innovative techniques and strong management skills toward the development of a diverse portfolio of high value, low risk oil and gas projects." It provided no insight as to the costs of the new venture or possible sources of capital.
In any event, day trading already appears to be in the rear view mirror. On July 13th the Company announced that it had acquired a "60% working interest in a 5 year crown lease of Petroleum and Natural Gas rights in a (sic) 640 acres of land located in Alberta, Canada." According to the Company, there could be two productive gas zones on the property "based on nearby production."
The press release did not provide any independent basis for even that modest optimistic projection. HLV which says it now will change its name, presumably to X-Tra Petroleum did not disclose the terms of the acquisition, indicate how the project would be funded, identify the seller, or provide any details about the individuals or entities that hold the other 40% interest in the property. In short, the press release offered no meaningful information upon which might guide a potential investor.
But why should details concern investors? The July 14th spam emails did not concern themselves with such mundane matters. Instead they offered unqualified endorsement of HLV shares, ostensibly based on the Company's "top notch management" and plentiful cash.
But if management at least Vaccaro appears to have some qualification to lead a day trading operation, there is nothing to suggest that anyone in the Company's employ is equipped to spearhead the oil and gas initiative. And, in the absence of any public quarterly or annual financial reports there is no way investors can ascertain whether the Company has a red cent much less "plenty of cash."
No wonder the promoter elected to omit any details to support its recommendation.
Then again, maybe the promoter was confused. On July 19, 2006 we received a second wave of emails touting HLV. This time the promoter focused on the Company's business only it was the wrong business. The latest email ignored the Company's recent shift and its plan to dump the trading operation. Instead it extolled the prospects of HLV's day-trading business. "Over the past 30 years," the promoter declared, "stock-brokerage firms have grown faster and realized greater profits than any other industry and that includes the booming, technology sector."
What does this have to do with HLV, which never was a stock-brokerage firm and claims to be departing the day-trading sector? Once again, we discovered a promoter who was not deterred by such minor facts. The email went on to say that "[n]ow, HLV Trading is leading this revenue-rich business into the next generation, combining cutting-edge technology with an explosive marketplace, breaking ground with the first Direct Access Electronic Trading Center in the United States" and giving the "individual investor, the power to trade just like the big boys."
Apparently this promoter missed that press release announcing the Company's plan to depart from the day trading business.
The email projected "huge" gains, warned that a "major PR campaign has already begun," and exhorted investors to "WATCH this trade" on Thursday, July 20th.
We watched and were not surprised.
Hype Pays
Sgt. Joe Friday, the protagonist on the early TV cop show Dragnet (briefly and unsuccessfully revived a few years back) had a favorite phrase that became part of the national lexicon "Just the facts ma'am." Sgt. Friday would have made a lousy stock promoter.
The promoters who have been touting HLV have either ignored the facts (in the case of the July 14th message) or distorted them (in the July 19th email). It makes no never mind - they each had their intended effect. On June 20, 2006, 15,000 shares of HLV common stock traded, and the stock closed at a modest 7/10ths of a cent a share. On June 26th, as the Company announced its new oil and gas initiative, prices climbed as high as 1.5 cents as 180,000 shares changed hands.
That was just the beginning. On July 13, 2006, the day the Company announced its acquisition of an interest in the Alberta, Canada property, HLV common stock hit a high of 4 cents, and over 2.9 million shares traded. The following day the date of the email extolling the Company's "top-notch management" - more than 3.75 million shares traded, and prices hit 3.3 cents before closing at 2.6 cents. Millions of shares continue to trade each day. On July 18 over 5.8 million shares of HLV were traded and on July 20th, the day that the July 19th promoter told investors to "WATCH this trade," another 4.16 million shares moved around the marketplace.
Just imagine what attention the Company might attract if it provided investors with details of its operations, management and financial condition.
On the other hand, maybe that would spoil the story.
Sgt. Joe Friday, the protagonist on the early TV cop show Dragnet (briefly and unsuccessfully revived a few years back) had a favorite phrase that became part of the national lexicon "Just the facts ma'am." Sgt. Friday would have made a lousy stock promoter.
The promoters who have been touting HLV have either ignored the facts (in the case of the July 14th message) or distorted them (in the July 19th email). It makes no never mind - they each had their intended effect. On June 20, 2006, 15,000 shares of HLV common stock traded, and the stock closed at a modest 7/10ths of a cent a share. On June 26th, as the Company announced its new oil and gas initiative, prices climbed as high as 1.5 cents as 180,000 shares changed hands.
That was just the beginning. On July 13, 2006, the day the Company announced its acquisition of an interest in the Alberta, Canada property, HLV common stock hit a high of 4 cents, and over 2.9 million shares traded. The following day the date of the email extolling the Company's "top-notch management" - more than 3.75 million shares traded, and prices hit 3.3 cents before closing at 2.6 cents. Millions of shares continue to trade each day. On July 18 over 5.8 million shares of HLV were traded and on July 20th, the day that the July 19th promoter told investors to "WATCH this trade," another 4.16 million shares moved around the marketplace.
Who has been selling all of those shares? Who fueled the promotion? Answer the second question and it could provide the answer to the first.
Just imagine what attention the Company might attract if it provided investors with details of its operations, management and financial condition.
On the other hand, maybe that would spoil the story.
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