Promoters have been cluttering e-mail boxes for the past two months with newsletters recommending Valde Connections, Inc. (OTCBB: VLDE), a wannabe hair salon/spa/ model agency business. As we noted in Part I of this series, the newsletter senders have adopted a number of colorful monikers (including Pot of Gold, Over and Under, New Horizon, Mustang Stock Picks, Lightening Picks, Golden Goose Picks, Gladiator Picks, Crystal Comet, Cat’s Meow, Bulletin Board Stock Picks, Blue Ribbon, Benchmark Stocks, Gold Bar Picks, All American Stocks, Smart Stocks, Precious Gems, TNT Picks and Top Drawer Stocks) but they have yet to disclose their true identities. Indeed, it is possible that there is just one promoter, operating under a string of aliases.
Maybe they’re simply shy – or perhaps, as we see below, they have good reason to prefer a low profile.
Calling Miss Cleo
These newsletters were eager to tout Valde Connections – and no wonder, as they acknowledged, they were being compensated with various amounts of cash and stock for spreading the word. As we reported in Part I of this series, on February 20th we received a wave of newsletters predicting that Valde Connections would be releasing “very good news in the near future.”It didn’t take long. Late in the day on February 20th the next series of newsletters arrived in our e-mail.
This time the newsletters (from the same colorful list of senders) declared that “[n]ow that the shorters and earlier sellers are gone [Valde Connections] appears to be an excellent buy. A bargain-basement price, indeed.”
And just where had those “shorters” and “early sellers” gone in the few brief hours following the previous newsletter? Assuming they ever existed in the first place.
To support the renewed recommendation the newsletters referred to a series of four press releases issued by Valde Connections – and included hyperlinks to those press releases - with the following comment:
These are the types of news releases that render powerful assurances to our original premise that [Valde] is a VERY active Company, intends on delivering much reward for the benefit of its shareholders, and that these news releases are, in our opinion, just the tip of the iceberg in terms of what we expect to see from [Valde] in the *very* near future
Considering the content of those press releases maybe that should have read “ice cube” rather than “iceberg.” But lack of detail was only one feature shared by the four press releases. Another peculiarity cast a troubling shadow on the entire promotion and the Company.
First, the press releases.
The newsletter contained a hyperlink to a Valde Connections press release dated February 24, 2003. The press release, announced an online sweepstakes promotion by the Company. The winner and a guest would receive airfare to Orlando, Florida, three nights in an unidentified hotel, a makeover by Valde, and a $400 “spending allowance” – with the total prize valued at approximately $2,500. A nice promotion – but hardly the sort of corporate development that would send investors rushing to load up on Valde Connections stock.
The second link led to a press release dated February 28th, said that the Company had been working “diligently” with consultants, and was “currently in negotiations” to secure the property rights for its first storefront location. The Company did not identify those consultants, say where its first salon might be located, or indicate how it planned to finance the initial venture. This was hardly the sort of definitive information that supported the promoters’ characterization of Valde Connections as a “very active company.”
A third link in the newsletters keyed a press release bearing the date March 3, 2003. This time, Valde Connections was announcing the addition of a “Health and Fitness Advisor,” a personal trainer named Alberto “Brickhouse” Buckeridge, whose clients have included model Rena Mero, who wrestled under the World Wrestling Foundation umbrella as “Sable.” The Company said it would use the connection with “Brickhouse” to promote the personal health and fitness aspects of beauty.
Once again, however, the press release provided little insight into the development of an operating business that might justify the relentless hype of the newsletters. A fourth press release proved somewhat more informative.
The final link contained in the newsletters led to a press release dated March 5, 2003. The Company announced that it had reached a “general” agreement to build and operate an upscale salon and day spa inside of the Main Street Inn in Hilton Head, South Carolina. No terms of the agreement were disclosed, and the Company did not indicate how the venture would be financed. Our research indicates that the Main Street Inn is a thirty-three room property on Hilton Head Island.
But there was something even odder about the newsletters and the information they were feeding to the public. The newsletters referencing press releases dated February 24th, February 28th, March 3rd and March 5th arrived in our e-mail on February 20, 2003 – four days before any of the press releases had been issued. We continued to receive copies of this same newsletter (from members of the same promotional “group”) on February 21st, February 24th, February 25th, February 26th, February 28th, and March 3rd. In each case they predated one or more of the press releases that could be accessed through the links contained in the newsletters.
How was this possible – short of a time warp? How could any promoter have access to news weeks in advance of its release? The implications are disturbing, to say the least.
Even with their vision of future news, the promoters had little to offer to entice investors. They must have realized that investors would read the press releases and shrug – so they promised more, declaring that:
We are hearing VERY strong rumors that the Company may have additional very good news soon. Possibly within a couple of days. And if so, we will report that news.
And, if that was not sufficiently reassuring, the newsletters cleverly danced around the most pressing question; why should anyone invest in a company that has no business?
Some of you might look at [Valde] and say I see lots of potential (so do we), but I don't see a busy operation. I don't see revenues. I don't see a lot of business yet. Correct. You DON'T! And that's the point. If you DID see all of the above then you can be darn sure that you could not purchase [Valde] for these entry-level prices. And THAT is what a speculative stock is. In picking a "spec" stock you must determine if you like the business the Company is in, the business plan, whether the affected business is recession-proof (it is), the daily volume a.k.a. liquidity (there is MUCH), how much profit their competitors earn (MUCH), and whether you feel the Company will have good news in the near future. We like *all* of the above and that's why we feel very strongly about [Valde’s] future.
In other words, if you want to invest in a Company with plenty of plans, but no revenues, no business, no track record, and no evident access to capital, Valde Connections is for you.
To which, the promoters added:
Admittedly, there is a risk. But without risk there are no rewards. You do not make a profit in this marketplace buying a stock at the top. You buy it before it reaches the top. [Valde] is a ground floor opportunity. NOW is the time! Don't wait till it reaches $2.00
Notably, they failed to mention that a speculative stock for a start-up company with no track record and few obvious resources, is far more likely to result in losses than gains.
Even if you can see into the future.
Where were the promoters headed next? We will continue to follow their relentless campaign in Part III of this series.
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