What to do about SpongeTech (SPNG)?
Today's Financial News - Posted October 20, 2009
Let’s cut bait on SpongeTech (OTC BB:SPNG) and take our loss like a man
by J. Christoph Amberger
Baltimore, MD — TFN: Occasionally, even our top stock pickers at TFN’s Hot Stock Confidential strike out.
It pains me to say it but we think it’s time to take some bitter medicine on SpongeTech (OTC BB:SPNG). In August, we recommended our HSC members sell half their position in this audacious penny stock for 30% gains, hoping to ride out the rest for more.
(Andrew Snyder originally saw this hot shot as a dollar stock in the near-to-medium term. The company announced plans a 1-for-100 reverse stock split to take effect on September 22, 2009. Then it fell off the rim of the world.)
Andrew sums up what happened:
“SpongeTech (OTC BB:SPNG) shareholders have become all too familiar with uncertainty over the past few weeks. Thanks to a few oddly timed New York Post articles, a required re-auditing of past financial statements, and an ensuing SEC investigation, the stock halted all trades for nearly two weeks. As a consequence, SPNG shares have endured massive declines over the past month.
“As of yesterday, shares are trading once again. Mmuch of the uncertainty remains. It’s reflected in the three-cent share price.
“At the heart of the SEC investigation are the company’s extraordinary claims of recent revenue growth. Slews of investors poured into the company wanting to get a piece of the action. As SpongeTech advertisements popped up at dozens of major sporting venues and its products hit major store shelves, investors (including myself) had every reason to believe the company’s statements were true.
“Now that the SEC has become involved and old financial statements have been retracted, nobody knows what the truth is. Lawyers are lining up class-action suits. With uncertainty this high, the share price is bound to remain low.
“But there’s hope. The SEC will finish its investigation soon, we’ll get the past financial figures we need and uncertainty may wane. Shares are priced for all-out calamity right now. If the investigation reveals anything positive, even a hint of legitimacy, share prices will climb. That means shares maybe worth holding if you still own them. Of course, if the investigation uncovers gross fraud, your shares may be worth zero.”
It shows that the keenest analysis of the numbers is worth only as much as the integrity of the guy providing them.
We have to eat crow on this one. We may have sold half of our position for 30% gains. But the other half now trades for 3 cents… a painful 79% loss over our entry price. For the total position, that works out to a loss of -23%. Small solace to those who followed our updates and bought more.
Sell your position in SpongeTech (OTC BB:SPNG) at a loss!
Next Article: OshKosh vs Cat: Not much of a fight
Posted by J. Christoph Amberger · Filed Under Editor's Pic, US Stocks and Markets
| 
2 Responses to “What to do about SpongeTech (SPNG)?”
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down
October 20th, 2009 at 11:07 am
The stock is only trading as we speak because teh SEC has no sense of urgency in shutting down this con game. Assistant Director of Enforcement Charles Cain all but stated such in a recent heated argument we had. Cain’s greatest point (and to paraphrase) ‘We suspended trading and set it up to trade on the Grey Market when it reopens. If people are foolish enough to trade it there, with all the hints of impropriety, they deserve to lose their money’. Cain was disinterested in the theory that people trust the SEC and honestly believe that the SEC would not let a scam trade at all. I now know why he was disinterested; it is foolish to put faith in the SEC.
For a compilation of SPNG issues take a peek here: http://investigatethesec.com/drupal-5.5/?q=node/908
November 16th, 2009 at 7:47 am
Don’t try and give false hope saying the shares are priced for calamity….ZERO is the going price for calamity….If anyone still owns shares in this train wreck, you should sell them….three cents a share will be better than the zero you are going to get.
Where there is smoke there is fire, I posted a year ago that this stock had all the markings of a classic pump and dump…No, everyone said it’s a great company, yeah, sure it is! You’re only going to go so far on a re-invented brillo pad designed sponge and lying to investors about sales….The building is on fire…GET OUT!