August 2, 2011: The question on many of our readers' minds is, "What in the world is Paul Luna, CEO of Portage Resources, Inc (POTG), up to now?"
On August 1, the company announced that not only was Mr. Luna generously cancelling 230,000,000 shares of the common stock he owns, but that the Board of Directors (read: Paul Luna), voted to split the stock on a 10 for 1 basis.
It looks like Mr., Luna isn't happy with the tens of millions he's managed to extract for himself from the pockets of the suckers out there, who collectively lost in excess of $150 million over the last six weeks. Now he's concocted a scheme to extract more. All from the safe confines of Peru.
Let's take a look.
First the cancellation of shares. Do you really think he is just freely giving up stock that not three weeks ago had a market value of $300 million, without an ulterior motive? We're hoping our readers are not that stupid. He gave up nothing but air.
Now pay attention. According to SEC filings, on May 30, 2011, Luna paid $20,000 to own 480,000,000 of 637,200,000 shares, representing 75.33% of the stock. Since then the company has issued another 38,000,000 shares supposedly in land acquisition deals (maybe with himself), so now we're standing at 675,200,000 shares outstanding. Now there is no way, Luna is ever planning on selling all that stock, nor could he. The only thing that matters to Paul Luna is that he maintains control of the company, so that he can continue to milk it. Whether he owns 90%, 60% or 50.0000001% of the stock, control is still control. While he is in control, he can always issue himself more stock, whether it be in lieu of payment for services, or through director stock options, or through employee benefit plans, or any other scheme he can dream up. While he is in control, Luna can manipulate the stock, execute more pump and dump schemes like the one just completed, or anything else he wants to do, all for the purpose of lining his pockets. The cancellation of 230,000,000, while seemingly magnanimous, is actually meaningless. It's all a facade. Notice how he is theoretically still left with 250,000,000 of 407,200,000 shares or 61.3% of the stock. We say theoretically because he has, of course, sold stock into the latest promotion. But he could have (and probably did) sold 30,000,000 shares, which would have netted him over $20 million, and still be in control with 54% of the stock. And we don't even know what stock options he holds today!
So hopefully you get it why the cancellation of the shares is a sham. Paul Luna's only goal is to maintain control of the company. The margin of control is irrelevant.
Now let's look at the forward split.
It is a given that this stock would never see the dollar range again. It has had its run and after all the carnage leftover from the last pump and dump campaign, there is no way the public could be counted on to be stupid enough to take another chance and take it back to a buck. One thing we have preached time and time again when warning about pump and dump campaigns, is that the higher the share price, the farther it has to fall.
Another undeniable truth is that it is easier to get a 3 cent stock to 10 cents, than it is to get a 30 cent stock to $1.00.
Yes percentage-wise, a 3 cent stock rising to 10 cents is the same as a 30 cent stock rising to a dollar, just as a 10 cent stock falling to 3 cents is the same as a dollar stock falling to 30 cents, but the perceptions are different. There is a perception that comes with a 70 cent decline that makes it harder to accept than a 7 cent decline. Similarly, a dupe is less likely to think it is too late to buy a stock just because it has climbed a nickel, than if it has climbed half a buck.
So what does Luna do? He splits the stock 10 for 1 and he'll be just as happy selling 50 million shares @ 7 cents as he would be selling 5 million shares @ 70 cents.
But for now, he'll be content letting the dust settle while he counts his new found riches.
And his pigeons won't even get a Christmas card.
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