Our "Past Performances" tracking of the trading in promoted stocks keep subscribers away from the obvious scam that is Definitive Rest Mattress.
March 4, 2015: We were encouraged to take a look at the recent Pump & Dump campaign conducted on Definitive Rest Mattress Company (DRMC) after a Full Access subscriber sent us the following email:
Naturally,we redacted the guys email address but we have confirmed that he has been a Full Access subscriber for a year now. The DRMC records he is referring to come from our Past Performances table. We keep trading statistics on most of the tickers that have been promoted since the beginning of 2013. The individual records are extracted from The Nightly, our evening look at the trading on tickers that were promoted on each trading day.
We decided to look at the performance of this particular pump because DRMC has been one of the more actively downloaded Past Performance tables in quite some time. In other words, a lot of people took a look at this ticker and like our friend, should have figured that it was unlikely to offer any opportunities for even a quick profit. Let's see why.
Phony Acquisition News
We won't drone on too much about why DRMC is a scam because if you have been a follower of the ticker and don't see it by now, then there's not much hope for you anyway. To review though, in the eleven months that this has been actively trading DRMC has already switched industries; had its share price discounted by 97.75%, dropping from $.20 to .0045; and, increased its number of shares outstanding by at least 150%, which was necessary for the scam artists to maintain control after they dumped 138 million shares on the public.
The first Pump & Dump campaign, which was conducted during the spring months of 2014, was predicated by the phony announcement of a phony acquisition of some probably phony Guatemalan mattress company. It would have been impossible for anybody to really conduct any due diligence on this acquisition, which of course was important to the schemers. After one follow up press release intended to lend support to the Pump & Dump, the acquisition was never again heard about and evaporated into thin air. Over the course of the 67 day promotion, at least 90 newsletters pushed the stock on various days and we received 412 promotional emails. We estimate that over $3 million was lost by the public.
The second Pump & Dump campaign, which took place throughout February 2015, was built from the January announcement of a different acquisition, just as phony as the first, of something called NU Metals Technology. You would be hard pressed to find anything on NU Metals. There does not seem to be any mention of them on the internet that predates DRMC's announcement and we could not find any corporate or other registry information on the company anywhere. With an address in California, at a minimum the company would require a Foreign Qualification status in that State. But of course if the company doesn't really exist...
We did find a hastily slapped together website which claims a 2013 Copyright.
|NU Metals Technology's Website|
|NUmetalstech.com WHO IS Registry|
Numbers Don't Lie
Watching the day to day trading in DRMC during the first Pump & Dump campaign is a lesson in how these schemes work. At the launch of the campaign--the Past Performance records are displayed in reverse chronological order--insiders held almost all of the shares. This provided them the opportunity to dole out shares at the start of the campaign, rather dump in a hurry. In the beginning, the street accumulated stock, anticipating an extended promotion as is common for newly promoted tickers.
Half way through the campaign, the share price met resistance at 50 cents and those who got in early started to take profits, adding to the continued divestiture of insider holdings and creating such tremendous selling pressure, that the house of cards collapsed onto itself. The share price dropped 61% within a single trading day (April 22). The massacre continued into the next day when shares dropped another 37%. With the crash, interest in the stock quickly evaporated as shown by the declining dollar volume, and naturally, the share price disappeared in the abyss, especially since insiders were taking what they could get for their intrinsically worthless stock.
As shown by the percentages of losing number of trades and losing volume--calculated by comparing actual trades to the closing price--losses were staggering, far outpacing any gains that might have been realized by those smart enough to take quick profits at the beginning of the campaign. The losses were particularly harsh to those buying shares on the highest trading volume day, when the share price hit its high.
The day to day theoretical losses are also very telling. While some gains could be have been realized by those getting in early and selling off before the severe dump, the huge daily losses which followed are permanent, whether the newly minted bag holder has since sold his shares or not, as the stock cannot be expected to ever again experience the lofty share prices seen in the opening weeks of the pump. Even as many cut their losses, others were still buying shares, hoping for a bounce or executing the ill-advised "averaging down" strategy.
The changes to the Market Cap should be particularly disturbing to the prospective investor. Over the course of the 67 day Pump & Dump campaign, DRMC's valuation at first increased 140% and then quickly gave up 95%, moving from a $104 market cap to just under $5 million in 50 days. If this doesn't scream of market manipulation, what does?
It is no wonder then, that Full Access subscribers like our emailer stayed away from the second DRMC Pump & Dump campaign. Fool you once, shame on them. Fool you twice.....well you know.
----------Note: The segmented Past Performance records of DRMC can be viewed as a whole, including the records from the most recent Pump & Dump campaign of this past February by clicking on the image below.