The Wrap – Beware of This Pathetic Joke of a Stock Advertised on TV
Also, quick comments on Turning Point, AXT and Palantir.
▶Before we get going, this heads up…
Be on the lookout for a new Red Flag Alert in the coming days. This company, with a market value above $5 billion and roughly $40 million in average daily volume, sticks with an ongoing theme here of real companies with real products and real revenue that are faking it in the hope of making it… at least in terms of becoming what they already claim to be. Stay tuned.
▶Also, if you missed my Zoom with Turning Point Brands TPB 0.00%↑ bull George Baxter, you can hear the replay here…
I also include an updated 39-page slide presentation. The slides include a breakdown of the short-term risk associated with the company’s announcement yesterday of a deal with TKO Group TKO 0.32%↑, and, more broadly… what could go wrong with his thesis.
Quick aside, for those interested in AI editing: This was the first time I’ve run a Zoom call through an AI program to get rid of the fluff and even improve the video presentation. I used Descript. What I found was that for this specific use, agentic editing of audio and especially video is very hard to get right. That’s why, in the end, I opted for an unedited audio version.
▶Also, the bull/bear slugfest on AXT Inc. AXTI 0.00%↑ has shifted into high gear. I first wrote about the company less than two weeks ago. Since then, if nothing else, the swings in its stock show how little conviction there is, with its shares sinking as much as 34% after the report… to back to even, and then some in recent days. All of this, mind you, on no real news other than: The market’s continued infatuation with all things optics; the persistent “story” that AXT is in the catbird seat to help break the “bottleneck” for indium phosphide substrates, which are needed for advanced fiber optic connectors and are purportedly are in short supply; and the filing of the company’s latest proxy, which included a proposal for AXT to increase its outstanding shares, in turn used to raise more cash to expand capacity. Never mind the potential dilution or the reality that it’s not the only supplier out there rushing to build capacity.
I go through a few of the market realities and risks to the bearish thesis in my report, which you can read here…
Regardless, AXT is a perfect story in a market that thrives on stories.
▶Also worth noting, next time a CEO starts ranting about short-sellers: Did you notice that the peak in Palantir PLTR 0.00%↑ was the day of the seemingly good earnings report on November 3.
It was the next morning that CEO Alex Karp went on CNBC, ranting about the shorts. He did the same thing in a letter to shareholders, where he wrote…
When I see a CEO not only go off on the shorts, and I see a guy whose stock is up nearly 200% this year using words like “deranged” and “self-destructive befuddlement” to describe his company’s “detractors,” I’m thinking… why?
And then to talk about how his company has helped “retail investors…achieve the kinds of rates of return previously limited to the most successful venture capitalists,” I’m thinking… why?
Maybe he saw what was coming. Just as Sam Altman of OpenAI did when he had his podcast meltdown roughly the same time.
▶Finally, the main event – pathetic stock promotion…
I guess there is no way around those penny stock commercials that pop up on financial TV, especially in the early hours here in California. You’ve seen them, and I’ve written about them before…
They’re always variations on the same theme, with a reminder by the announcer of what the “ticker” is and which exchange it trades on, as if that’s important.
One of my favorites, which I wrote about early last year, was Venu Holding VENU 0.00%↑, which operates concert venues… and in its commercial claimed to trade on “The New York Stock Exchange.” As I pointed out at the time, the stock wasn’t really trading on the real NYSE but the NYSE American, which is for the nanocaps that can barely meet listing requirements but can afford to pay listing fees. As it turns out, within five months, the stock doubled, but now trades at half where it was when I wrote about it.
But at least Venu generates revenue!
That’s more than I can say for the piece of garbage (my opinion!) that was promoted on a commercial this past week. The company: Greenland Mines. The first words in the first second of the 30-second spot from the announcer were, “The world needs palladium”…
To which I’m thinking: “Oh, puhleeze.”
As if on cue, within seconds, the announcer mentions, “the ticker – GRML,” and later says it again, adding, “On the Nasdaq.”
Never mind that the Nasdaq he’s referring to is really the Nasdaq Capital Markets, better known as the NasdaqCM. That’s not to be confused with the real Nasdaq; the CM is the entry-level Nasdaq, akin to the long-gone (may it not RIP) Vancouver Stock Exchange, where, like the NYSE American, almost anybody anywhere could list as long as they could pay the fees and meet the listing and disclosure requirements.
When I heard “palladium” and saw Greenland, despite having considerably better things to do, I couldn’t not take a peek. After all, given all the publicity surrounding the country, especially about supposedly “rare” minerals, it’s a stock promoter’s dream come true.
And Greenland Mines, in my view, checks every box. Among the fun finds…
Until a month ago, Greenland Mines was known as Klotho Neurosciences, a 2024 SPAC creation that claims to have five market-approved anti-cancer drugs approved for sale in Germany. Its original name, when it was merged into the SPAC, was Anew Medical. It changed its name to Klotho a few months later.
It has no revenue, or as the company said in its 10-K, “We have not generated any revenue to date.”
As of the 10-K, it has two full-time employees.
It has been battling Nasdaq not to be delisted.
It acquired mining assets that have – how shall we say, based on my own research – a sketchy history.
The company now has two divisions: mining and cell and gene therapy.
That last point on its own, but especially against the backdrop of the others, puts it into the bucket I like to call, “If you knew nothing else…”
As of Friday, with the company’s market cap just tipping $40 million – coincidentally, the daily volume of the company I’m about to red flag – the stock traded for 40 cents a share, up around 33% for the week. TV commercials will do that.
As I said, the stench, to my nose, is unmistakable, and I’m being kind: Garbage.
Interpret at will.
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DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!) I own shares in Turning Point.
I can be reached at herb@herbgreenberg.com.