North American Oil & Gas Corp (OTCBB:NAMG)’s Hard Mailer Pump Confirmed, The Ticker Jumps
It’s now official. North American Oil & Gas Corp (OTCBB:NAMG) is the subject of a stock promotion through the snail mail. We first heard rumors about colorful brochure being distributed around the mailboxes yesterday and we can see that some traders around the message boards and Twitter have now confirmed that Tobin Smith’s optimistic projections are flying around over the conventional mail. Unfortunately, they have only photographed the first page and we can not see the disclaimer which should reveal the total budget (rumor has it, it’s around $2.4 million) but it turns out that whatever the amount of cash being splashed out on the pump, it’s proving quite successful. At least for now.
Tuesday’s trading was quite intense with more than 1 million shares changing hands and a price increase of around 13%. It would appear, however, that more investors received the brochure before the start of yesterday’s session which resulted in an even bigger trading volume – nearly 1.8 million shares. The ticker added another 13% and the whole buzz racked up a trade value to around $2.6 million.
When the closing bell rang, NAMG was standing at $1.48 which is precariously close to the 52-week high of $1.67 that was registered while the touting was done only through the emails and landing pages. The market cap at this point is also nearing $90 million and we don’t really need to tell you that this colossal value is simply too much for an enterprise that has:
- no revenue
- less than $40 thousand in cash
- a working capital deficit of around $542 thousand
- quarterly net loss of around $326 thousand
It’s pretty clear that while the promotion is proving successful at inflating the price, the increase is completely disproportionate to the company’s financial position. Then again, that’s nothing new in the world of penny stock promotions. Alkaline Water Company Inc (OTCBB:WTER), another company targeted by the pumpers, for example went up to a 52-week high of $1.30 back in July after which it crumbled catastrophically, wiping out around 60% of its value in no more than three sessions. The same thing can be said about Blue Fire Equipment Corp (OTCMKTS:BLFR) who flew to $0.85 fueled by the hype. Currently, the people who bought in on those huge values are looking at around 64% in losses.
So, will the same thing happen to NAMG? Well, there are certainly some things to suggest that. Apart from the humongous market cap, you should also bear in mind that the ticker has been touted for quite a while now. It already crashed once back in August when the latest financial statement revealed that the pumpers’ price targets were extremely overestimated when compared to the company’s current position and right now, a little over a month later, there is absolutely nothing to suggest that a similar drop can be avoided.
On the contrary. The fact that more and more money is being poured into the promotion means that more and more money will need to be won by the people who invested it. How can they do it? Well, you are probably guessing that selling some cheap stock at the artificially inflated prices could yield some healthy profits. Will this happen? Only time will tell, but there are just too many things to suggest that a correction is inevitable which is why staying away from NAMG unless you can afford the losses is probably your best bet.
