Another Pump for Light Media Holdings Inc (PINK:LGMH)

Light Media Holdings Inc (PINK:LGMH) probably know the drill by now – some paid promoters send out some emails about them, there is increased interest in their shares and the volume soars, a few opportunities might just arise, but soon after there is a substantial fall. Some of you might say that we’re just guessing what will happen to LGMH now that there is a new wave of promotions for them, but the truth is, we have based our predictions on LGMH‘s extensive promotional history.

The first pump for them was carried out back in May 2012 and while the ticker gained some ground during the first couple of days, it plummeted as soon as the emails stopped. The next one was at the end of February and we covered that one in an article. Unlike the promotion from May, this time we didn’t see even a short positive move. The downfall was there, however – 65% in a single trading session. Having all that in mind, we’re struggling to see how they will manage to do something different this time.

Some of you might argue that according to their latest report, they have a positive cash flow which will keep them afloat and it is true, that during Q4 of 2012 they did manage to generate a small profit but, then again, the same figures were available during their last pump and, unfortunately, they didn’t really help. In addition to this, as we wrote in the previous article, the net income amounted to only $2,534 which, you would agree, is not whole lot for three months. Not to mention the fact that it was only due to gains on some sales of assets and not on actual profit from operations.

We did take the time to look through some of their old financial statements and we can see that, unfortunately, the business of producing and distributing Christian music has not been very profitable for them. On the contrary, they have been working at a loss from the very start and we reckon that despite the optimism that springs out of their press releases, they have quite a lot of work to do before they can finally boast about a reliable source of income.

It’s anyone’s guess if they will succeed or not, but the fact remains that pressure from paid promotions pushes the ticker further down and if the pumpers continue to create artificial hype around them, LGMH might find themselves in a place where they definitely don’t want to be. All we can do at this point is wish them the best of luck with their efforts and move on to the people who are desperately trying to raise awareness – the pumpers.

Not all of them disclose where they got their compensation from and the ones who do, say that they were paid by companies like Microcap Innovations. Judging by the movements on the chart, however, we are more inclined to think that it’s actually a substantial shareholder that is profiting from the pumps. Of course, we can’t be sure about that, but the sudden drops and the high volume do suggest that quite a lot of stock is being sold as soon as the touting stops. Which is not a pattern reserved for the shares of LGMH only. One of the newsletters carrying out the current pump is called Jet-Life Penny Stocks. We are familiar with them and we can see that nearly all of their promotional emails end with a statement that the shares of the featured company are cleared for take off. This makes us wonder what happened to the lift off of companies like Evcarco Inc (PINK:EVCA) and Automotive Resource Network Holdings Inc (PINK:ARNH). As you can see from the charts on the right, while there was some movement, things soon turned pair-shaped which left a lot of badly burned and rather grumpy investors.

If the previous awareness campaigns on LGMH are anything to go by, they are more likely to remain firmly grounded rather than soar to the skies. This is why it’s absolutely crucial to weigh the risks carefully when making your investment decision.