David Cohen’s Pump on HARVEY WESTBURY CORP (PINK:HVYW) Lacks the Wow Factor

Back on Tuesday, HARVEY WESTBURY CORP (PINK:HVYW) saw a massive leap and gained almost 40%. This was at least partly due to the fact that David Cohen and the people standing behind his newsletters created a lot of fuss around HVYW. Then again, why wouldn’t they? Mr. Cohen received at least $50 thousand in compensation and for that sort of money, all he had to do is promise inexperienced investors the ride of their lifetime.

We received quite a lot of emails yesterday and they keep coming in as we speak. With this number of alerts we expected an even more impressive jump than the one on Tuesday – something in the region of 50% or 60%, maybe even more. That didn’t happen, though. While HVYW did close in the green, they only gained about 14%, which is nowhere near the figures we are used to when we speak about promoted penny stocks. So what caused the poor performance?

Well, it might be due to the fact that more people performed some due diligence and actually did some research on HVYW before blindly trusting the emails. We, for one, did the research and, as yesterday’s article shows, HVYW are anything but a viable investment option. A quick look through the financial statement shows that they have been working at a loss since the very start, and when you read on, you will find that the amount of dilution caused by the management team truly is massive. Shares are being issued with or without a reason and although they have dragged HVYW into a financial hole, the managers have pocketed a huge amount of awards in the form of warrants, options and common stock.

Dig a little further and you will find out that the managers we’re referring to are not new to dealing with publicly traded companies. HVYW‘s CEO has been involved in other ventures in the past, he has been alleged by SEC of misinformation and he has spent some time in prison for securities fraud. We wonder what would the reaction be if Mr. Cohen had included these facts in his emails.

The newsletters are not the only ones creating the hype around HVYW, however. Yesterday, shortly after the closing bell, a press-release came out. We thought that it would be something exciting and that it will bring the company tonnes of revenue, but we were wrong. What HVYW wanted to tell us is that they have been featured in an independent research by Mr. Patrick J. Murphy who, by the way, received $5 thousand for his work.

Sure enough, we were eager to open the report and see what’s inside it. The first thing that we noticed is that there are a lot of comparisons between HVYW and companies with solid operations, millions in revenue and actual profits – all things that HVYW can only dream of. The second thing that catches the attention is that Mr. Murphy, unlike David Cohen, has actually done some research. He has included the miniscule assets, the enormous liabilities, the continuous losses and the lawsuits that we’ve been talking about since yesterday. So, if anything, HVYW‘s managers might make the price drop even faster with this sort of press-releases.

And having in mind what happens to other companies featured in David Cohen’s pumps, this is a very real possibility. Global Security Agency Inc. (PINK:GSAG)’s chart illustrates the scenario: a brief ascend is followed by a massive fall. AXLX already gained some percentage. How long will it last and when will the free fall start, however, is anyone’s guess.