|To: afrayem onigwecher who started this subject||8/4/2004 2:48:23 PM|
|Streamedia Co-Founders, Via Investment Entities and Trusts, Provide Financing|
Business Wire, Jan 5, 2001
Business & High Tech Editors
NEW YORK--(BUSINESS WIRE)--January 5, 2001
Streamedia Communications, Inc. (TM) (NASDAQ: SMIL, SMILW; BOS: STA, STAW), New York (www.streamedia.net) and Los Angeles (www.bijoucafe.com), a U.S.-based streaming media services company and global broadband technology provider for rich media content, today announced that its co-founders, Gayle Essary, Chairman, and James D. Rupp, a Director, in concert with their respective investment companies, ESCO Capital Management Co., Austin, TX, and Web2Ventures, Ltd., Hasbrouk Heights, NJ, have sold 250,000 combined shares in order to provide the company with an interim round of financing.
The co-founders took this action to provide interim working capital for the company until additional filings can be completed. The broker was instructed to sell the shares after the markets had closed.
Neither Essary nor Rupp nor any of their related companies or entities will receive any of the proceeds of the sale, which are being passed on to the company interest free, according to Henry Siegel, President and CEO. "The company owes Mr. Essary and Mr. Rupp a debt of gratitude for stepping up to assist in this interim period." He said the company will issue new shares to the two co-founders to replace the shares sold.
Additional shares from the principals, as well as from the ESCO Trusts and their principals, may be similarly registered during the interim period. All such shares will be sold in a similar manner, and all proceeds from all shares utilized in this fashion will be provided directly to the company.
Streamedia Communications, Inc. (TM) (NASDAQ: SMIL, SMILW; BOS: STA, STAW), located at www.streamedia.net, is a dynamic broadband services company that redefines how businesses communicate utilizing the power of the Internet and streaming media. As part of its overall streaming solution, Streamedia conceptualizes and designs its clients' IT infrastructure to optimize their streaming strategy as well as provide web design, application development, third-party technology integration, encoding and hosting services. The Company has recently signed a Letter of Intent to acquire a strategic interest in Nomad General Corp., A.G., Zurich (www.nomad.ch), with a warrant to acquire the entire company."
Additionally, the acquisition of the celebrated Bijou Cafe (www.bijoucafe.com), touted as a world-class showcase for independent films, has advanced Streamedia.Net's presence in the critical online, and offline, film distribution industry. The company has been referenced by U.S. Bancorp Piper Jaffray, whose analysts concluded that "streaming media is the next macro growth driver on the Internet ... the Internet of tomorrow (two to five years) will resemble television of today in terms of audio and video quality, while enabling users to control the media viewing experience." The research report is located at: gotoanalysts.com.
ABOUT ESCO CAPITAL:
ESCO Capital Management Company, Austin, Los Angeles and New York, (www.escocapital.com) is a private investment and management firm with diverse interests and a concentration on new media. The company participates either directly or via its principal or the ESCO Trusts. Todd Essary and Lisa Westfall, Austin, are Co-Managing Directors of the ESCO Trusts. Essary, the principal of ESCO, also serves as Chairman of the Board for Streamedia Communications, Inc. (www.streamedia.net), President of the non-profit Streaming Media Alliance, Inc. (www.streamingmedialliance.org) and Executive Chairman of Investrend Communications, Inc. (www.investrend.com). Certain statements contained herein are "forward-looking" statements (as such term is defined in the Private Securities Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.
Factors that could cause or contribute to such differences include continued acceptance of the Company's products in the marketplace, the timing of significant orders, delays in the Company's ability to develop or ship new products, market acceptance of new products, competitive factors, general economic conditions, currency fluctuations, and other risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission.
By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
COPYRIGHT 2001 Business Wire
COPYRIGHT 2001 Gale Group
|RecommendKeepReplyMark as Last Read|
|To: afrayem onigwecher who started this subject||8/4/2004 2:53:23 PM|
|HO HO HO L0LOL->"Gayle Essary, Investrend president, announced that John M. Dutton, professional securities analyst qualified in the PAR program, published his Quarterly Update PAR coverage of Starnet Communications (OTCBB: SNMM) on August 12, 1999. Mr. Dutton has reconfirmed his BUY recommendation. His 12 month price target is $30 - $35."|
PAR Analyst Announces Investment Opinion On Starnet Communications
Business Wire, August 12, 1999
NEW YORK--(BUSINESS WIRE)--Aug. 12, 1999--
Public Analysis & Review (PAR) is the unique professional independent analyst program administered by the non-profit Investors Research Institute, Inc. PAR research is distributed by Investrend Research. Gayle Essary, Investrend president, announced that John M. Dutton, professional securities analyst qualified in the PAR program, published his Quarterly Update PAR coverage of Starnet Communications (OTCBB: SNMM) on August 12, 1999. Mr. Dutton has reconfirmed his BUY recommendation. His 12 month price target is $30 - $35. Mr. Dutton will continue to follow Starnet Communications and issue Quarterly Update Reports. Mr. Essary noted that Investrend Research will be releasing shortly the previously announced Quarterly Update of MedCare Technologies (NASDAQ:MCAR). Initial Research Reports were recently issued on Vasogen Inc. (OTCBB:VSOGF) and M&A West (OTCBB:MAWI).
A summary of the Starnet Communications report follows. The entire report including disclaimers can be downloaded from the Investrend Website at www.investrend.com/research/snmmupdate1.html.
Please read the disclaimers posted on the Investrend site before investing.
We reaffirm our strong BUY recommendation. The reasons for the continuation of this recommendation are as follows.
1. The stock price of SNMM is down over 50% since its recent high of $29. We believe this decline is the result of side bar events coupled with nervous investors. The stock is presently at attractive levels.
2. Management is on course in executing its business strategy to become the dominant factor in most major phases of internet gaming. A current market share of 35% - 40% of all internet gaming sites belong to Starnet and its licensees. Present estimates are that only 10% of potential internet gaming customers use the internet to gamble.
3. Like most highly successful internet companies, Starnet is a dominant factor in its industry in both marketing and technology. It endeavors to pick franchisees capable of aggressive marketing to build a customer base. It exchanges a low initial license fee for an average 25% of their net revenues as an on-going license fee. It becomes their partner. However, unlike most top Internet companies, Starnet has escalating earnings and EBITDA.
4. At current prices, the stock sells at a P/E of 28x current year EPS estimate of $.47, and 11.8x the $1.13 estimate for next year. In fiscal 2001 and 2002, SNMM should obtain the earnings benefits from the high margins flowing from a large licensee base. Given a reasonable market 12 months hence, we expect SNMM to trade at 30x - 40x the $1.13 fiscal 2000 forecast of EPS, supported by a valuation of 25x to 30x EBITDA.
We further note the following:
For the year ending April 30, 1999, sales increased $6.4 million to $9.8 million, of which gaming accounted for $6 million of the increase and on-line interactive (adult) the balance of $0.4 million. EBITDA (earnings before interest, taxes, depreciation and amortization) expanded $3.6 million to $3.4 million from a negative ($0.234) million in 1998. Sales of gaming licenses to new operators totaled 36 in 1999 and 1 in the initial year of 1998. Recognized revenues from initial license sales in 1999 were $1.6 million. Revenues from on-going license fees from the 15 operating licensees of 20 completed sites totaled $3.5 million. Starnet's own casino (World Gaming Services) and its transaction service fees (EFT credit card processing) contributed revenues of $1.1 million. Total gaming revenues were $6.2 million. There were no significant comparable revenues in 1998.
In May 1999, 11 new licenses were sold bringing the total sold to 47 as of June 1. As of 2000 Q1 end, we estimate there were 25 operating licensors. Management has stated that it believes approximately 3-4 new licenses can be sold monthly for fiscal 2000 and 2001. Our earnings model assumes lower franchisee additions. Revenues from on-going licensee fees are a majority of StarnetAEs gaming revenues. In the current 2000 fiscal year, we expect initial license fees of $4.7 million and reoccurring license fees of $33.1 million. Revenues from World Gaming and transaction service fees should exceed $2.0 million. Total gaming revenues should total $39.8 million.
Finally, SNMM shares should be accepted for listing on the NMS of NASDAQ within 60 days. This listing coupled with the absence of the adult segment whose sale should be announced shortly, should broaden the stock's appeal to the institutional market place. With capital presently being raised, we expect shareholder's equity to exceed $50 million at year end, up from $9.4 million.
Mr. Dutton is the par supervisory analyst. He is a member of both the Boston and Los Angeles Security Analyst Societies, and has been an analyst and director of research at several firms including Moseley, Hallgarten, Estabrook & Weedon and LH Friend, Weinress, Frankson & Presson. He was president of Corsair Asset Management, an asset management firm, for over 11 years. For seven years, he was Executive Vice President of the international hospital company American Medical International. Mr. Dutton's past work includes development and execution of strategic and financial planning for small cap companies. Mr. Dutton presently is charged with expanding the PAR program.
For Further Information, please contact:
Starnet Communications, Inc., 425 Carrall Street, MezzanineLevel, Vancouver, B.C. V6B 6E3, Canada, Mr. Robert Grace, Investor Relations Phone 604-608-6035, Fax 604-684-0391 Email: mailto:email@example.com, website www.starnet.ca Investrend Research, John M. Dutton, President 801 S. Figueroa, Suite 1100, Los Angeles, CA 90017 Phone (213) 630-4401 Fax (213) 623-4590 e-mail: firstname.lastname@example.org web site: www.investrend.com.
COPYRIGHT 1999 Business Wire
COPYRIGHT 2000 Gale Group
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|To: afrayem onigwecher who started this subject||8/4/2004 2:58:54 PM|
|Investors Research Institute, Inc.|
P.O. 750471, Forest Hills, NY 11375-0471
Telephone 212-484-4747, Fax 718-523-2137
April 17, 1998
Via E-mail: email@example.com
Jonathan G. Katz,
SecretarySecurities and Exchange Commission
Mail Stop 6-9
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: File Number S7-2-98
On February 17, 1998 the Commission published certain proposed
amendments to Form S-8 and related rules and solicited public comments.
Release No. 33-7506.
The purpose of these comments is to address certain practical
aspects and applications of the S-8 Rulemaking process.
First, the non-profit Institute, whose missions advocated on behalf
of its small but diverse Membership include high standards for "disclosure"
and "accessibility" of information about public equities to public
shareholders and potential shareholders, was established during an
environment in which there has been insufficient guidelines for disclosure
of dilutive events, and far too many abuses of the S-8 rule whereby shares
appear to have been issued in many instances in amounts which far exceed the
monetary value of the services rendered to the issuer.
The Institute applauds the Commissioners for revisiting these
guidelines for the purpose of curing these inefficiencies of the present
rule. Public companies which enroll as Members of the Institute already
must agree to voluntarily adhere to such higher standards. Of course, the
Institute has no enforcement power nor staff to monitor abuses. It is
limited to the withdrawal of Membership privileges should a Member or the
public bring an abuse or instance of non-compliance with its standards to
its attention. And unfortunately, the investing public does not presently
have a commitment re: these "best practices in investor relations" standards
from the vast majority of public companies which have not to date adopted
the Institute's standards.
However, we would propose that the Commission move cautiously so as
not to "throw out the baby with the bath water."
More specifically, we are talking about the huge disparity between
the financial and resource-rich "blue chip" companies and the financial and
resource-poor "small capitalization" and "micro-cap" companies. In the
former instance, such companies often have entire departments devoted to
development and distributions of company information to investors and
potential investors. In the latter instance, some companies have no
assigned staff whatsoever for this purpose, and it remains in the best
interests of investors and potential investors for there to be a means by
which such companies and their investors to achieve a level of information
parity with their larger-capitalization peers.
It does not serve the investing public if such companies are left
without the necessary resources to pay for quality opportunities to present,
achieve professional scrutiny and distribute information in a timely and
We would argue that the rule here should be on what is reasonable
and proper in terms of compensation guidelines, what is reasonable and
proper in terms of investor relations activities, and what is reasonable and
proper in terms of disclosure as to whether products, services and resources
are paid through equity distributions where the investor's holdings are
diluted or are paid through operational expenditures where the investor's
holdings may be impacted by lesser profit margins.
It should be up to the management of the company to decide which of
these means to inform investors is in the best interests of the
shareholders, as the shareholders have remedies should management
subsequently make an inefficient choice.
Where the shareholder and investor needs protection is in the
issuance of stock for exhorbitant fees and compensation or to directly or
indirectly enrich insiders.
We would also ask the Commission to distinguish between
"promotional" activities by a Company which coincide with stock trading by
recipients of S-8 stock, perhaps putting limits on sales of stock during
periods that the recipients are in the process of aggressively distributing
information, and the strictly "informational" activities where services
designed to enhance exposure and investor scrutiny, such as conferences,
exhibitions, reviews and other means where the investor public has an
opportunity for dialogue and interaction with company executives is the
primary usage of S-8 distributions.
Also, a company may have legitimate purposes for S-8 distributions
to suppliers of non-investment related products and services, and the
Commission may wish to survey small capitalization public companies to
determine whether undue restrictions on the usage of such stock not
considering the appropriateness or comparative valuation of the products and
services received for operational purposes or for professional services,
such as legal, etc., may in some instances disserve the shareholder by
undermining the ongoing financial solvency of borderline entrepreneurial
enterprises in which members of the public have acquired an equity stake.
Thank you for your consideration, and we hope that we have given you
additional insights to assist you in your final determination on this matter.
Investors Research Institute, Inc.
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|To: afrayem onigwecher who started this subject||8/4/2004 3:18:49 PM|
|Investrend Needs Designer + Webmaster or all-in-one! in NYC |
Financial website (www.investrend.com) gearing up to be portal for public company profiles, data, research and official announcements. Needs profile search engine, news data feed, dynamic broadcast sub-portal,
PublicAccess [tm] interactive system, self-posting for enrolled public companies, live quotes and research charts (some of this already developed but requiring integration). Willing to separate design from webmastering, but prefer both, and some financial editorial background would be a definite plus. In fact. for right person, this could be a Divisional VP or President position, with stock and options (company filing Form 10, public offering already completed). Can be part-time, no office work locale needed. Contact Gayle Essary at 212-484-4747, fax 508-526-5696 or write firstname.lastname@example.org .
|RecommendKeepReplyMark as Last Read|
|To: afrayem onigwecher who started this subject||8/4/2004 3:31:00 PM|
JUNE 3, 1999
For Release After 12 noon EDT
INVESTORS RESEARCH INSTITUTE PRESS RELEASE
M & A WEST, INC. PRESS RELEASE
Public Analysis & Review (PAR) Announces M & A West, Inc. (MAWI) will be Covered Quarterly by Analyst James F. Reda, to be Distributed by Investrend Research.
NEW YORK CITY (BUSINESS WIRE) June 3, 1999 (InvestorWire) -- Public Analysis & Review (PAR), administered by the non-profit Investors Research Institute, Inc., has announced that James F. Reda, Atlanta, GA, a professional analyst qualified in its unique continuing analyst program, will initiate coverage of M & A West Inc. (OTCBB: MAWI), beginning immediately. The reports will be distributed nationally by Investrend Research, according to John M. Dutton, President, and Supervisory Analyst.
James F. Reda. Mr. Reda, a member of the New York Society of Security Analysts, has over 15 years of financial analysis experience for public and private companies, including valuations, mergers and acquisition, and tax matters. Mr. Reda is a Level III CFA candidate. He has a BS degree from Columbia University and an SM in management from the Sloan School of Management, MIT. His firm, The Reda Group, is located in Marietta, GA
The initial report is expected to be issued within a few weeks, and subsequently MAWI will be followed on a quarterly basis after the issuance of each quarterly report.
M&A West develops, invests in, and operates Internet and Technology related companies. M&A West's strategy includes the internal development and operation of majority owned subsidiaries within the "M&A West" family, as well as the investment in other Internet companies, either directly by M&A West or through other venture capital arrangements. The Company's strategy also envisions and promotes opportunities for synergistic business relationships among the Internet companies within its portfolio. M&A West has capitalized and hopes to continue to capitalize on its position as a Seed Round Internet Startup investor.
Some 16 public companies are enrolled in the unique PAR program, including ALYA International, Inc., M & A West, Inc., Aphatrade.com, Scottsdale Scientific, CorpHQ, Inc., Whatsonline.com, MedCare Technologies, Crys-Tel Telecommunication.com, Cadapult Graphic Systems, Inc., Starnet Communications, Inc., Virtuallender.com, AutoTradeCenter.com, Boystoys.com, AmeriClean, Inc., and Planet City Corp.
Thirteen wirehouse-quality analysts have qualified in the PAR program. Their reports are issued completely independent of both the Institute and covered public companies. Analysts who have qualified include Joyce Baynard, NYC, Richard Bliss, NYC, Gary N. Clark, Ph.D, CFA, Pasadena, CA., William W. Davison, Ph.D., Fairfield, CT, John M. Dutton, Los Angeles, J. Freedman, Miami, Gerald F. LaKarnafeaux, CFA, Ivins, UT, Stanley Lanzet, NYC, Randall D. Lewis, Los Angeles, James F. Reda, Marietta, GA, Darren Robinson, CFA, Toronto, ON, Harvey Robinson, CFA, Laurel, MD and Bradley S. Wilds, CFA, NYC.
Initial reports will be issued shortly on Scottsdale Scientific, (OTCBB: STDS) and Quarterly reviews are to be issued shortly for AutoTradeCenter.com (OTCBB: AUTC), and BoysToys.com (OTCBB: GRLZ).
Investors Research Institute, Inc.
John M. Dutton, Supervisory Analyst, 213-630-4401
M&A West, Inc.
Mr. Scott Kelly, President
583 San Mateo Avenue, San Bruno, CA 94066
Web site: www.mawest.com.
|RecommendKeepReplyMark as Last Read|
|To: afrayem onigwecher who started this subject||8/4/2004 10:00:01 PM|
|GAYLE ESSARY->Domain Name.......... ceocouncil.net|
Creation Date........ 2002-04-09
Registration Date.... 2002-04-09
Expiry Date.......... 2003-04-09
Organisation Name.... Investrend Communications, Inc.
Organisation Address. P.O. 750471
Organisation Address. Forest Hills
Organisation Address. 11375
Organisation Address. NY
Organisation Address. UNITED STATES
Admin Name........... Gayle Essary
Admin Address........ P.O. 750471
Admin Address........ Forest Hills
Admin Address........ 11375
Admin Address........ NY
Admin Address........ UNITED STATES
Admin Email.......... email@example.com
Admin Phone.......... (718)896-5060
Tech Name............ VERIO VERIO
Tech Address......... 12345 Blue Lake Dr.
Tech Address......... Boca Raton
Tech Address......... 33431
Tech Address......... FL
Tech Address......... UNITED STATES
Tech Email........... hostmaster@VERIO-HOSTING.COM
Tech Phone........... 888-663-6648
Name Server.......... ns.terencenet.net
Name Server.......... ns2.terencenet.net
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|To: afrayem onigwecher who started this subject||8/4/2004 10:11:24 PM|
|8-K FEATURES GAYLE ESSARY|
Essary is removed in a special meeting of the board which might indicate the board considered it an urgent matter .
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 14, 2001
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
STREAMEDIA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
244 WEST 54TH STREET, NEW YORK 10019
(Address of principal executive (zip code)
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Based on the analysis of the available financial information concerning eLeaders, Inc. (eLeaders), the Board of Directors determined that the acquisition of eLeaders does not constitute an acquisition of a significant amount of assets. Upon further review of the acquisition, the Company has not decided whether to treat the transaction as a pooling or a purchase.
ITEM 5. OTHER EVENTS.
On March 9, 2001, Streamedia Communications, Inc., held a special meeting of the board of directors. At that meeting, by a majority vote, the board agreed to remove Gayle Essary from his position as a director and Vice President of the Company.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 14, 2001
STREAMEDIA COMMUNICATIONS, INC.
By: /s/ HENRY SIEGEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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|To: afrayem onigwecher who started this subject||8/4/2004 10:16:42 PM|
|re:GAYLE ESSARY->Streamedia In Turmoil: President/CEO and CFO Resign |
Chairman appoints board member Henry Siegel as interim president and CEO amidst top executive and board resignations.
By José Alvear
October 24, 2000
Streamedia (www.streamedia.net) is going through some hard times. Not only has its stock price gone down dramatically since its IPO in early January, but it also lost some top management on Tuesday.
Streamedia announced that James Rupp, president and CEO, and Nick Malino, COO and CFO, both resigned. Rupp will remain as a consultant to the company for at least a year, said a company spokesperson, and will remain a board member. Malino will also stay on an interim basis to help sort out third quarter earnings, which will be released soon. He will relinquish his position on the board, however.
For many investors on the Internet message boards, this is a good day. Online critics have been calling for the resignations of Rupp and Malino for a long time, because of the company's dismal revenues. Second quarter earnings saw revenues total just $131,000. In trading today, Streamedia's stock went up over 30%.
Gayle Essary, chairman of the company, said that new management is being brought on, but the direction of the company will remain unchanged. In a statement released today, the company said that it will "pursue an aggressive policy of advantaging a number of current business opportunities".
According to a company spokesperson, the company is coming around business-wise and wanted to make sure it has experienced executive management as it turns to the future. Part of that new focus will be on finding business models that generate more revenue. "We're ready to embark on a new direction," said the spokesperson.
Board member, Henry Siegel, was named president and interim CEO while the board searches for "professional management". Siegel was recently president and CEO of Kaleidoscope Media Group and comes from a TV broadcasting background.
Aside from executive management troubles, Streamedia has also seen the resignation of two board members, James Schroeder and David Simonetti. New board members were announced today, filling those empty seats.
Schroeder's resignation occurred about two weeks ago. According to SEC documents, Schroeder left due to a disagreement with Chairman Essary. "Given the recent events at Streamedia and the vast disagreement and disarray of the principal shareholders, I feel that I no longer represent the views and interests of those shareholders," he wrote in his resignation letter. "I serve at their discretion and I, in good conscience do not agree with the proposed direction of this company as set forth by the Chairman."
Schroeder, speaking from his current position as vice president-tax at the Thomson Corporation, wouldn't give any insight into his resignation. "The board was not going in a direction I could support. I'll just leave it at that," he said glumly, indicating his letter published in the SEC filing.
Speculation on the message boards is that Streamedia is losing money at an accelerated pace and may soon run out of cash. Nevertheless, Siegel said that the company expects to report "record revenues for the 3Q and 4Q" and remains on a "path to profitability".
According to SEC filings, Streamedia will be making a new stock offering soon valued at $1 to $3 million. In a filing from September 27th, the company said that the proceeds from the Private Placement Proposal securities offering are critical to the "continued success and operations of the Company."
There will be a special shareholders meeting on October 27th, which might shed more light on today's events and the upcoming offering.
Although touting itself as a streaming media company, former CEO, Rupp, admitted during a recent interview, that streaming plays a small overall role at the company. It focuses mostly on web design and consulting services. Streamedia is perhaps best known as the owner of content site Bijou Cafe (www.bijoucafe.com), which it acquired early this year.
Perhaps some insight into the future direction of the company was revealed when Essary said he signed a letter of intent to acquire an undisclosed equity interest in Nomad Media (www.nomad.ch), a streaming media company based in Switzerland. Essary is also president and co-founder of the Streaming Media Alliance, an organization that is looking to promote streaming worldwide.
"You never know what the future might bring," said the spokesperson, "but there's reason to be optimistic."
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|To: afrayem onigwecher who started this subject||8/4/2004 10:19:42 PM|
|GAYLE ESSARY "The Waaco Kid"->THE NEW GRAPEVINE IS ONLINE|
Amateur Internet gurus are moving stocks in a big way
Something intriguing happened to the stock of Guardian Insurance Financial Services back in January. In the universe of news sources available to investment professionals, such as Dow Jones News/Retrieval Service and Bloomberg Business News, nothing significant was brewing. Yet, for no apparent reason, Guardian stock began to climb--2 1/8 on Jan. 10, 2 3/4 on Jan. 16, then 3 and 4 1/2 and up to 6 on Jan. 24.
What happened? A press release issued by the company at month's end said the rise was ``partly attributable to a favorable review by an electronic newsletter.'' But to followers of a band of stock traders on the Internet, there was no ``partly'' about it. A widely followed online investment tip sheet--the Waaco Kid Hot Stocks Forum--had picked Guardian. And when the Waaco Kid speaks, investors listen--and buy. ``Sometimes the moves are just dramatic,'' says Richard Geist, editor of the Strategic Investing newsletter and an occasional Forum source.
GROWING POWER. Welcome to the new world of Internet stocks. No, these are not the darlings of Wall Street--the stocks in Internet services and software companies. The new breed of Net stocks are companies that are influenced, favorably and not, by messages and E-mail on the Internet and the online services--notably America Online Inc., which is host to the widely followed Motley Fool investment feature. The ranks of the new Internet stock mavens range from online newsletters to a small but growing number of Internet Web sites and mailing lists--such as the Waaco Kid--that distribute their stock tips to thousands of investors around the country.
The growing stock-moving power of the online world is a comparatively new phenomenon. Its impact, which first emerged last year, has become ever more apparent in the past few months--and presents both opportunities and dangers for investors. The dangers include misinformation and ``pump and dump'' schemes, in which stocks are hyped by traders who then sell at the inflated share prices. But above all, the impact of the Internet stock gurus epitomizes the power of the Net as a growing force in the stock market. The Internet is hardly as potent a market force as are analyst reports and the financial press--but it's getting there, and fast.
Internet-driven shares are top-heavy with penny stocks such as Guardian but lately have included larger, often high-tech issues such as computer peripherals maker Iomega Corp., whose intense following on America Online message boards has prompted concern from the company. Net watchers believe that the recent surge in Zenith Electronics Corp., the TV maker turned Internet company, was fueled in part by postings on the Internet and America Online. Another dramatic example of online stock-moving clout involves Zytec Corp., a computer equipment maker whose shares fell 20% on May 7 after it was dropped from a model portfolio posted on America Online by Motley Fool. ``Did I cause Zytec to drop seven points? I suppose so,'' says Greg Markus, who runs the Fool's ``Boring Portfolio.'' But Markus emphasizes that his portfolio is purely an educational tool, in keeping with his occupation--he teaches political science at the University of Michigan.
Many of the new Internet investment savants are, like Markus, strictly amateur investors. The Waaco Kid is a good example. Its founder is a confessed tyro at stock-picking who started the Waaco Kid pretty much as a lark. ``Just a year ago I was asking stupid questions on Prodigy,'' notes founder Gayle Essary, 55, a soft-spoken Texas native who runs a management consulting firm, New York Management Group.
In his varied career, Essary has been a trade magazine publisher and political consultant. He became interested in investing while perusing the Prodigy Money Talk message centers but became disenchanted with the often heated discussions he found there. So he quit Prodigy but continued to correspond with his online friends--a correspondence that became the nucleus of the Waaco Kid. The group began a year ago as an informal exchange of investment ideas, and eventually spun off a formal investment club separate from the forum.
The Waaco Kid works simply. Every member--or ``co-editor''--of the mailing list, which has charged a subscription fee for the past few months, has the right to distribute stock suggestions to all the other members of the list. A small nucleus of members, headed by Essary, makes ``picks,'' or formal recommendations. Initially the picks were secondhand, usually borrowed from the Dick Davis Digest, a prominent investment newsletter. Early in its life, Waaco Kid picked fairly sizable companies. The stocks often moved when Waaco Kid chose them--but that was probably due to the clout of the newsletter, not Waaco Kid members' own purchases or the members' efforts to talk up the stocks in Internet discussion groups.
The tide turned last September, however, when the Waaco Kid members picked a stock on their own--and quickly learned their clout in the marketplace. It was a small software maker and penny stock called Blue Chip Computerware Inc., based in Farmingdale, N.Y. When the company's stock was picked by the Kid on Sept. 12, the selection was promptly disseminated both in the group's own mailing list and in Internet newsgroups, such as ``misc.invest.stocks'' and ``alt.invest.penny-stocks.'' The impact was dramatic. In a matter of three days, the share price of the stock zoomed from 29/32 to a 52-week high of 1 17/32, only to fall back just as dramatically afterward. The volume was staggering--soaring from an average of only 25,000 shares a day beforehand to 2 million shares when the stock hit a high on Sept. 14. Other stocks--including Westerbeke, Quantum Learning Systems, and CD-MAX--also moved skyward when picked by the Kid.
When the Waaco Kid moves the market the rise is usually just temporary, leading some Internet skeptics to contend that the Waaco Kid is sometimes used as a ``pump and dump'' effort. Essary concedes that some Waaco Kid subscribers may indeed be engaged in that practice, but he says that he tries his best to discourage that--by, among other things, asking that Waaco picks not be disseminated in Internet news groups. Essary notes that he does not trade stocks himself, and that the Kid is but one of the Internet-related ventures that his company has in the works, such as noninvestment-oriented World Wide Web sites. The Kid itself has grown beyond the Internet, with forum picks now distributed by fax and, beginning just recently, made available to subscribers of Real Time Quotes Inc., a network of trading terminals.
Still, the heart of the Waaco Kid remains the Internet, for better or worse. Essary's own integrity seems untarnished--Geist, for one, says that he has found Essary to be scrupulously ethical in running the forum. But not all the Kid's subscribers may be that pure. One Waaco Kid investment club member, for example, said in a late-January posting on an investment newsgroup that after the club takes a position in a stock ``we publicize the stock on the boards [investment newsgroups] and the price goes up.''
``HACKER ORIENTATION.'' That indeed is what tends to happen--and it is not always pleasing to the companies. One Waaco Kid pick is the Arizona-based HealthTech International Inc.--a choice that grew out of a conference call that HealthTech President Tim Williams had with several online investors. As with other stocks, the Kid had a temporarily positive impact on HealthTech stock. But HealthTech consultant John Pigman, who serves as a liaison with the Internet community, says such short-term moves don't do companies much good. Unlike some other Internet investment forums, he says, the Waaco Kid ``has more of a hacker orientation. They're acutely aware of the power of the tool itself.''
Perhaps. But who can blame them? Wall Street pros have long reveled in their power to move the market. Now it's the little guy's turn.
By Gary Weiss in New York
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