Timothy Sykes manages Covestor’s Contra Hype model, which seeks to identify price movements of small cap stocks that are susceptible to unusual short term price movements due to media hype or investor exuberance.
Tim recently shorted Jammin Java Corp. (OTC: JAMN), formerly Marley Coffee Inc., which is a development-stage company engaged in the coffee distribution business. We asked Tim to share his reasons for shorting. His response follows.
JAMN is in the midst of a pure pump and dump, as the company itself even acknowledged in an SEC filing that there is an “unauthorized” email campaign going around that has artificially pumped up their stock price in the past few weeks.
As I describe more fully on my site, I believe it’s especially prudent to short-sell these kinds of companies as their stocks fall and reality sets in. After all, despite JAMN’s stock trading above $3/share as recently as May 16, they recently did a financing deal at just 40 cents/share, which is more likely its true value. That makes it an excellent short in the $2-3 range. (Pricing source: Yahoo Finance)
Chart: Google Finance
Email campaign: Jammin Java Corp. Form 8-K, 5/9/11 http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7915144-1039-7420&type=sect&dcn=0001432093-11-000271
“The Seemingly Unchanging Million Dollar Profit Stock Market Pattern” Timothysykes.com, 12/15/10 http://www.timothysykes.com/2010/12/the-million-dollar-profit-stock-market-pattern-8-pretty-charts/
Financing deal: Jammin Java Corp Forrm 8-K, 5/5/11 http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7911391-1124-7557&type=sect&dcn=0001214782-11-000090