The Most Boring Stock Ever. Until It’s Not…

Usually you see a little disclaimer at the end of these articles. But this whole article is going to feel like a disclaimer. I will say this right up front, there is no business related reason why BVSN will grow, as far as I can tell. They won’t increase their EPS, or sign a major contract that impacts thier profitability anytime soon. I wouldn’t put it past them to announce something with the word “blockchain” in it, but I would be surprised if it had any long term effect on their business.

As far as boring goes, there isn’t a stock that can feel more flat then BVSN. I believe it has spent entire weeks at the exact same price before. If you take any 1 month snapshot of their timeline, you are very likely to see a straight line with almost 0 variation.

But if you zoom out on that 1 month chart, and look at their 5, 10, 20 year or Max chart, you are going to think your computer is lying to you.

[Starting with a chart that shows 2014 to now, then backing up further with a chart that shows 2002-present, and finally the longest chart to include the “Pump of Y2K” as I just started calling it right now.  All charts taken from https://www.nasdaq.com/symbol/bvsn/interactive-chart]

Screen Shot 2018-02-12 at 3.45.57 PMScreen Shot 2018-02-12 at 3.45.26 PMScreen Shot 2018-02-12 at 3.44.19 PM

I am going to spend this article talking about those ridiculous spikes. I will make the case that it is worth having even just 100 shares sitting in the back of your account waiting for the next time this stock goes from “boring,” to “lunacy.”

For anyone who looks at these charts that didn’t already know this: THAT is what a Pump n’ Dump looks like.  All of those.  I watched from the sideline each time, except in the 2007/2008 pump where I did get a few shares, but didn’t make anything more then enough for the beer I bought that weekend (I was in College, over 21.  Don’t drink and trade).

In 2009 I decided to buy 100 shares, and wait.  It was a LONG wait, and I got bored, only to sell it and forget about it until one day in 2012 when I decided to look at it for some ungodly reason, and found out I had missed the trade again.  My 100 shares could have gotten me $4,400.  I had paid around $680 for them, and even if I had held it for the entire 3 year period, that yearly return is still astronomical.

Admittedly, I stopped paying attention for a while.  But a spike in a stock that had some nostalgic tentacles in my head caused me to look again a few months ago, and I saw a clear opportunity.  Not just for me mind you.  I don’t have the funds to make a lottery tickets worth of money from trading BVSN if it spikes.  The opportunity I think I see, is an opportunity for the same people who participated in the last spike.  It is because I believe old dogs will re-preform their old tricks that I see an opportunity in this for me.

BVSN has stalled out lately, even for their low standards.  The price has trickled lower and lower, and even teases $2.80 every once in a while.  Meanwhile, the float on BVSN is Just over 2 million according to Gurufocus.[https://www.gurufocus.com/term/FloatPercentageOfTSO/NAS:BVSN/Float-Percentage-Of-Total-Shares-Outstanding/BroadVision%20Inc.]

Very quickly, “Float” refers to all the shares that are available to trade.  Which is the shares outstanding minus what is held by insiders, who have to file paperwork well in advance to make any sales.  Stocks with low float tend to:

  1. be Incredibly volatile at times, but can be completely immovable at others.
  2. Often have valuations that seem completely unrealistic when you look at their PE ratio or revenue growth.
  3. Illiquid at times, meaning if you wan’t to sell your shares for cash it doesn’t happen automatically, and could take days, or not happen at all if you use a limit order.
  4. Places where people will spend time spreading false information, or information that is true but exaggerating the effect.
  5. Companies that have made announcements that seem to have the sole purpose of pumping their own stock price.  Like changing their name to Long Shmisland Blockchain (not calling anyone specific out here) or announcing that they bought a damn (again, not calling anyone specific out here.  Unless I am).

Back to my story–for years, after the 2012 pump and dump, a company called ESW Capital started scooping up shares.  They are on record as purchasing shares of BVSN as late as 2016, this according to Reuters: [https://www.reuters.com/finance/stocks/insider-trading/BVSN.OQ]

Screen Shot 2018-02-12 at 4.15.19 PM

I don’t know what happened after 2016 with them.  I don’t see any SEC filings that would indicate there has been a sale, although this would be a huge loss for ESW at the moment.  I have an email into ESW’s contact from their website, and if I receive an answer about their positions I will update this article immediately.

There was a rumor that came out in late December that I can’t verify anywhere.  The rumor was that ESW had purchased 995,000 shares.  That post appeared on StockTwits, and I believe the person who posted had linked to a press release.  However, I did not think I would be writing about them later on so I didn’t mark it, and I don’t remember if I read it or not.  The idea at the time was that they had purchased half of the float, and that a bounce was imminent.  It did actually recover to $4.00 on these rumors, but I still consider them unsubstantiated.  Judging from the gradual slide down, so did the rest of the market.

Screen Shot 2018-02-12 at 8.00.12 PM

The reasons for those past spikes I can remember vividly.  During the 2007 one, I was in College, in an investments class, watching as my friend Dave won the Stock Market Game because he had gotten lucky and bought them at $20 with the fake game money.  He sold them at $65 and we all wen’t home mad that it was only play money.

There was a Newsletter that was published by a group calling themselves the NIA, or National Inflation Association.  The NIA had been publishing newsletter after newsletter to their members that claimed that to protect against the dangers of hyperinflation, they should buy BVSN.  They were issuing this letter twice per day at times.  But, there were paid members who would get stock picks early, so by the time the people who had signed up for the free newsletter had received any notice, the paid members had already bought up enough shares to make a mint.  It was highly successful, and highly illegal.

The NIA was run by a man named John Lebed, who was a renown Pump and Dumper, who had been convicted by the SEC (according to http://www.trade.education/national-inflation-association-review/).  In 2016 there was an interview with someone who had left the NIA who exposed them as a Pump and Dump organization.  https://www.youtube.com/watch?v=XYOclEsKHtc

But even today, I googled them and it looks like they made a blockchain pick early in 2017.  Google says their site “may be hacked,” so I won’t be clicking on that for my research.  But the fact that they still exist is interesting.  In my experience, criminals are not bright, and tend to go after the same targets.  The fact that it has been so long since the last Pump and Dump attempt of BVSN by this group makes me think they have it in their back pocket for another attempt at some point.

Even if they don’t put BVSN in their crosshairs again, someone else probably will.  One of the unintended consequences of a deregulated market–which the current administration is achieving at a rapid pace–is that people tend to think that they can get away with manipulative action in the stock market.  I can’t say if they get away with it more during deregulation or not.  What I can say is that as long as their has been money to make, there has been a scam artist trying to get it.

The 2012 pump was based around Broadvision claiming that their Social Media Platform “Clearview” was going to be the next Facebook.  The company seemed to be in on this one, because they were creating a product that, by all accounts, was completely inferior, and possibly nonexistent.  Seeking Alpha published an article right after an Earnings release that seemed to prove beyond a shadow of a doubt that BVSN was way overvalued.  [https://seekingalpha.com/article/525031-broadvision-challenges-loom-ahead]

I wish I could find information about the pump and dump that started the whole story in 1999-2001.  They have preformed a 1-3 Split right after listing, and then a 25-1 Reverse Split years later, but even so, the price increased by thousands of percentage points.

I guess what I am getting at is this: There is no guarantee that BroadVision is going to experience another Pump and Dump.  But, it is vulnerable to such an attack because, objectively:

  • It has a very small float
  • The company seemed to actively participate in the 2012 Pump and Dump by promoting a product that simply does not exist anymore.
  • The price has fallen to lows that I believe it has never traded at before, it may even be undervalued as a business.
  • The daily volume on this stock is so low that sometimes it seems like it is frozen in time.
  • The regulatory environment is one that may convince a person with a penchant for Pumping and Dumping to begin to issue alerts about this stock.
  • It will only cost approximately $300 to sit on a lottery ticket that, if it does hit, has shown that the potential on it is remarkable.

You can subscribe to LIVE Stock Alerts ($9/month), 1 on 1 Chat ($6/month), and/or Early Access to my articles ($3/month) by emailing theblackinkeconomist@gmail.com to inquire!  I use the Remind platform to send alerts, which you don’t need anything other then a phone number to receive!

As if this entire article wasn’t already one, here is the disclaimer:  My opinion should never be taken as investment advice.  BVSN is, for all intents and purposes, a lottery ticket.  I don’t believe they will go bankrupt, but if it happened I wouldn’t be surprised.  It seems to just be a vehicle for employees of the company to collect a salary, and a playground for Pump and Dump groups.  Having said that, I have a small number of shares that I purchased at 2.85.  If it drops far I may add more, but all it is, to me, is a lottery ticket.

CORRECTION: A previous version of this article had a statement that there were ties between the CEO of BVSN and the NIA.  A commenter noted that the CEO is a very honorable person, and he disagrees with that statement.  Upon further review, I have decided that until I can prove it with objective data I have removed that statement.  However, I do believe that there was teamwork during the “Clearview” pump between the NIA and BVSN, and that is the connection I was referring too.  If I find more information about this I will update the article again.

 

2 thoughts on “The Most Boring Stock Ever. Until It’s Not…

  1. I agree with a lot of this content, EXCEPT that the CEO has zero “ties” to NIA. Quite the contrary. Check out Pehong Chen. He has a superb reputation as an honest, ethical person, Berkley PHD etc. In fact, he has never sold a single share. Thanks.

    Like

    1. Hi Guy, thank you for the comment. My only “tie” that I was willing to put into print was the Clearview pump seemed to work with company announcements. I need to find an internet archive sight to search for the articles I remember reading in 2007 to give any other examples.

      Having said that, considering the subjectivity of my statement, I will amend the article and put a correction note at the foot of the article. However, if I do find those 2007 articles I will cite them and rephrase my original comment to objectively report on what I find.

      Thanks again Guy! I do appreciate feedback of all kinds, I will have an open mind, and even be willing to make corrections if I am persuaded to do so.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s