Pacific Ridge:
Ah yes, the Old Reverse
Binge-Purge
Ralph Kettell
Archives
September 5, 2003
If you have invested
in stocks for any length of time, you have certainly heard the
term pump and dump. A pump and dump is when someone pumps up
a stock by heaping loads of praise on it and then during the
ensuing runup they sell out, aka dump it. Well today we had a
beautiful example of precisely the opposite of a pump and dump,
I'll call it a Reverse Binge-Purge.
On Wednesday night, Pacific
Ridge Exploration (PEX on the Vancouver Exchange) released
a second set of results on their first round of drilling at the
Golden Arrow Property in Nye County, Nevada. I read the results
Wednesday night and thought these are good, not great, but good.
I thought that the stock would firm up a bit in the morning.
Imagine my surprise when I checked the stock price the next morning
and it was trading at $0.14 x $0.15 Cdn (down from a high of
$0.25 on Tue!) and had made a low at $0.105 Cdn. Whoa Nellie,
what's up!
When I first checked the price,
a little over 200,000 shares had traded. I decided to buy some
more and thanked those who had sold for the second buying opportunity.
As I watched the stock through the course of the day it became
apparent what was happening. Someone had decided that they missed
the boat when this stock first left the dock and they wanted
to get aboard for a lower fare. They used the opportunity of
a press release that the average investor would not understand
and smashed the stock down.
The smash down phase is the
Purge portion of the Reverse Binge-Purge. In the process of smashing
down the stock, they helped the less-informed investors interpret
the press release. If the stock is dropping like a rock after
a press release, it must be bad news, huh? This is a classic
case of shaking out the weaker hands holding the stock, while
the stronger hands pick their pockets. (Editor's note: This is EXACTLY what
happened here. Bob - in his early-morning stupor - saw the stock
dive; knew there was a drilling result press release (but
hadn't yet read it), and ASSUMED it was a bad drilling result).
Then comes the Binge phase.
While the shell-shocked investors are cutting their losses by
selling en-masse, the big money is laughing as they Binge on
the low priced Pacific Ridge stock. At the end of the day the
stock stood at around $0.15 Cdn and over 1 million shares had
traded. Such a deal for the big money guys. They sold and/or
shorted 200,000 shares to knock the stock down and then were
able to pick up 800,000 at bargain-basement prices. The elegance
of what they did was that they used the company's own press release
to pull off their scam.
In the long run this purging
of the weak hands in the stock is a good thing. It will make
for a more orderly advance in the next few weeks and months.
The best part, however, is the buying opportunity it has presented
us with.
 I do not know any more about the drill
results than was announced in Pacific Ridge Exploration's press
release, but I have a meeting scheduled with the principals of
the company this weekend in New York. If I learn anything additional
I will pass it on at that time.
If you are at the New
York Gold Show next week (Mon/Tue Sep 8/9), Pacific Ridge
will have a booth in the exhibit hall (Badger and Co)
Please stop by and introduce yourself to them. If you see me
roaming the halls, please stop and introduce yourself to me as
well.
You can't miss me, I am 6'
6" tall, weigh 275 lbs., and wear Birkenstock sandals...
no matter what the weather.
Happy Investing!
Sep 5, 2003
Ralph Kettell
Archives
email
 Disclosure:
The
author is not an investment advisor and this article should not
be construed as a recommendation to invest in the discussed securities.
The author is merely presenting some possible scenarios and what
the potential risks and rewards associated with an investment
in these securities could be. The author has not been paid to
write this article, either in cash or securities. The author
is a share holder of these securities along with about 15 to
20 other mining companies. The author sells shares from time
to time to rebalance his portfolio as well as invest in other
opportunities which present themselves.
Disclaimer:
The
author's objective in writing this article is to make potential
investors aware of the possible rewards of investing in this(ese)
security(ies) and to elicit interest on their part in this stock
to the point where they are encouraged to conduct their own further
diligent research. Neither the information, nor the opinions
expressed should be construed as a solicitation to buy or sell
this stock. Investors are recommended to obtain the advice of
a qualified investment advisor before entering into any transactions.
_______________
321gold
Inc ref: 02787
|
