It's been a couple of weeks since I warned investors about the stock that never went down, until it did: Manchester (OTC BB: MNCS).
As I pointed out then, this company -- a former Nevada mining outfit with roots in the Vancouver penny-stock market that had only recently consummated its long-standing plans for selling used cars to people with bad credit -- was already terribly overpriced. Moreover, the only "growth" it was getting was going to come through acquisitions, and these would be funded by high interest rate lending from a source that seems all but anonymous. (Attempts to reach Manchester, its investor relations firm, and the reported capital source have all led to dead ends and unreturned calls.)
At the same time, I noted that the Internet buzz was building for this company, with partisans trying to compare it to the next CarMax
Much of that buzz came from the company itself, which issued flurries of press releases covering the most mundane of corporate activities. Later, more buzz, I believe, was due to the pumping from a penny-stock promotion site that receives thousands of dollars for writing and issuing so-called analyst reports, and had recently been hired to get the word out on Manchester, by Manchester itself, for the tidy sum of $20,000.
To judge by the stock's lack of response, that hasn't worked out so well, so it appears that someone else has become mighty interested in drumming up interest in Manchester.
The last few days have seen no fewer than three paid press releases touting Manchester, and in all cases, the money for the touting is attributed to an outfit called "Blue Chip IR Group, LLC" or "Blue Chip IR Ltd."
There's not much information out there on "Blue Chip." It looks to me to be the Las Vegas shop that was involved in a legal scuffle regarding an alleged double-cross when it paid an Ohio "financial public relations specialist" to tout shares of penny stock Ever-Glory International, to "open new markets for EGLY shares, increasing share value."
Whoever's behind Blue Chip, the company shelled out more than $54,000 for these promotion services, the first just prior to Manchester's announcement of another acquisition, and one a day later. As is common with the worst of these touts, the latter release was salted with the names of popular blue-chip companies like Citigroup
Any investors out there think Blue Chip IR has your financial well-being in mind when it shells out $50K to pump an overpriced acquisition machine in the used car biz? Anyone think management at Manchester -- which has already gone on record with "naked short" allegations -- will come out and warn potential shareholders about the more common danger of upward market manipulation via paid stock promotion?
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At the time of publication, Seth Jayson had no positions in any company mentioned here. View his stock holdings and Fool profile here. CarMax is a recommendation of Motley Fool Inside Value. Fool rules are here.