Its Over, page-1523

This is how I see microcap news release.

Too often I see holders of microcaps crying out that there is dead silence and as most of them are traders, they depend on stock movements to make a buck, they always look forward to news announcements, hoping to lift share prices.

And I have seen some of the most ridiculous price movements akin to irrational mania , upon such release of news. We saw that with ACW, 4DS (haha my former lottery stocks) , GSW and a few others recently but after awhile, prices invariably drop back to earth and more so in the day (s) thereafter. In most cases, the optimism and exuberance exhibited even on positive news got over the top as if revenues were flowing in or they landed a multi million dollar contract (and I mean not the Get Swift kind) when in reality, progress is in the positive direction but don't count your chickens yet.

(1) Sometimes its better not to have any news and the sp slowly creeps up demonstrating quiet accumulation of shares - no news is actually good news if there is no good news to share with. And most microcaps management make the novice mistake of dishing out news for the sake of it to 'spruik' a declining sp - in reality, taking shareholders for fools (indeed there have been quite a number) but the market may not initially understand the implication but will soon realise it. You see, if your management tells you after 4 months of silence, they landed a collaborative agreement that may not have a material impact on earnings (of course they wont say that but you can infer) , then it tells you by implication that over 4 months, the business actually has had no traction at all. So the people who rush in to buy on the news , so called positive news, took the news on face value instead of possibly determining the possible state of business the company may actually be in.

(2) Then there is the very often news release by microcaps about collaboration or engagement with the big names, creating immediate excitement and a boost to share price. Then a period of complete silence. 4C came, little to no mention re: the big news. Nuheara was an example and Yojee another and I am sure many more of this nature. If it is such a big deal, why was there no follow up news and no mention whatsoever in 4C? A landmark deal and no mention? Yet, holders of these stocks never truly question as the company proceed to announce other deals to distract attention. And the merry go round continues with new holders coming into picture. In the first place, if there was ever a standard of disclosure only for material deals and deals with strong likelihood including compelling companies to make continuous disclosure on the state of those deals , then there would be less inclination for ''rogue"companies to resort to such tactics to spruik their share price. Remember this, if you own a listed company that may not have a future or wobbly future, your way of profiting is maintaining the market cap level while you wish yourself handsome performance shares (that bear little to no resemblance to the company's financial outlook) and hope you can sell your shares along the way before it tanks (on excuse you need to pay tax).

With established companies, like APX and PME as examples, you do not see them making announcements unless they are newsworthy to begin with, either a new contract which they are able to quantify potential revenues or better still actual revenues and they would be expected to be relatively material to their business- and I am sure they have many small customer contracts or even contract renewals that are BAU (business as usual) and not expected to be announced and they don't. Imagine PME making an announcement on a contract renewal for every of its customer, they would be no end to news releases.

Now for microcap companies that make news announcements on something insignificant (like BUD LIFX lights now in Qantas Frequent Flyer store) , it indirectly implies the company is actually short of telling you they have a better and promising story but nonetheless going to make it because the sp is tanking. And there will be no short of retailers falling for it!

Oh, you can learn so so much by what and how management of these companies make their news releases. If your company employs any of the above disclosure tactics with an agenda (even though you may like it), be concern about the underlying fundamentals of the company. Well run businesses let their accounts speak for themselves and will only disclose news that have a materially positive or negative impact on the business. Yes even negative!

The next time you see a news release, its best you don't get sucked into the whirlpool as the sp gets a sudden adrenaline shot.