RE: RE: LavenderMBA...you asked..''how does one explain Northern Rivers and Research Capital getting sucked into this story?''
I'm confident that they'd be better qualified than I to explain their actions...but to be fair...I'm not sure that anyone got 'sucked' into this story. They're all deemed to be professionals who weigh information and act accordingly. Who knows exactly what information AMA laid out for them that allowed them to take the positions they did.....and conversely, who knows what hard questions they did or didn't ask of management.
I will offer a couple of observations ...I don't expect that you'd recall any or all of my posts but I will recap what I've said previously on this subject. I listened to Hugh Cleland make two presentations on AMA.....in both cases I ( and others ) believed he was well steeped in the financial projections and the projected business model....but was lacking in real understanding of the product and the myriad of challenges it would face in seriously penetrating the marketplace. The key to the grand business model and financial projections was always China.....many of us had grave doubt as to its viability....and have so far been correct. He's a financial man...not an aviation man....he ran with what he thought was a good, viable story that so far hasn't panned out.....but these guys don't win on every gamble.....you're going to go broke if you think you can bank on all their positions as being iron clad money makers.
As far as Research.....one must remember that Jacques Kafavian works for them as their aviation analyst....and was one of the vocal proponents of the stock during its price gyrations 10 0r 12 months back. Research was, rather ironically, the same broker that arranged the 'bought deal' last Spring for 4.5 million units @ $1.00 ...and were paid $360,000 in cash plus 315,000 underwriters warrants @ $1.00. They passed the stock through to their clients....so it looks like Research itself didn't exactly suffer...it's the clients who are holding the bag! Kafavian has always been as right as he's wrong...or as wrong as he's right......much like most analysts....these folks don't have a mortgage on being right....if it were that easy we'd all get rich following their lead. Most folks who were really paying attention realized that his original $3.00 price prediction was ''generous'' to say the least......but it's those heady predictions that facilitate placing all that stock at a buck. It didn't take long to get the downward revision to $1.65 or so, and I queried at that time on this board how long it would take to get another revision....and you just got it down to 65 cents......ya' gotta' let the air outa' the balloon gently ...right.
So...were they 'sucked in'.....hardly....they chose to get involved. I'm sure neither is genuinely thrilled with the outcome at this pint......Cleland invests other peoples money....he loses some and wins some. Research made the commission....Kafavian still gets paid....the little guys who put up the money are the ultimate losers ....and the merry-go-round continues. Everybody can conveniently just write it off to the bad markets at this point....but the downtrend on AMA was firmly established before the markets imploded.
Penny stocks generally are a great game of stories, money, and dreams. Much like any gambling casino the odds are against you.....it's fairly predictable who tells the story, who ends up with the money, and who the lucky ones are that end up with only the hollow dreams.