RE:RE:Proceed With CautionSomeone sent me this from a financial advisory firm - good read! :)
"In regards to NeuLion, the “news”, as you call it, is nothing more than a scheme to take people’s money by preying on their fears and ignorance. The firm that press released this ambiguous charge is nothing more than a front for the shorts, in my humble opinion. For all I know they themselves are the shorts, or have a profit-sharing agreement with the shorts. The shorts have been positioning themselves for this trade for the past few weeks. The price drop today gives them the opportunity to close their position at a nice profit. In regards to the actual allegation, it is utterly absurd. At least 60% of the stock is owned by the insiders, which include Charles Wang and his wife, a private equity firm called Parallax (that sold NLN a portfolio company called DivX for NLN shares), and the rest of management & the Board. Any actions that causes damage to shareholders, as the charge seems to suggest, hurts these insiders more than anyone else.
It appears to us that this law firm is, as you call it, an “ambulance chaser”. Its website says almost nothing about its longevity and little about its track record. There are just three principals, with little to recommend them. Their office is in a 3rd rate building that leases space for very little. Previous cases mentioned on the site are three years old, and most involve puny amounts for which it’s hard to see this firm profiting. The whole thing looks very shady. They press release these sorts of things constantly. Two days ago they press released identical charges for two small biotech companies. Last month they press released on Autodesk, a big company. I can find no evidence that any of these charges have ever stuck, and in all the cases I looked at (other than NLN) the stock market ignored them.
We own shares in NLN because we think there’s a decent chance the company will be sold later this year, for $2 or more. We could be wrong, but that’s our thesis.