I like to watch the stocks of companies that can be classified as off-beat sometimes.
Like Ginger Beef Corporation (
TSX:V.GB,
Stock Forum), which supplies, well, ginger beef to restaurants and retail (problem with their stock: a half hour after you buy it, you want to buy more).
Or Odyssey Marine Exploration (
NASDAQ:OMEX,
Stock Forum), which hunts for buried treasure (and has been leaking for years).
Or the $100m market cap strip club giant, Ricks Cabaret International (
NASDAQ:RICK,
Stock Forum), (where 'yield' has an entirely different meaning).
There’s more: International Absorbents makes stinky pet solutions. The Female Health Company (
NASDAQ:FHCO,
Stock Forum) sells female condoms (and has a $259m market cap!).
But one company has popped up on some screens of late as a big mover and simply must be explored further because, well, come on: The Psychic Friends Network! (
OBB:PFNI,
Stock Forum).
PFN has a chequered past. It was the biggest infomercial in history back in the 1990’s when singer Dionne Warwick used to pump the company’s lineup of ‘hand-picked psychics’ that you could call with a 1-900 number for just $3.99 a minute.
Then along came Miss Cleo (“
Callmenow!”) who drank PFN’s milkshake, a lawsuit from star psychic claiming the company had stopped paying her, and some 18 other different lawsuits filed against the company for breach of contract and lack of payment.
Then there were ongoing wars with phone company providers who insisted on keeping large ‘holdbacks’ on PFN calls due to the large amount of disputes filed.
All of that left the one-time $100 million company in bankrupt bits – something you would expect they could have seen coming if they knew a psychic or two.
Instead, PFN called upon Gary Coleman and Isaac from the Love Boat to hype their product. Because who inspires credibility more than an 80’s TV bartender with a winning smile?
But the Psychic Friends, like the Superfriends, are hard to keep down. In fact, they were just getting started.
Michael Lasky, the man who built (and ultimately oversaw the demise) of the company repurchased the rights in 2011 and rebirthed it as an online entity, featuring Vivica A. Fox as a spokesperson… that is, until she ordered the company to cease and desist using her image.
Unperturbed, Lasky sent the company public and promised to use ‘new technologies’ to surpass the $1 billion in
earnings he claimed the previous incarnation of the company had brought home.
The pinks stock jumped high upon release, on the back of ferocious stock promotion and, let’s face it, straight out irony, with seven of the first eight trading days showing big gains and the price moving above $1 per share.
For the next six months however, things drifted, as some investors perhaps realized that a website with hundreds of online chatrooms was pretty close to the model the porn industry was running, only with less attractive participants and a lot more Krishna wall hangings in the background.
It all came crashing down in December 2012 when a meeting of the shareholders saw
this happen:
PROPOSAL NO. 1:
Result: The Company's shareholders set the size of the Company's board of
directors at two directors.
Votes:
------
2 directors: 32,990,280
5 directors: 19,737,760
Abstain: 4,000
PROPOSAL NO. 2:
As the Company's shareholders had set the size of the board of directors at two, according to plurality voting, the two directors receiving the most ‘For’ votes were elected to the board of directors.
Result: Marc Lasky and Mike Lasky were elected to the board of directors.
Votes:
------
Nominee For Withhold
------- --- --------
Mark Lasky 33,005,290 19,726,750
Mike Lasky 33,002,610 19,729,430
Peter Newton 19,740,040 32,992,000
Kelly Anderson 19,738,360 32,993,680
If you need a translation, the Lasky family, having bought up (and, yes, gifted themselves) a bunch of stock, voted the board of directors down to two people, which saw the other two major shareholders booted out and replaced them with, oh, the Lasky family.
Added bonus: They then voted themselves a pay package, and set the next vote on their compensation package for three years down the line, instead of the established one.
The share price duly crashed to the 10c range. From there, it was all thumb twiddling until the price eventually floored at $0.01 per share.
But, this past October, something weird began to stir in the dark depressing cesspit of the Psychic Friends Network share price. It nudged up. And up. And up still.
Right now, it’s just below $0.06 per share, which doesn’t sound impressive until you remember that’s a 500% share increase in a month. Which is why, all of a sudden, the stock is being noticed.
There’s also been an onslaught of news releases from the company – everything from content sharing deals with
unknown websites to how it’s “surging on social media” (while
showing absolutely no evidence of a surge) to the release of apps and the promise of upcoming
TV ads and
YouTube marketing and Ad Words SEO.
The company also points to a 2009 report from Pew Research Center that says “15% of Americans have consulted with a psychic or fortune-teller for advice, […] 26% saying they believe in spiritual energy located in physical things such as mountains, trees or crystals, and 25% professing belief in astrology.”
Look, there’s nothing wrong with profiting from a weirdly run company. It doesn’t really matter whether you get profits from sound business management or a bizarre streak of ironic consumer interest but, though the Psychic Friends story is definitely a weird one, it doesn’t exactly demonstrate sound business practices or leadership or financial wherewithal.
But it’s moving. And it’s cheap. And even a small nudge up will potentially bring big percentage gains.
So I did the only thing one can do in trying to determine whether PFNI is worth grabbing: I contacted a psychic on their network.
Let’s call her Cecelia, so she doesn’t get in any trouble.
CECELIA: Hello! Welcome to my room! Are you having a great day?
ME: Hi Celelia! I’m Chris. I have a business question I need help with.
CECELIA: Okay lets hear it.
ME: I’m considering investing in a company, it goes by the ticker symbol PFNI. The people running it claim it’s going great and that it’s going to make a billion dollars, but it’s been losing money for a few years now and the share price is really low.
CECELIA: What does this company do?
ME: Shouldn’t you be able to tell me? Haha. I guess you get that a lot.
CECELIA: Yes. What does the company do?
ME: It’s like a chatline for sad people...
CECELIA: I see. And its losing money?
ME: It appears that way.
CECELIA: Im not getting a good feeling about this. I think you should put your money somewhere else.
ME: But they have apps!
CECELIA: Yes but no its not a good idea. You know how they say a fool and his money are parted? Don’t be a fool here. I get a bad feeling from this company.
ME: Yeah, me too, now that you mention it.
CECELIA: That is your inner eye seeing the truth. You are opening up to energies that will point you in the right direction.
ME: You have wisdom, Cecelia.
CECELIA: LOL well I like to help people. You keep your money away from this company okay?
ME: I will, I will. I guess that means I should end this chat now since the company is charging me $1 a minute.
CECELIA: No we still have more to talk ab… (click).
Shares in Psychic Friends Network rested at $0.0598 at the end of Friday trading.
My gut feeling tells me to go take another look at Ginger Beef.