Borislav Tonev

Newsletters Join The Party For Sanborn Resources Ltd (OTCBB:SANB)

by Borislav Tonev July 30, 2013
23SANB.pngNormally, when a new company starts trading publicly, the first couple of months aren't particularly interesting. We often see a sort of "incubation period" during which, traders wait for some press releases, official SEC filings and they generally get to know the ticker and the management team that stands behind it. Apparently, some people decided that Sanborn Resources Ltd (OTCBB:SANB, SANB message board) doesn't need such a thing.

The ticker (which was changed a couple of months ago) actually served as a vehicle for Sanborn to go public. Up until April, the publicly traded venture (then called Universal Tech Corp) was dealing with the retail sale of works of art, but then, for reasons that are not very well explained, the people who run SANB decided to perform a stock split, raise the number of authorized shares to 100 million, change the name and present the traders with what is basically a brand new company. Some mineral rights were bought from Rae Wallace Mining, Co. (OTCMKTS:RAEW) and all these steps meant that the stage was set for a stock promotion.

Unfortunately, we can't be 100% certain when the pump actually began since it is a bit on the unconventional side. Instead of the usual touting via the emails, snail mail and landing pages, the pumpers decided that this time the best way to entice people into buying in on SANB is an article on a website that was designed to look like a serious media. It's called Financier Times and if you check out the narrative itself, you'll see that it's all full of optimism and bright projections, but when we were researching the company for the first time, we weren't able to see why the author seems to be so excited about SANB.

It is indeed mightily confusing at first since you see this rather well-made informational website which appears to be covering all the latest news around the world and then, all of a sudden, there's SANB who, just a couple of weeks ago, were a virtually dormant company sitting firmly at $0.27 per share. Take a closer look however, and you'll see exactly what's going on.

All the articles considering big companies like Dell Inc. (NASDAQ:DELL), Siemens AG (ADR) (NYSE:SI), Apple Inc. (NASDAQ:AAPL) etc. are copies of coverages made by real journalists at Wall Street Journal (WSJ) and under most of them, there is a disclaimer noting when the material first saw the light of day. The article about SANB however, wasn't written by journalists at the WSJ. Partly because a newspaper this big can't be bothered to write about small cap mining companies with big hopes and even bigger zeros under the revenues sections, and partly because if WSJ had been the ones covering SANB, they wouldn't have been so optimistic about the whole thing. Which, apparently, is the point for the people who commissioned the coverage since according to the fine print at the bottom of the page, they paid $3 million for what is nothing more than a pump job.

Naturally enough, this did have an effect on the stock and as you can see from the chart at the beginning of the article, there were a couple of spikes. During the first one SANB reached as much as $0.60 per share at one point only to drop to some more realistic (although, still overvalued) figures but it jumped back again this time falling just short of $0.50 after which it came crashing down once again.

Apparently, the people who shed millions of dollars on touting SANB aren't happy with the way things are going and so, they called the paid newsletters. Just minutes after yesterday's opening bell, an email from David Cohen a/k/a Research Driven Investor came in. We were alerted once again about an hour after the close and the two emails apparently cost $15,000. They did have an effect on the performance though. SANB bounced yesterday reaching as much as 1.8 million shares in trading volume and adding 25% to its value.

Today's performance also seems rather strong. About an hour after the opening bell, the ticker has yet to fall below the yesterday's close which means that some of the traders who bought in on the dip could be presented with an opportunity for a profit. That said, there's absolutely no one that can say for sure when the next backlash will leave quite a lot of people out of pocket.

65NHUR.pngIf you still think that the run from the yesterday could turn into a starting point of something really big, you might want to take a look at the chart on the right. It's the one for Northumberland Resources Inc (OTCMKTS:NHUR) and the reason we picked this particular ticker is very simple. NHUR's stock was pumped recently and the promoters used a similarly optimistic article on the same exact website as well as some alerts through the emails. We knew right from the start that NHUR is an extremely risky play and right now SANB is no different. That's why staying away might not be a bad call. Especially if you can't afford to lose a significant part of your investment.

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