22nd Century (XXII) Announcements = Promos, Dilution, Institutional Selling
by Sonya Colberg, Senior Editor - 6/19/2017 10:12:56 AM
TheStreetSweeper issues a quick update for anyone caught up in 22nd Century Group’s (XXII) smoke.
The third-party promotions just keep on coming as this off-brand low-nicotine cigarette company attempts to justify its $165 million market valuation.
Now, the second-hand smoke from this Clarence, New York company (here) may be poised to kill the average investment portfolio, thanks to:
*Promotions, Promotions, Promotions
The company last Friday hyped a previously hyped meeting with the Food and Drug Administration … an announcement (here) ultimately tied to paid promotions and stock dilution.
We’ve seen these “very encouraging and productive” meetings before with other companies. This hype, in our view, amounts to nothing more than an effort to pump up the stock price. The press release concludes XXII will simply continue with its modified risk tobacco product (MRTP) application. This appears to be just self-promotion. No news.
The company's additional recent promotion came as an announcement about an XXII-sponsored survey on low-nicotine cigarettes.
That's not all, of course. More hype has been puffed out... via third-party promotions.
A hype-maker called TheStockExpert pumped out a series of late-week promotional emails, including:
“This could be your last opportunity to get in at these levels. Make sure to continue to closely watch XXII for today because we expect to see this one continue its trend of gains today.”
And this:
The real surprise is what some unbelievably kind-hearted third party has paid to get XXII pumped:
“TheStockExpert.com has been compensated $12,500 dollars by a third party (Sunrise Media, LLC) for an investor awareness campaign regarding XXII. TheStockExpert.com was previously compensated $20,000 dollars for an investor awareness campaign regarding XXII, which has expired.”
A week earlier and a month before that, hype outfits called Small Cap Traders and Road Runner Stocks reeled out more promotions:
(Source: stockpromoters.com)
The jaw-dropping total number of promotional campaigns going back to 2011?
37!
The SEC has warned that paid promotions too often become the key part of pump-and-dump schemes. We just can’t jump up and slam the table hard enough to warn investors that these promotions amplify the risky nature of money-losing XXII.
The stock has virtually survived on promotions.
And now this …
*Dilution
Just this morning, the company filed for $1 warrants to purchase up to 7 million shares, plus $1.45 per share warrants for up to 4.25 million shares.
What does this mean to average earlier shareholders? Dilution of about 12.5%.
Seeing your shares get watered down is never a good feeling... especially at such a high level.
*Institutions Yell “Sell!”
Meanwhile, the big investment banks are avoiding XXII. With teams of researchers devoted to in-depth analysis, institutions can offer a level of comfort to individual investors. The absence of these big funds is a big concern. Indeed, we see that XXII’s institutional ownership is a very low 5.52%.
Even more concerning is that institutions are selling their stock in XXII:
(Source: Nasdaq)
*Conclusion
XXII offers no news, more third-party paid promotions to hype its imaginary news, institutions selling stock and more stock dilution. We believe all this smoke will spark a near-term drop in the stock of 30%.
