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Hooooooooooooooray Billy!
Now he has an excuse to come visit more often! LOL
Great job B & K!
+Oh, and my mistake. Actually OT was busy behind the scenes taking care of the rif raf.
Once agsin wrong:
DKAM
Short Interest Date Short Interest % Change Avg. Daily Share Volume Days to Cover Split New Issue
Jun 30, 2008 25,845 -11.72 98,675 1.00 No No
Jun 13, 2008 29,276 33.35 143,732 1.00 No No
May 30, 2008 21,955 -58.73 79,965 1.00 No No
May 15, 2008 53,202 12.13 162,610 1.00 No No
Short-Sellers Spin Themselves Silly, SEC Sounds Strong
July 24th, 2008 by Mark Mitchell
After years of intermittently ignoring and whitewashing one of history’s biggest financial swindles, the Wall Street Journal today, for the first time, published some basic truths about the crime: “Illegitimate naked short selling is different from [legal short-selling]…this kind of manipulative activity can have drastic consequences…Eliminating the prospect of naked short selling will help assure investors that… when the market declines it is not because of unseen manipulators and `distort and short’ artists.”
Unfortunately, these words were not written by some enterprising journalist seeking to nail the criminal hedge funds who have manufactured billions of phantom shares (shares sold “naked” because they don’t exist) while using other dubious tactics – such as publishing false “independent” financial research, working with a crooked law firm (the recently indicted Milberg, Weiss) to saddle companies with bogus class action lawsuits, hiring thugs and private investigators to harass corporate executives, orchestrating dead-end government investigations, employing armies of basement-dwelling creeps to bash companies and smear reputations on Internet message boards, and feeding distorted and maliciously false information to compliant or naïve journalists – all part of a massive, collusive effort to destroy public companies for profit.
No, sadly for anyone who cares about the state of our financial markets and media, those crimes go mostly unreported. And as for the few basic truths that appeared in today’s Wall Street Journal, they were not products of any journalistic effort. They were, rather, the words of SEC Chairman Christopher Cox, who managed (no doubt, with some difficulty) to convince the Journal to publish an op-ed wherein he explains why he had to issue an “emergency order” to prevent abusive short-selling from crashing the American financial system.
Why is this not front page news? Why is the Journal not clamoring for the criminals to be put away?
We’ve noted that The Wall Street Journal’s “Money & Investing” section, which covers the hedge fund beat, was once under the control of editor David Kansas, who was known for unleashing reporters on companies targeted by his long-time short-selling friends, while ignoring, with seemingly purposeful intent, all evidence suggesting that his friends were up to no good. Kansas, I believe, was the principal reason why the Journal long held back from investigating the naked short selling scandal.
But Kansas and some of his comrades have left the Journal, and I believe most of the paper’s other reporters are well-intentioned. It’s just that this is a complicated story – it can take time to wade through the grim data, to see for yourself the rapes in progress, and to come to terms with the ugly dimensions of the problem. It’s all the harder when you’re having smoke blown in your face by people whom, for whatever mistaken reasons, you have come to respect.
It is no coincidence that Jim Chanos, manager of hedge fund Kynikos Associates, was elected chairman of the Coalition of Private Investment Companies, the hedge fund lobbying and PR outfit. Chanos is the guy who helped Fortune Magazine’s Bethany McLean break the Enron story. Ever since, he’s been the David Koresh of media, convincing a cohort of zombified journalists that he can bestow blessed immortality — the next big scoop. The reporters swoon to this guru’s sermons, even when they sense that there is something untrue – even when, Waco-like, the authorities are closing in and a gruesome end is nigh.
Chanos has been busy dishing out the usual proselytizations: short-selling is good for the markets, short-sellers help root out bad companies like Enron, short-sellers are victims – nice fellows under attack by crazies and people who don’t like free markets. “We’re on the side of the angels,” Chanos proclaimed yesterday, clearly hoping that the media’s cries of “Amen!” would drown out the rumblings of a government that finally seems to be waking up to the notion that while there is nothing wrong with short-sellers, and free markets are swell, there is something not so good, and not so free, about a market getting pummeled by peddlers of fake stock and false information.
Chanos and his followers should throw in the towel. Contrary to our earlier concerns, it seems like the SEC is blowing off the hedge fund lobby and its media followers. Short-sellers of stocks in 19 financial companies have actually been forced to borrow real shares — not just locate them; not just say “yeah, yeah, my buddy in Staten Island’s got ‘em in his drawer,” but have real shares in hand before selling them. Even better, Cox said today that he intends to expand the enforcement across the entire market. We’ll see if he follows through.
Perhaps to avoid panic, the SEC Chairman has said that his emergency order was a preventive step, and was not meant to suggest that naked short-selling of the financial stocks was already rampant. But we know from SEC data that more than $6 billion worth of shares go undelivered every day. We know further that the phantom stock has been targeted at specific companies, including Bear Stearns, which saw as many as 13 million shares fail to deliver in its final days. Much more naked shorting takes place “ex-clearing” – for which no public data exists.
The immediate results of the SEC’s emergency order speak to just how big the ex-clearing problem is. Since Monday, when the order took effect, short-selling of the affected companies has decreased by 70 percent – and 90 percent in the cases of Fannie Mae and Freddie Mac. It is safe to say that a lot of that reduction is attributable to hedge funds that were previously selling shares without borrowing them. Now extrapolate to the entire market. We know that short-sales make up around 30 percent of total market volume. If we knock some points off that 70 percent number and decide that, say, half of short-selling has been naked – then 15% of total market volume on any given day could be phantom stock.
That is an admittedly rough number. The fact is, we just don’t know the exact figure. But as evidence for the hypothesis that the number is, in fact, even larger, consider that Chanos and friends insist that the SEC’s restrictions on illegitimate naked short selling will seriously reduce “liquidity” in the markets. Some Wall Street lobbyists have even suggested to the SEC that the New York Stock Exchange would have to temporarily shut its doors if the SEC were to enforce its emergency order market-wide.
In other words, people like Chanos (who has denied that he has ever participated in naked short selling and has previously expressed surprise that it even occurs) is now saying that the practice is so widespread that the markets cannot function without it. The market’s “liquidity” depends on illegitimate naked short selling. Without the phantom stock which predominates in our markets, nobody would know what to do–prices would go haywire, there’d be total chaos.
All of which is reminiscent of the SEC’s earlier weird statements that naked short selling occurs rarely, but there’s so much naked short selling that enforcing rules against it might “create excess market volatility.”
If you’re a journalist, and you’re still confused, just wrap your head around this: even the hedge funds now admit that a very significant chunk of the stock that they sell cannot be readily borrowed. It cannot be borrowed, because it does not exist. This massive supply of phantom stock is what is setting prices in our supposedly “free market.”
It is a recipe for financial meltdown It is the scandal of a lifetime. And the financial media fiddles.
Posted in The Mitchell Report | 26 Comments »
We Love Jim Cramer
July 23rd, 2008 by Mark Mitchell
“…the most falsely over-weighted topic on Wall Street these days is naked shorting…the concept of not finding shares before you short them, not locating them, is something that happens very rarely…”
- Jim Cramer, TheStreet.com, February 5, 2006
Do you believe in redemption?
In “The Story of Deep Capture,” we noted that CNBC’s Jim Cramer is at the center of a clique of dishonest journalists (most of them former employees of Cramer’s website, TheStreet.com) who have spent many years taking dictation for short selling hedge funds (most of them connected to Cramer). These same journalists, we pointed out, have steadfastly denied that hedge funds commit crimes or that illegal naked short selling is a big problem.
On the day after we published “The Story of Deep Capture,” Cramer went on CNBC to say that illegal naked short selling is a big problem.
This was the first time he had ever said such a thing, and he didn’t mince words. Comparing today’s hedge fund crimes to the short selling that contributed to the great stock market crash of 1929, he said, “We know that there was a lot of time spent in the 30s analyzing this issue and deciding that it was very easy to create a bear raid…What I’m trying to eliminate is the kind of bear raid…where people didn’t borrow stock [i.e., where they conducted illegal naked short-selling].”
Cramer was quiet on the issue after that. But last week, the SEC issued an “emergency order” suggesting that naked short-selling had the potential to topple the American financial system.
That evening, Cramer said, for the second time in his career, that naked short selling is a big problem. He said that, in fact, all along, “We’ve been on a crusade on this show…it’s a crusade to bring back honest short-sellers…Right now hedge funds, if they don’t like a stock, can just attack it by calling brokers and punishing the stocks, blitzing them down [by selling stock that they have not borrowed – naked short-selling].”
Meanwhile, the rest of the CNBC staff went to lengths to suggest that short-sellers are good people who do no wrong – that the SEC’s emergency order was some kind of witch hunt. The folks at CNBC also seemed keen to erase their own culpability in the short-seller attack that is widely believed to have destroyed Bear Stearns.
Strangely, Charlie Gasparino, who has been one of the few CNBC reporters to acknowledge short-seller shenanigans (he once called Deep Capture reporter Patrick Byrne a “hero” for raising awareness of the problem), suddenly pronounced that people who believe that short-sellers destroyed Bear Stearns are all “morons” because hedge funds were pulling their money out of the bank “before all the CNBC chatter” [i.e., before CNBC’s David Faber sparked a panic by airing, as if it were fact, the scurrilous hedge fund lie that Goldman Sachs had cut off Bear’s credit].
This was somewhat in contradiction to Gasparino’s earlier suggestion that hedge funds had precipitated the demise of Bear Stearns. “If you look at the way Bear Stearns imploded,” he said in April, “it didn’t go down in a couple of months, it went down in a week. And if you look at what happened, it’s clients, which were hedge funds - these are the people that…trade with the firm. They precipitously started pulling cash while - while they were going short…”
Indeed, we challenge CNBC to name more than one hedge fund that had pulled out its cash before its reporter, David Faber, aired that well-timed fabrication on Wednesday, March 12 . We’ll say it again: The SEC should subpoena Faber to find out which hedge fund (perhaps illegally) fed him the false news.
In any case, Gasparino now says critics of short-sellers are “morons.” The rest of CNBC has not seen fit to interview the many experts who believe illegal naked short selling is threatening the stability of the American financial system, and has instead lined up people like Cramer pal Joe Nocera, of the New York Times, and Michael Steinhardt, the hedge fund manager who incubated Cramer’s first hedge fund. These people have reinforced the party line that short-sellers are the market’s “vital” untouchables while failing to address the data – the billions of phantom shares that crooked hedge funds have manufactured through naked short selling.
Thus, surreally, the only person on CNBC now acknowledging the scope of the problem is the one journalist who has done the most to cover it up – Jim Cramer. And Cramer is not just acknowledging the problem, he’s telling us how angry it makes him. I mean, we at Deep Capture have done our fair share of ranting about naked short selling, but our efforts pale in comparison to the 15-minute tirade that Jim Cramer launched against the SEC for failing to stop the law-breaking short sellers who are “viciously and quickly” driving down stock prices [tirade accompanied, literally, by a soundtrack of emergency sirens].
What to make of this?
We’ve given up trying to psychoanalyze the singular Jim Cramer. Maybe he sees where the wind is blowing and is trying to distance himself from his hedge fund cronies. Maybe CNBC has heard the critics who have been hollering for years that Cramer’s clique was running rampant, while Gasparino was the only reporter on CNBC who could be objective about short-sellers’ crimes. Maybe to neutralize that criticism, CNBC is flipping everything on its head. We’ve seen stranger goings-on at Cirque du CNBC.
But it doesn’t matter. We’d like to give Jim Cramer a hug. Yes, Jim, come on over — you bear, you — and give us a great big hug.
There is always the possibility that you are legitimately horrified by the destruction that illegal short-selling has wrought. Maybe you even feel a bit guilty about the role you have played.
Well, we feel your pain. All is forgiven. Come and give us that hug.
Sure, it’s beyond the pale for you to suggest that you’ve been on our “crusade” all along, but we’ll give you points for chutzpah. We’ll also give you points for taking a stance that will no doubt alienate you from some of your closest friends.
Most importantly, we give you points for speaking the truth – and doing it well. Although your speechifying against the problem of illegal naked short selling seems strangely timed, it has been unequivocal, incisive, and no doubt convincing to a great many people.
“Would you call me crazy?” you asked on CNBC, as a prelude to your 15 minute rant against the naked short selling problem. Yes, Jim, we would — but crazy ain’t such a bad thing to be, so long as you’re saying it like it is, and doing the world good.
Welcome to the Deep Capture team.
(Or….maybe not. Here’s a question for the long-time crusaders – the hundreds of good people who have been hollering about the problem of naked short-selling for years (you’re all members of the Deep Capture team, as far as we’re concerned): Do you believe that Cramer is truly reformed? Is he going to continue highlighting short-seller crimes. Can he really be one of us? Let us know what you think).
Posted in The Mitchell Report |
How Naked Short Sellers and CNBC Bamboozled the SEC
July 21st, 2008 by Mark Mitchell
You can bet that the hedge fund talking points were rolling off the CNBC fax machine last week, and really, the network did a stellar job – right on par with the high-powered lobbyists in Washington. Yes, the folks at CNBC should join hands with those lobbyists, and take a deep bow. It was a heck of a show – a real extravaganza.
I doubt the American people even know what hit them.
It is hard to believe, given that the news has so quickly disappeared from the front pages, but the SEC last Tuesday issued an historic “emergency order” to head off financial apocalypse by preventing criminals from “naked short selling” the stock of 19 big finance companies.
The SEC’s move was kind of weird (Why only 19 companies?) but it was gratifying to Deep Capture and a band of crusaders who have long been hollering that crooked hedge funds use naked short selling (selling stock that has not been purchased or borrowed, and usually does not exist – i.e., phantom stock) to drive down prices and destroy public companies for profit.
For years, arrogant journalists brushed off the crusaders, while a pack of dishonest, but influential reporters with close ties to hedge funds harassed and ridiculed them (see, “The Story of Deep Capture”). Meanwhile, government agencies denied that phantom stock was a problem. SEC Director of Trading and Markets James Brigagliano once referred to the crusaders as “bozos.”
But on Tuesday…well, here was something altogether different. The SEC said that phantom stock was not just a problem; it was an “emergency” that had the potential to crash the nation’s financial system.
In other words, the bozos were right!
Well, we cheered, and then we closed our eyes to take in that warm glow of vindication. My eyes were closed a bit too long, I’m afraid, because I missed the curtain opening on Cirque du CNBC and its amazing spectacles – great feats of flimflammery, upside down speechifying, all manner of contortionism and illusion.
Within three days, this grim circus, with a lot of help from the mighty hedge fund lobby, would reduce the SEC’s “emergency order” to a twisted joke – a grand gesture to do nothing whatsoever.
The day after the SEC’s declaration, the circus was already well under way, with the hedge funds spinning furiously and their media marionettes singing the party line: short sellers are “vital” to free markets; everybody loves free markets; only bad companies and bad CEOs complain about short sellers – go investigate the CEOs, hands off the “vital” hedge fund managers.
As for billions of dollars of phantom stock threatening to topple the American financial system – don’t even mention it. If somebody does, repeat, over and over, “Only bad companies complain about shorts…shorts are vital”
I sketch out the hedge fund party line only for those who are new to the so-called “debate” over naked short-selling. If you’re a long-time crusader, you’ve heard it all before. You’ve heard it on CNBC so often that you’re probably now banging your head against a wall and saying something like, “oogly oogly oogly,” half-mad with incomprehension – still unable to come to terms with the utterly surreal spectacle of an important television news network, in the United States of America, completely whitewashing a massive crime.
By the time CNBC interviewed SEC Chairman Christopher Cox on Wednesday, the top market cop seemed to have become rather befuddled by it all. Amidst the incessant chants — “bad CEO’s…vital short-sellers” — Cox backed away from his earlier suggestion that he might extend the emergency order to protect the entire market, rather than just 19 big financial firms with ties to Wall Street.
Meanwhile, Chairman Cox suggested, preposterously, that it’s somehow more acceptable to naked short smaller companies because their shares are harder to locate and borrow. This is something only a hedge fund contortionist would say. There are always shares to borrow at some price, and a tough borrowing environment hardly justifies selling millions of non-existent shares to drive down prices.
But we sympathize with Mr. Cox. While the CNBC lady suggested that the SEC should investigate bad companies instead of shorts, and questioned whether the SEC had initiated some kind of “witch hunt” against short-sellers generally, the chairman labored valiantly to point out the obvious (though apparently not to CNBC) distinction between legal short-selling and the blatantly illegal practice of spreading maliciously false information while selling non-existent stock to create panic and drive down prices.
Mr. Cox seemed like he wanted to do the right thing. It’s just that Cirque du CNBC can be a rather discombobulating place.
Moments before the SEC Chairman was interviewed, circus clown Joe Nocera, who doubles as the New York Times’ top business columnist, was on CNBC, working up the crowd by suggesting that Mr. Cox had lost his mind and was doing the bidding of bad companies and stupid people “saying woe is us, woe is us, blame it on the shorts.”
Remember, Joe Nocera is the anti-investigative journalist whom Deep Capture has tape recorded telling some of his media colleagues that the naked short-selling scandal “makes his eyes glaze over,” and he isn’t going to look into it because “life is too short.”
Far easier to read from the script: “Bad companies! Vital shorts!”
The next day, CNBC had yet to televise any of the CEOs, economists, and many other experts who agree that the phantom stock problem is, indeed, an “emergency.” Instead, the network brought on hedge fund cronies to say that their hedge fund cronies are “vital.”
Predictably, CNBC did a long interview with the dreaded Michael Steinhardt, a mentor and incubator of some of the most notorious short-and-distort hedge funds in the land. Steinhardt, for example, once employed David Rocker, who has regularly used the media (most notably, CNBC’s Herb Greenberg) and a dubious financial research shop called Gradient Analytics to disseminate misleading information about target companies, most of which are also victimized by massive levels of phantom stock. Jim Cramer, CNBC’s top-rated “journalist,” once ran a hedge fund out of Steinhardt’s offices, and CNBC’s “Money Honey,” Maria Bartiromo is married to the top partner in Steinhardt’s newest fund.
These are the sorts of relationships that prevail at CNBC. Our critics say it is too “conspiratorial” to point out these relationships, but we believe otherwise. Watch CNBC. Observe the lubrications that are lathered on favored hedge funds. Then judge for yourself.
Steinhardt didn’t have much to say about hedge funds that destroy public companies by selling billions of dollars of phantom stock while publishing false financial information, colluding with crooked law firms to file class action lawsuits, orchestrating dead-end government investigations, hiring convicted criminals and thugs to harass CEOs, and feeding false information to compliant journalists. Indeed, he didn’t have much to say at all, except the predictable mantra that all the “moaning and groaning” about short-sellers comes from bad companies and silly people who are angry about falling stock prices.
Participating in this interview was Paul Roth, another hedge fund manager who was mentored by Steinhardt. When asked whether it would be a problem if, say, a hedge fund were to sell ten times as many shares as actually exist in a company, Roth said, “That’s not illegal…the problem is sometimes you located the shares [and sold them] but somebody scooped them up [before you could deliver them to their rightful owners].”
CNBC’s Joe Kernen, who conducted the interview, characteristically let this statement go unchallenged. So let us state, for the record, that it would be a crime of monumental proportions to sell, say, 1,000 shares in a company that had only 100 shares outstanding. It is a crime because you cannot possibly “locate” or “scoop up” 900 shares that do not exist. It is a crime because there is only one possible reason why a hedge fund would sell ten-times a company’s public float, and that’s to manipulate the stock price.
But understand how these people think: If you can get away with it, it’s not illegal.
Around the same time that CNBC was massaging Steinhardt and Roth, members of the Securities Industry and Financial Markets Association, the leading Wall Street lobbying outfit, were on a conference call with some high-level SEC officials.
As it were, none of the hundreds of companies victimized by phantom stock got to be on any conference calls. But they’re used to that.
They’re also not too surprised that after CNBC aired the hedge funds’ talking points for three days, and the lobbyists wailed on the conference call, and uncounted other hedge fund billionaires bellowed in the name of “efficient markets” and the right to destroy “bad” public companies, the SEC announced that it would preserve its “market maker exemption,” which allows some brokers to sell stock they don’t have in order to “make a market.”
The “market maker exception” is one of several loopholes that hedge funds have been using for years to create billions of dollars worth of phantom stock. Market makers are, in fact, required to eventually deliver the stock they sell. But the name “market maker” imbues magic powers. If the SEC asks why you haven’t delivered the shares you sold, stick the words “market maker” on your forehead, mutter something about keeping things “liquid”, and the SEC goes away — even when you’ve sold ten times the float and even when the phantom stock goes undelivered for months or years at a time.
Since it was already against SEC rules to use naked short selling to drive down prices, the most exceptional feature of the commission’s “emergency order” was that it was going to close the “market maker exception” loophole – at least as it applied to trading in 19 big financial companies. By retaining that exception, the SEC has, in essence, decided that it isn’t going to do anything after all. Hedge funds and their “market makers” can go right on selling phantom stock and threatening the stability of the American financial system.
From “emergency” to “exception” in a few short days…Behold the powers of Cirque du CNBC and its hedge fund choreographers.
Posted in The Mitchell Report
Actually everyone would do well to listen to this over the weekend.
http://groups.google.com/group/total_truth_sciences/browse_thread/thread/aca790ad0e71d94b
Then once you simmer down, you know what to do.
Legislators, Interstate Commerce Commssion, DOJ, SEC, CEO, and DTCC. It only takes a few phone calls. It's your constitutional right.
See, the last thing these guys expect is the one thing they rely on. Being able to willingly send a sell order and have it execute. When they suddenly find they are no longer allow to execute an order and the DOJ and FBO are knocking on the door is the last day they ever trade a stock. They get hauled away and the whole time, their ex clearing short just loses monumental millions.
Off shore or not, they will suddenly not be able to place an order. Who cares if NITE and UBSS go to jail. That's the chance they take by creating a market. Their lack of policing their own orders system makes them an immediate accessory. NITE and UBSS will go to jail also. And we know right who to go to at both since they've both been brought up on numerous charges before and found guilty. That's why SBSH pulled out. They knew they were about to get busted also.
Rilo? As soon as we put two and two together on The Rolling Stones suddenly 250000 shares just couldn't stand to hold onto the stock a second longer. I talked to "everybody" and with all smiles, they figured out how to make these guys go bankrupt with the SEC watching to see if they sell another share.
It's perfect.
I kept up the fort while you were gone. I watched a couple little hands bail because there was no bid support and nobody paying the ask since 1999. They even fed a new program in that throws a block into the bid the instant any order hits the ask. Kenny and the Board watched it the past two days and are all over it for prosecution as nobody is selling per their readouts.
Also 2008 is not done. I found out something today from an analyst that will knock your socks off.
Alot of faces missing today. Actually it was noticed at .295. .23-.26 says they will not get back in. Always the way it goes. Flush the up. Flush the down. Stock takes off on a meteoric run.
We have a new program on the stock. Any order that executes at the ask immediately excutes a block into the bid. The guys manipulating the stock got highly irritated it went up for a couple days.
Because it had the audacity to go higher and has every reason to go much higher. That's why you got filled. Small caps are soaring everywhere. NITE making sure this one doesn't.
Your feel good post for the rest of the year!
Kenny forms DKAM as Global Brands whiz kid with Seagrams.
Kenny goes out and signs Universal and Interscope to a line of iconic beverages
Kenny signs Dr. Dre under his Aftermath label of which Dre sold a 30% stake to Universal Interscope.
Vivendi buys Universal
Vivendi Universal buys Seagrams in 2000 and turns right around and sells it for big profit to Pernod/Diageo
OK, lead brick up side of the head time. Reuters reports celeb-preneurs the only double digit drowth sector of the beverage biz. Over 20% in fact.
There is no doubt in my mind now. DKAM is being primped and set up for the ultimate buyout. That's why Kenny turned down deals last year.
Let the Big Party gather all they want down here. They will take us where we need to go. It's obvious now.
1. Earnings, CC
2. Dre
3. New icon
4. Analyst coverage
5. Amex/Nasdaq listing (over $3 and S/E above $4 mil for sure)
6. More icons
7. Soaring numbers
8. More institutions
9. Buyout
10. Then we go find another
DKAM: The benefits of great DD!
In 2007, DKAM signed an exclusive deal with Universal Interscope to bring iconic beverages to market utilizing their stable of artists like Dr. Dre, Fergie, Snoop, Busta, etc..
They anounced 4 drinks to come, the first a cognac, in a couple weeks. Sales will top $80-$100 mil in 2 years. 20 times what they are now.
Another iconic introduction per the CEO is being announced by September.
Today, the Rolling Stones left EMI and signed with Universal.
DKAM has TWO trademarks already published without opposition.
Rock It and Rock Cola.
I'm not saying anything excpet what I've already said.
It just doesn't get any easier.
Actually I forgot. It does. Sorry, I'm not pushing the buy button for anybody any more.
The Rolling Stones sign with Universal today
Kenny meets with 30 marketing people at Universal last week
DKAM has a trademark on Rock Cola and Rock It
So many sugar plums dancing in my head!
OT: INSM I'm excited for these guys. 39 cent 2 weeks ago and screaming for a buck now.
I remember those days! That means ours is right around the corner.
One by one they are all beginning to run.
Article on DKAM in Special Forbes issue.
Talks about it taking $10mil -$100 million to introduce a premium spirits offering. The beverage industry averages $50 mil per icon. Just on Trump and Dr. Dre alone company is worth $100 million without selling a single case of booze. Two more icons TBA by CEO before year end. That's $200 mil, or $2.50 per share, or a 10 bagger.
Oh it will happen. I will be back here laughing that nobody bought a single share. Company CC on earnings next week. Yeah, an OTC with a CC AND analysts all tuning in.
Meeting at Universal last week with 30 people in marketing. This is why they don't belong on OTC. Equity and minimum share price both get taken out to get listed on Nasdaq. You heard it hear first.
Just out in Forbes. Spirits success Drinks Americas:
http://www.forbes.com/2008/07/22/stars-biz-successful-forbeslife-cx_dp_0722style.html
I'll be back to give you the next one after this one cracks $3. Somehow you'll probably know about it when it gaps over a buck in the meantime.
Fortune Brands(FO) profits fall 41% but the sector remains strong. Stock is up on horrible earnings. And guess who got their business? Celeb-preneurs!
And they continue to ignore us. Not for much longer. At any moment you will look and it will be up over 100%. Probably by the market makers when everyone is sleeping!
How fitting Old.
Right in full view of "The Field of Dreams"
I got an e mail back from Kenny. Said he was in LA all last week meeting with the folks at Universal. Thirty six people in the meeting. Thirty of them were from marketing.
We're not in Kansas any more.
DKAM in Forbes Magazine just hitting newsstands now in their Special "Celebrity All-Stars" edition. DKAM has Trump, Dr. Dre, Willie Nelson, and Newman's Own.
It has started:
http://www.forbes.com/style/2008/07/22/stars-biz-successful-forbeslife-cx_dp_0722style.html
The Appeal: Nothing evokes old Hollywood glamor quite like a lit cigarette, a stiff cocktail and a fedora. Now that cigarettes and fedoras are out, spirits are the chosen sin for many celeb-preneurs. In the words of J. Patrick Kenny, chief of Drinks America, which produces Donald Trump's vodka and Dr. Dre's cognac, "Beverages are as much a fashion statement as clothes or music. They are global and trans-generational."
The Payoff: Potentially huge. Profit margins "are fantastic," upward of 30%, says Kenny. A recent Nielsen study found that liquor store sales of celebrity-driven spirits were up 21% over the last year, compared with 5.6% for liquor in general.
"Alcohol defies recessionary trends more than any other industry," says Richard Hurst of Beverage Alcohol at ACNielsen. "We're still seeing very buoyant sales." Start-up costs vary, from $10 million to as much as $100 million for an ultra-premium line.
How to Succeed: To compete against the likes of Jim Beam, Johnnie Walker and Jose Cuervo, your name had better be equally familiar--like Willie Nelson or Paul Newman. Instant recognition means you can spend far less on marketing and more on quality control, as quality is essential for a successful product. Former Van Halen frontman Sammy Hagar's Cabo Wabo premium tequila is a hit--he sold it to Campari/Skyy for $80 million last May. Not as successful? Goth rocker Marilyn Manson's Mansinthe.
Reprinted from "Forbes Entertainment All-Stars" available on newsstands now.
Wish they'd given the stock symbol!
OMG! Your feel good post of the evening.
It has started:
http://www.forbes.com/style/2008/07/22/stars-biz-successful-forbeslife-cx_dp_0722style.html
The Appeal: Nothing evokes old Hollywood glamor quite like a lit cigarette, a stiff cocktail and a fedora. Now that cigarettes and fedoras are out, spirits are the chosen sin for many celeb-preneurs. In the words of J. Patrick Kenny, chief of Drinks America, which produces Donald Trump's vodka and Dr. Dre's cognac, "Beverages are as much a fashion statement as clothes or music. They are global and trans-generational."
The Payoff: Potentially huge. Profit margins "are fantastic," upward of 30%, says Kenny. A recent Nielsen study found that liquor store sales of celebrity-driven spirits were up 21% over the last year, compared with 5.6% for liquor in general.
"Alcohol defies recessionary trends more than any other industry," says Richard Hurst of Beverage Alcohol at ACNielsen. "We're still seeing very buoyant sales." Start-up costs vary, from $10 million to as much as $100 million for an ultra-premium line.
How to Succeed: To compete against the likes of Jim Beam, Johnnie Walker and Jose Cuervo, your name had better be equally familiar--like Willie Nelson or Paul Newman. Instant recognition means you can spend far less on marketing and more on quality control, as quality is essential for a successful product. Former Van Halen frontman Sammy Hagar's Cabo Wabo premium tequila is a hit--he sold it to Campari/Skyy for $80 million last May. Not as successful? Goth rocker Marilyn Manson's Mansinthe.
Reference pointer again. Cramer talking TUP, or Tupperware and showing from $16 to $40 virtually straight up in the past two years.
$584 million a year in global sales on single digit sales growth. 85% of its sales are outside the US. 61 mil OS.
So for a DKAM, a half billion in sales gets you a $40 stock.
And nobody can get you the margins like DKAM can.
Not the point on HANS as to when it took off and once again straight to the stock price people go. It was 1999 when people started muttering a Monster energy drink. It was 2002 when the analyst coverage came in and suddenly the sales soared.
2005 Drinks came around and mentioned a Trump Vodka.
Three years later what happens if somebody says boo now?
Think about it.
Well it was not perceived as a positive to somebody considering Dre's website has Detox as an upcoming release. And then Snoop tells MTV "Detox is finished" only to come out and publicly say that in a perfect sense it might be out by Christmas. That is 6 months from the time it was done to the time it might be available. Plus several places have been saying September.
But as was said, it makes no difference to the cognac. August launch and a good solid quarter of initial sales knocked out of the park by the soaring sales that come from the Detox launch/ Then what comes after that?
Oh there is those pesky music videos. Perfect place to showcase the cognac.
I might make a suggestion to everyone. Let's refrain from posting certain things we know and things we find out going forward. Keep it off the board and use our other channels. It's come to my attention we have eyes watching that have no business here. This way we put the element of surprise back in our court and I'll hear that phrase I absolutely love that shows naivety at its finest,
"Holy cr*p! What's the news?"
Nevermind, I figured out what is going on.
Somebody posted that article yesterday about Dre and Detox and maybe around Christmas. So that means somebody from here is selling and sold. Of course, on an old article at that.
That is hilarious considering it has nothing to do with when the cognac gets launched. Still on schedule with the next couple of weeks or so.
And that means that whover sold will absolutely have to pay higher than they sold to get back in and even then won't have the shares they had before.
I love it.
Apparently there was a name change I wasn't aware of.
Banks Americas
They must have us confused with a financial stock.
"We are HANS in 1999"
A psychology shift and the way you introduce DKAM to the investment community. You get their attention immediately and they give you the respect of "$4 million sales going on $1billion"
Even when you talk to Kenny, he reminds you repeatedly, "We are not the Trump Vodka guys." When he talks to the investment community, he tells them we are HANS in 1999.
Then it is easy to understand your stock being 30 cents in advance of being $30. It is easy to understand the manipulation in advance of a major run up. It is easy to think of the big picture instead of tick by tick nonsense.
You should do the same thing also. The #1 deterrent from anyone making money in the market is looking at yesterday as your guide to exactly what a stock is going to do for you today. And even worse yet, what a company is going to do tomorrow is being measured in the stock today.
Never works, never will.
We are HANS in 1999. That is how I will introduce this stock from here forward. Soon you'll smile when you hear of another stock that is exploding and they say, "It is DKAM in 2008."
Shakes, my apologies. When you run across a few bad eggs in your travels they tend to get categorized within the confines of the group they are associated with. I have the utmost respect for Mr. Panetta and everything he personally has done for the investment community. We're all working towards a common goal and learn to weed out the bad investments along with the bad people that hover around the same.
Great investing to all!
That last post will take you two hours. Do you have two hours to make a few million? I don't pump and I never have. Read it and think about all the stocks that have run on nothing but air.
Then think about ALL the stocks that have run because there wasn't enough air. I'll see you at $30 on DKAM.
Shakerz A 10000% loss if you dont read this:
I had to pass this on to you. Some 50 investors from here wanted me to make you aware of this. I am a beverage person for many aears. JSDA sucks and HANS tastes like regrgitated alpo. Take heed, I won't tell you about this again. This isn't a pump. I am the one that is making this happen! I won't give it to Panetta's group because it doesn't even deserve a daytrader and all they do is get in the way. Take 10 minutes to read this and you'll be thinking $20. Then look at the price. Absolute gift for Christmas whether it is July or December! If you look at the current techincals, you'll lose. The 10 broke, the 20 broke, the 100 broke. All that is left is 200dma. The next level is beyond everybody's comprehension. It is -8 EPS going on +3 this quarter and up to 50 cents by the 2nd quaarter 2009.
Research Report July 7, 2008
Company: Drinks Americas
Symbol: DKAM
Current Price: .2170
Preface
Let me preface what I’m about to tell you with the following: Most of us at one time or another have all received “special” information about this company or this stock that is going to go gangbusters. 99% of them are promoted by hired hands so to speak that are brought in to pump up the price to ridiculous levels so other parties can dump their shares on unsuspecting investors. They crash and burn never to be heard from again. I have been trading these markets for over 20 years and this story I’m about to tell you is as good as it gets. I will break down every scenario for you, good and bad, so you can make well informed decisions. I have personally put several hundred hours of research into every nook and cranny of this company. I have talked to management, board of directors, distributors, suppliers, and even the parties that are accumulating large positions in this company. There is no analyst coverage presently on this company so I am the best that it gets and aside from sitting at a company board meeting, this information is as solid as it comes. I must tell you at this time that the company has no knowledge of my research, my report, nor have they extended any compensation of any kind to me for reporting my findings.
Business Plan and History
We first visited this company in August of 2006. The price was at .60. As a blank check start up, this company came to market with a very well defined plan. They introduced Paul Newman’s Own Sparkling Fruit Juices and Sparkling Waters. They introduced Willie Nelson’s Old Whiskey River Bourbon. Additional products include Rheingold Beer, Cohete Rum, Damiana Liqueur, Aguila Tequila, and Bo Dietl Wines. As a “niche” beverage company, their initial claim to fame would be announcing they had signed a definitive deal to bring Donald Trump’s new signature vodka, Trump Super Premium Vodka, to market. The price of the stock had a low around 35 cents and quickly rose to a dollar. As with any news related item, it took time to implement the plan and the product, the price retraced in the interim and certain savvy parties began accumulating the shares. Soon, Trump’s product arrived in New York and sales soared. 300K in sales quickly rose to over $6 million. The stock took off to a high of $3.56 a share for more than a 500% winner.
It should be noted now just what was happening here. Always take time in any specific situation to take a look at the bigger picture. In the past few years, we have seen the likes of HANS, Hansen Naturals Energy Drinks, move from a split reflected 59 cents on December 14, 1995 to over $400 in 2007. We have seen a niche player JSDA, Jones Soda, go from $2 to $33 on their Pure Cane Soda and a deal with Target for exclusive distribution. Needless to say, beverage stocks can do well with a specific product, exponential growth, and an expanding market for growth. Looking at the meteoric move out of HANS in 12 years with over a 70000% move makes it the #1 performing stock of the past two decades. Everyone is on the prowl for the next company to pull of even a fraction of what HANS did.
*HANS’s business model and plan is virtually identical to that of Pat Kenny’s at DKAM. When you look at HANS more closely, you find the company didn’t have any positive annual earnings until a full 7 years into their start up process. Even then, it was only 4 cents a share.
We know that there is a specific recipe to growth in a company and ultimately meteoric growth in a particular stock. You have to have a defined market, then product introductions, then accelerating sales, then exponential sales, and ONLY then accelerating profits. From there, you pick up analyst coverage, defined targets, money managers with “BUY” ratings, and continuation of the growth curve.
For a start up like DKAM, their story is not unlike many we have seen before. But, as an OTC stock, this story differs from almost all the others for some very specific reasons that I will outline here. As I already said, a blank check company called Maxmillian Partners and then Gourmet Group, CEO J Patrick Kenny has a very refined business plan; Form a start up company, introduce iconic branded beverages, scale them into world wide distribution, exponentially increase sales, increase profits, and sell the company to the highest bidder. For any liquor company to introduce a new global brand, the beverage industry estimates it costs about $50 million per product to do so. The beverage giants like Seagrams, Constellation, Bacardi, Allied Domecq, Pernod Ricard, etal would much rather buy a smaller proven product than to start from scratch and bring their own product to market. That is why we see buyouts all the time from Grey Goose at $2.3 billion to Absolut at $4 billion to Coke buying Glaceau Water for $4.1 billion or Pepsi buying SoBe for $360 million. There is constant consolidation in the industry as we speak.
As their initial flagship product hit the market in Trump Vodka, it became the world’s fastest selling initial introduction into the vodka space, even faster than Grey Goose. Even in F. Paul Recault’s Spirit Journal, The Bible of the spirits industry, he gives Trump Super Premium Vodka 4 stars in September 2007. In the same edition, he gives Grey Goose 2 stars. But, in the beverage world, you can’t make it on one product with limited resources and ratings alone. Start up companies have their growing pains as you would expect. Initial sales surges resulted in having to replace large amounts of inventory. The company additionally had to turn investment dollars into shares and also do a private placement offering which allowed them to pay off 90% of their accumulated debt. The market punished the fast run up in stock price by bringing it down even though the company was doing exactly what they needed to do to maximize shareholder value and become a major player in the beverage space.
To insure the results are achieved in a very defined business plan, you have to have very key people to pull it off. Drinks Americas has put together a stellar ensemble of beverage giants, global expansion executives, those adverse in leveraged buy outs, and even those familiar with distributing into the retail space. Normally, most people would not pay attention to the Board of Directors, but this set up is so glaring in what is happening and going to happen, it bears that anyone reading this report pay close attention to every facet of the make up of this board. Please take a moment to read the specifics on the board of directors below:
Board of Directors:
J. Patrick Kenny has been our President and Chief Executive Officer, and a member of our Board of Directors, since March, 2005. He is a former Senior Vice President and General Manager of Joseph E. Seagram & Sons, for which he held a variety of senior management positions over 22 years, with increasing levels of responsibility in Seagram's wine, wine cooler, alcoholic and non-alcoholic beverage divisions.
Mr. Kenny managed Seagram's worldwide carbonated soft drink operations from 1992 through March 2000. He held the title of Senior Vice President and General Manager when he left Seagram in March 2000, prior to its sale to Vivendi Universal. In April, 2000, he co-founded Sweet16 Intermedia, Inc., a trademark licensing and media company which was sold to TEENTV Inc., a media company for chain retailers and mall properties. He has also acted as adviser to several Fortune 500 beverage marketing companies, and has participated in several beverage industry transactions. Prior to joining Seagram, Mr. Kenny was employed in a range of sales and sales management positions with Scott Paper Co. and then Coca Cola's Wine Spectrum. Mr. Kenny initially attended West Point (U.S. Military Academy), until an athletic injury required lengthy treatment. He later received a B.A. at Georgetown University, and an M.A. at St. Johns University in New York.
Bruce K. Klein has served as the Vice Chairman of the Board of DA since it was founded in September 2002 and has been our Chairman of the Board since March, 2005. Since February, 1999, he has served as the Managing Partner of Victory Partners LLC, a company created to fund private businesses in their early stages. In the last five years, Victory has funded six businesses in technology, vitamins and internet services areas, of which three have became public companies and three remain private. From 1992 to 1997, Mr. Klein was a registered representative of the Equitable companies, responsible for sales and services to high income clients, acting as investment advisor and estate planner to an exclusive client base. >From 1986 to 1991, Mr. Klein served as President of Transatlantic Exports Corp., where his duties included purchasing and exporting of finished and contract goods throughout Europe and Africa. From 1980 through 1991, Mr. Klein owned several retail businesses in lumber, hardware home centers and decorating. He received a B.S. in Finance and an M.B.A in Marketing from Fairleigh Dickinson University.
Jason Lazo has served as our Chief Operating Officer since March, 2005 and the Chief Operating Officer of DA since May, 2003. From December, 1997 to May, 2003, he worked for Joseph E. Seagram & Sons as Director of Finance, during which he served in the Mixers Group of Seagram working with Mr. Kenny. From January, 1990 to December, 1997, Mr. Lazo worked at Kraft Foods as Manager of Business Analysis, with responsibility for the Capri Sun and Kool-Aid Koolburst, and Ready to Drink Country Time & Crystal Lite brands. He has also worked as a Kraft Foods Plant Controller, managing the start-up of Capri Sun and Lender's Bagels. He has worked in logistics and procurement for Kraft Foods central manufacturing organization and in corporate finance for Entenmann's Bakeries, Inc. He received a B.S. in Finance and an M.S. in Accounting from Long Island University.
Marvin Traub was an initial investor with Mr. Kenny in Maxmillian Partners, LLC. He joined our Board of Directors in March, 2005. From 1978 to 1991, he served as CEO and Chairman of Bloomingdales. His background is in marketing, retail, home furnishings and apparel. Mr. Traub serves as President of his own marketing and consulting firm, Marvin Traub Associates ("MTA") which he founded in 1992. MTA currently has clients in 14 countries and an outstanding team of 18 consultants, all former principals in the retail and consumer goods sectors. Prior to that, Mr. Traub served as Chairman of Financo Global Consulting, the consulting arm of Financo, Inc., where he was Senior Advisor.
Mr. Traub is the author of "Like No Other Store..." a combination autobiography and history of Bloomingdale's and American retailing. It was first published in 1993 by Random House and has since gone through three printings. Mr. Traub's consulting clients include American Express, Ralph Lauren, Jones New York, Saks Fifth Avenue, Federated Department Stores, Nautica Europe, Lanvin-France, Coin-Italy, Men's Health, Yue Sai Kan-China, Aishti-Lebonon, Quartier 206-Berlin, The Mercury Group-Moscow, Al Tayer Group-Dubai and AOL Time Warner Center at Columbus Circle in New York. In 2005, in partnership with Mohan Murjani, Mr. Traub created Murjani Traub India Ltd., a joint venture aimed at bringing global brands to India, with offices in New York and Mumbai.
Thomas H. Schwalm was an initial investor with Mr. Kenny in Maxmillian Partners. He joined our Board of Directors in March, 2005. He is a 25 year veteran of the beverage industry. In 1995, he co-founded the South Beach Beverage Company, known as SoBe beverage, which was acquired by PepsiCo, Inc. in 2001. From 1995 to January 2001, he served as managing member of SoBe Beverage. Mr. Schwalm's career includes various managerial positions with the Joseph Schlitz Brewing Company from 1968 to1982 and as Group Marketing Director for the Stroh Brewing Company from 1982 to1984, where he managed a $100 million marketing budget and introduced Stroh nationally in 1983. From 1985 to1992, he was Vice President of Sales and Marketing for Dribeck Importers, the US importer for Becks Beer. In 1992 Mr. Schwalm became President of Barton Beers, in Chicago. Barton Beers imported and marketed the Modelo brands - Corona, Corona Light, Pacifico, Negro Modelo and Modelo Especiale. Barton Beers also imported Tsingtao from China, Double Diamond from England, St. Pauli Girl from Germany, Peroni from Italy and Point Beer from the Steven Point Brewing Company. Since January, 2002, Mr. Schwalm has served as the Chief Executive Officer and President of the Thousand Islands Country Club, an exclusive golfing resort, and The Preserve, a luxury residential development, both located in upstate NY. Mr. Schwalm graduated in 1968 from the University of Wisconsin.
Fredrick Schulman served as the Chairman and President of Gourmet Group from September 2000 until March of 2005 and he has been a member of our Board of Directors since March, 2005. He has 25 years of experience in corporate and commercial finance, venture capital, leveraged buy outs, investment banking and corporate and commercial law. Mr. Schulman's career includes key positions with RAS Securities in New York from 1994 to1998 as General Counsel and Investment Banker, eventually becoming Executive Vice President and Director of Investment Banking. From 1999 to September, 2001, he was President of Morgan Kent Group, Inc., a venture capital firm based in New York and Austin, Texas. Since September, 2003, Mr. Schulman has served as Chairman of Skyline Multimedia Entertainment, Inc., and, since September, 2002, he has served as President and Director of East Coast Venture Capital, Inc., a specialized small business investment company and community development entity based in New York.
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Fabio Berkowicz has served as our Chief Financial Officer since March, 2005, and as the Chief Financial Officer of DA since October 2004. He is a certified public accountant with over 35 years experience in public accounting. Prior to joining us, from October 1984 to August 2003, he was a senior partner of Edward Isaacs and its successor, McGladrey & Pullen, certified public accounting firms. For McGladrey & Pullen, Mr. Berkowicz was a managing partner of its New York City regional office. He was responsible for managing over 200 accountants and CPA professionals and overseeing accounting services for the full range of both firms' clients. In 2006, he has also performed consulting services for Rosen Seymour Shapss Martin & Company, LLP, a public accounting firm located in New York City, New York.
Hubert Millet joined the Board of Directors of Drinks Americas in 2007. An International Consultant and an Adviser to the French government on foreign trade. Mr. Millet has over 40 years experience in consumer products and has over 20 years in senior management positions in the beverage industry. From 1991 through 1997, he served as President of Seagram Global Brands Division where he was responsible for production and business development for Martell Cognacs, Mumm and Perrier-Jouet Champagnex and Barton & Guestier wines, ... as well as scotch whiskey operations (Chivas Brothers, Glenlivet). From 1989 through 2000 Mr. Millet served as Chief Executive Officer and Chairman of Seagram's Mumm Martell Group. From 1989 through 2000, Mr. Millet worked for The Seagram Company Ltd. where he served as a member of the Seagram Spirits & Wine Executive Council. Mr. Millet served as Chairman of Barton & Guestier SA, a member of the Board of Directors of Martell Cognac, a member of the Board of Directors and Chief Executive Officer of G.H. Mumm, a member of the Board of Directors and Chief Executive Officer of Perrier-Jouet, a member of the Board of Directors of Tropicana Europe, and Chairman of the Board of Directors of Herve Leger (Fashion Co.). From 1977 through 1989, he worked for Groupe Cointreau where he served in various roles, including the Chief Executive Officer of the Cointreau Group and as Cointreau's Finance & Development Director. From 1970 through 1977, Mr. Millet worked for the British American Tobacco Company, Cosmetics and Beauty Products Division, where he served in various roles including as a Vice President responsible for finance and development with respect to the division's of European operation. He has been Director of Drinks Americas Holdings, Ltd. since March 9, 2007. Mr. Millet has also served as a member of the Board of Directors of Parfums Hermes from 1982 to 2007 and serves as a member of the Board of Directors of Hermes USA, and a member of the Board of Directors of The Savannah College of Art and Design. Mr. Millet has been the recipient of various rewards, including Officer de la Legion d'honneur, Officer dans l'Ordre National du Merite and Medaille Commemorative d'Algerie. Mr. Millet is a graduate of the University of Paris, he received four major French decorations, including Officer of National Order of Merit and Officer of the Legion of Honor. Mr. Millet resides in Hilton Head, South Carolina. He is a native of France.
"We are very excited to have Hubert Millet join our Board of Directors," commented J. Patrick Kenny, President and Chief Executive Officer of Drinks Americas. "He adds depth and further expands our team. With over 20 years experience in the beverage industry, Hubert brings a wealth of expertise and invaluable insight into the development and marketing of beverage brands on a global scale. With the growing success of Trump Super Premium Vodka, combined with several products in development, Hubert's appointment reflects our commitment to becoming one of the fastest growing beverage companies in the world."
Mr. Millet said, "I am thrilled to join Drinks Americas' Board of Directors and work with their superb management team. With the Company's unique strategy that combines premium beverages with renowned icons, Drinks Americas is well positioned to become a global company. I look forward to contributing by leveraging my expertise and international relationships for the Company's product development, distribution and marketing plans to maximize the Company's international growth opportunities."
Current Status of Business Plan
In 2007, the company did do some financing that thoroughly cleaned up the balance sheet. However, as in many cases, when a company does a private placement at loftier prices, certain situations present themselves. Many times the parties that commit money to the company, will actually go short on their investment since they realize that their commitment dollars could dilute the company’s capitalization in the short term. In my opinion, that is what happened here. The financing the company did to continue to implement their business plan was a great move. However, certain parties played on that move and went short the stock to drive the price lower. I have exhausted all resources and have come to find out presently all those short shares are covered and they are now “net“ long the stock. As a sidebar to the financing the company did, Pat Kenny, CEO, locked all of his shares “in” meaning he is so convinced in the company’s forward progress, he cannot sell his shares until well in to 2009 at the earliest if he chooses to. I would be more than surprised if he did. More on that later.
In 2007, Pat brought in Hubert Millet to jumpstart the company’s global expansion. His presence spawned an initial Trump Vodka ANNUAL agreement for 50000 cases of product to Recolte in Russia. Now, Russia is known for their vodka products and to secure a deal like this is monumental for the company. Initial shipments to Recolte were thwarted by a tax stamp issue that has since been resolved. This deal assures the company of a minimum of $7.5 million annually.
Now, up above I had you read thoroughly the background of the Board of Directors. If you choose to pay heed to this report, you will have Hubert Millet to thank for the company’s final successes based on Pat Kenny’s initial business plan. Hubert Millet comes in and helps secure an immediate deal in Russia with Recolte. This gets the phones ringing as distributors in Asia are excited about doing business with DKAM. This comes from Pat Kenny on a conference call. Now, if you pay any bit of attention to the markets, you know those companies doing business in China and India have done exceedingly well in stock price appreciation. What you might not know is that Pat Kenny is responsible for getting Seagrams into China faster than any company in history for sales. I have it on good authority that with Hubert Millet, Pat Kenny is setting up distribution deals in both India and China. A press release from Feb. 11 said he expects to announce distribution deals in China in 2008. From word in the sector, these guys were banging down the door to do business with DKAM.
In 2007, DKAM announced a deal with Interscope Universal Geffen A&M Records to develop, brand, and distribute iconic beverages with those artists under their label. Not many people paid attention to the news and its implications. Worst mistake they could have ever made. People need to realize that when a star is hot, then anything he/she touches is hot also. Just look at Tiger Woods and his $100 million deal with Gatorade as a prime example. In early 2008, DKAM announced they had inked a deal with Dr. Dre, the world’s foremost hip-hop and rap superstar, for a line of cognac, sparkling vodka, champagne, and possibly a tequila all bearing his name. On that news alone, the stock immediately tripled. What people also don’t realize is the urban community, and those following their “rap” heroes, are particularly patriotic to their icons. Just the mere mention of Courvoisier in a Busta Rhymes hit “Pass the Courvoisier” sent sales of cognac for the company soaring. Cognac is now THE beverage of choice in the urban community. Detroit, MI is now the #1 consumption city per capita in the world for cognac. The impact of an initial cognac introduction by Dr. Dre for this company is enormous. Dr. Dre’s last album, 2001, was his last release in 1999. He has spent the past 9 years putting together his final album called Detox which is the finest ensemble of music in this genre ever created. DKAM is coordinating his signature cognac release with this album release to get the most sales impact out of the product possible. More on this later.
Cognac Sales & Production Numbers (Source: Just-Drinks, BNIC, France, July 31, 2007)
Cognac sales are expected to set a new record this year, according to a trade body in the French region.
An increase in the area given over to Cognac production was announced yesterday (30 July) by the Bureau National Interprofessionnel du Cognac (BNIC), which should see the amount of pure alcohol in the Appellation d'Origine Contrôlée of Cognac rise by 27% on last year.
The BNIC also said that it is calling for all producers to maintain the level of reserve stocks at 10% to sufficiently meet global demand for the liqueur.
In the year to the end of April, shipments of Cognac grew by just under 10%, following five consecutive years of growth.
Cognac sells 12.2m nine-litre cases - or 157m bottles - a year, putting it at the top of international consumption tables for quality eaux-de-vie, according to the BNIC.
VSOP and higher categories have registered the highest increase, with VSOP shipments up by 17.7% to 4.68m cases, while the XO and above category rose by 18.4% to 1.43m cases. The VS category was up by 2.7% to 6.09m cases.
The BNIC claims that Europe is Cognac's biggest market, accounting for 37.8% of world volume and shipments have increased due to the Russian market for the spirit growing 54.9% influencing the neighbouring states such as Latvia, Lithuania, Estonia and the Ukraine. The Cognac market has also seen sales rise 35.5% in the Netherlands and 27.8% in Switzerland.
The US continues to remain the biggest single export market and total shipments for Asia have risen by 20.4%, with exports to China up by a massive 49.3%.
The BNIC's director of marketing and communications, Jérôme Durand, said: "The growth of Cognac is down to the fact that it meets consumer needs for premium and luxury goods and can be enjoyed in a variety of ways. We know that, today, 70% to 80% of Cognac drunk does not concern the older Cognacs taken as a digestif, but rather younger Cognacs enjoyed on ice, in long drinks or cocktails".
The BNIC added that with almost 95% exported, Cognac currently represents some EUR1.5bn (US$2.05bn) in France's balance of trade figures, an increase of 10.5% in one year.
Looking at these numbers from one year ago, you see all sorts of confirmations in what the company is seeing in their plan; introduce a hot new cognac product on the heels of increasing global demand. In fact, 2007 was a record breaking year for cognac sales at 158 mil bottles. You can clearly see the largest leaps and bounds in shipments goes to Asia, and particularly to Russia and China. Drinks Americas has their current deal with Recolte that they will expand upon. Their distribution agreement in China when announced will only add to these exceptional numbers.
One of the hottest alcohol products on the market now is Sparkling Vodka with CO2. Dr. Dre’s introduction of his sparkling vodka here in the US, with expansion abroad, should make sparkling vodka the new liquor of choice both in the urban community and among the most fashionable socialites. Plus, it is just a smooth beverage to enjoy on the rocks or to add special pizzazz to your favorite vodka concoction.
One of the ways you know something big is about to happen at a company is when insiders are buying. It raises your eyebrows when ALL the insiders are buying. Once each year, the insiders at DKAM get the chance to buy and every one of them took advantage of that chance a few months back. In the past 12 months. Insiders have bought 1.4 million shares against ZERO sells. Additionally, you want to watch the company on the US Trademark website. In the past 5 months, the company has filed numerous trademarks which all point to their upcoming product introductions. They have filed the names of Aftermath, Pacifique, Topless, El Jefe, W Sparkling Vodka, Rock It, Lebasse, and Client Number 9. I realize it might prove immaterial, but it draws to clarity that what I speak of is coming. I’ve done some more digging. Dr. Dre’s record label is called Aftermath. It’s a sure bet in my opinion that Aftermath will probably be his cognac introduction. I’m going to go with the lingo play that Topless will be his Sparkling Vodka. Then there is El Jefe as the tequila offering to go up against Patron, with Pacifique being his champagne offering to go up against the likes of Hypnotiq that has been so wildly successful. This company is going after some biggies and with the following that Dr. Dre has, they could pull it off in style. In fact, it is virtually a given that with Fifty Cent selling out his Glaceau Water to Coke for $4.1 billion and P. Diddy putting out his Ciroc Vodka for a rumored $100 million on his end, that Dre will do everything imaginable to ensure to beats them both with a buyout on DKAM.
In order to do just that, Dre has to have the finest of products. Just as DKAM went to Wanders Distillery to put out a quintuple distilled vodka bearing Trump’s name, so shall they go searching for a premier cognac offering for Dre to put his name on. There are four vital things in play here that are about to separate DKAM from “just the” Trump Vodka company and make it a global beverage company:
First, you cannot just introduce a fine cognac. It has to be aged a minimum of 2 years. There are four cognac producers that are responsible for over 90% of the US consumption of cognac. They are: Remy-Martin, Hennessy, Courvoisier, and Martell. Hennessy would be the top producer. In order to put out the quality of product that Dr. Dre demands, it seems crucial that DKAM go to one of the Big 4 cognac producers. Should this occur, which I have every reason to believe it will, an announcement that DKAM is introducing Dr. Dre’s cognac to be produced by one of these companies puts it square in the sights of every beverage analyst out there. It also makes it even more of a buy out target. In addition, it reaffirms their global stance and expansion. The Top 4 beverage distributors in the US are Southern, Republic, Glazers, and Charmers Sunbelt, They account for $17.2 billion in sales each year. Drinks Americas has spent the past two years setting up distribution accounts with each of these four distributors.
Second, Hubert Millet is on the Board of Directors of DKAM. He is also on the Board of Directors of none other than Martell, one of the world‘s leading cognac producers since 1715. Read the dossier from above. He is also from France and he knows cognac and champagne! I would almost bet he makes sure the company doesn’t settle for a lesser player and gets either Martell or Hennessy to make the cognac for Dr. Dre. The reason I say Hennessy is there is an ad running non stop on one of Dr. Dre’s web sites that is for Hennessy. Dre has always been partial to Hennessy cognac.
Third, Hubert Millet is also on the board of none other than GH Mumm. GH Mumm is a world renowned champagne maker for a couple hundred years. They were sold to Seagrams years ago and then bought by Allied Domecq. I would say we have also found our Dr. Dre champagne manufacturer.
Fourth and most important, Dr. Dre is an equity partner in this venture with DKAM. Where Donald Trump lent his name and sat back while DKAM did all the work and Trump waited to collect profits, Dr. Dre and his products are completely different. He has committed capital to make this work. Because Dre is involved financially, Drinks Americas should not have to do any financing or issue shares to handle the capital requirements to introduce Dre’s products to the marketplace. This is an enormous bonus that the market has yet to take notice of. Dr. Dre has NEVER been part of a project that he did not make money on. That says he fully expects these products to be profitable. As an equal equity partner, he has complete say in the packaging and formulation of all the beverages bearing his name. In addition, those close to Dre on his record label like Busta Rhymes, Eminem, 50 Cent, etc. will all follow Dre’s lead. If he is invested in this company, they will want to be a part of it also. They will promote the products and they should all be buying the stock. Dre also was not given any stock in this venture. So, I fully expect he will be buying up shares at every chance he can. Once again, these artists do enjoy the stock market. If Dre’s product is hot, then they buy Dre’s stock. That is DKAM. It is just that simple.
News and Market Valuations
There are several things in play at the moment. Allow me to dissect them for you.
Let’s look at the big picture first. The Trump news of his vodka hits and the stock takes off. It takes awhile for the product to be made and then get to the US. The company spends almost a year getting the product into all states one by one. Sales come through huge, the stock takes off again. The company exhausts its resources and needs to replenish inventories. At the same time, they need to get all their financials in order. They clean up their financials and wipe out most of their debt. This all happens in 2006-2007. The market takes a dim view of the way things are going at the time as Trump’s popularity wanes slightly and so do sales. Plus, as I noted, there was shorting of the stock going on against the private placement shares at $1.80 and above. The company, its board, and the larger shareholders all realize this is part of the growing pains of a new start up company and they never lose sight of the bigger picture.
Now DKAM enters 2008 with a partnering deal in Universal Interscope under its belt. The stock is clearly oversold by every metric. The company announces they have signed Dr. Dre to a line of beverages with his name. The stock triples in short order. The market has realized once again the implications of what is coming. It is this precise moment that we have to pay close attention to. That tripling in price found a host of sellers that left everyone scratching their heads. The stock gave up its gains and has been strapped in a very tight range unable to move ever since. Let me explain what happened.
When the stock ran last year over 500%, there were a host of large shareholders that filed to sell shares in Form 144’s. These were many vendors and contractors that had no clue about the stock market. As the company was coming to market, they were paid in stock and chose to finally get paid for their services. That depressed the price somewhat and there has not been a Form 144 filed for many, many months. You also had all those short shares at higher prices that had to be covered. They are now all covered with just a small amount, roughly 50K shares, short at these levels. When the stock tripled in February and then fell, I went digging to find out why. Apparently, a hedge fund holding DKAM stock to the tune of about 5 million shares went belly up and is in a forced liquidation status by the courts. This is something you won’t see in any filings anywhere because hedge funds are not required to report their holdings, buys, or sells to the SEC like everyone else is. In an effort to keep from annihilating the illiquid market and low volume of the stock, this hedge fund’s shares have been getting dropped a little at a time every day for the past 3-4 months or so. At the same time they are getting sold, three particular market makers are making sure they get all the shares they can at these ridiculously depressed prices. I went digging a little further. It seems this hedge fund is just now out of shares and will no longer be hovering on the stock. Once done, there is no substantial liquidity standing in the way of this stock going higher.
There are those that believe the stock is fairly valued. There are many who emphatically disagree given that about 72 million of the 80 million shares outstanding are spoken for, and insiders control over 50% of the stock. It is important to note not one single insider has sold a share. As I highlighted above, the insiders are buying all they are allowed to buy at this point.
In the beverage industry, it is commonplace for many smaller niche players to get valued anywhere from 10-20 times sales on an annual basis. The CEO has said on conference calls that the going rate for a beverage company to be bought out is $2000 per case sales. This is because they are constantly on watch and being looked at for a buyout. As I indicated earlier, it is easier to buy a company like DKAM than for a beverage mogul to go out and create their own brands like what DKAM is offering. DKAM had sales over the previous 12 months of $4,170,000. This past quarter reported was $561,000. When sales decline in the quarter as they did , you can see the perception gains legs that the company doesn’t have products another company would want to buy. So, in this situation, we could easily value the sales of the past 12 months at a shade less than 10X sales. This 10X valuation, and a stagnant snapshot says the stock should be trading at a minimum of 51 cents. That is why we saw it move so easily from 20 cents to 60 cents back during the Dr. Dre introduction because it was so undervalued at the time. Since then, some will argue that last quarter’s $561000 is being looked at for a precursor to future events. Therefore, the company’s sales should be looked at going forward for four quarters based on this number. That would make Net Sales $2.4 million for the next year and at 10X should suggest the stock be trading at about 28 cents. This is what some people are trying to do who want the share price as cheap as possible. This could not be further from a true representation of the company. In fact, it is the FURTHEST from what is happening and about to happen. It is also what has set up this perfect storm of an opportunity. The market always looks 6 months out for its valuations of stocks based on news, increasing sales, and increasing profits. Stocks can gain valuations based on expectations of 2-3 years from now. Yet, this stock is currently being valued at a multiple of the business it did over 6 months ago? Is this not ludicrous or what?
So, let’s look at this situation a little more closely and why this is all about to change. The last earnings report for this company represented sales through the end of January 2008 for the Third Quarter of their Fiscal 2008 sales year. The company posted Net Sales of $561000. As with any company, in a declining sales environment, one would expect it to go lower. This one had already lost 90% of its value from its highs. We’re not talking about it NOW at its highs. We are talking about it at its incredibly oversold lows. That’s what we are supposed to do; buy low and sell high.
Since the end of the last quarter reported through January 31, the company announced that shipments to Recolte in Russia are back on track with the international tax stamp issue resolved. The company then introduced its line of Trump Premium Flavored Vodkas. It’s important to note that a prime recipe to success in this business is for a company to command shelf space and shelf presence in the individual retail liquor outlet. This is why Grey Goose, Absolut, Smirnoff, and Stoli have been so wildly successful because they have various flavors in various sizes. They hit the customer with a vast selection the minute they walk in the store. In early 2008, DKAM introduced four new flavors in Raspberry, Grape, Orange, and Citron. They issued a press release that the first initial shipment of 3200 cases were shipped and, as of the end of April sales quarter, word filtering around is that they passed 5000 cases, and as of the end of June, numbers are approaching 15000-20000 cases. The company has also told us through press releases that Willie Nelson’s Bourbon Sales are up 60% over last year. They follow that up with a press release that Paul Newman’s sales are up 38% over last year. Convenience Store Daily that tracks the sales of such products as Newman’s Own Sparkling Fruit Juices reported in June that sales of fruit juice beverages have been flat since Pepsi bought Izze EXCEPT for sales of Newman’s Own, the only company seeing an incremental rise in sales.
This kind of news comes in response to two things. First, investors have asked the company to keep them updated on sales. The company ended its 2008 Fiscal Year on April 30. That Fourth Quarter of sales for 2008 will be reported and included in the company’s Annual Report which I expect to see released the last week of July, 2008. When it is released, only the smart and savvy investor will realize it is old news of sales from 3-6 months ago. At the same time though, the news items the CEO put out were carefully picked. He chose to tell investors the company is seeing sales acceleration across the board. He also chose to give out sales numbers that clearly prove the company has surpassed sales over the same quarter in the year ago period AND, the numbers he gave shows the company has increased sales over 100% above the previous quarter. Only those who know this situation closely understand what is about to happen here. The CEO has a multitude of news to tell these markets about Dr. Dre and new iconic introductions and worldwide distribution and accelerating sales. He must also know that this hedge fund is holding the price back and doesn’t want to lose the impact of all this news. He has maintained from Day One he will maximize shareholder value and that is just what he is preserving. The CEO also knows one thing the market will not take notice of until it is happening. Beverage analysts and those institutional investors who follow this company have said, and maintained, “Show us two back to back quarters of increasing sales and margins, and we’re in.” That is exactly what Pat Kenny, CEO, is about to show them.
Now, what did I just tell you? Sales for the quarter ended April 30 are up over last year and over 100% above the last quarter reported. Do you remember what I said makes a stock go higher? The recipe for growth includes product introductions (Trump Flavors and Dr. Dre Cognac and Sparkling Vodka) and accelerating sales (triple digit gains over the previous quarter qualifies as exponential growth). Also, growth can be achieved when a company has losses and they make strides towards profitability. This company has seen its losses cut in half since the introduction of Trump Vodka and is only losing 8 cents a share. Several have done some intense digging and have found that DKAM is the cheapest stock on any exchange losing 8 cents a share. The average of ALL stocks losing 8 cents a share is $2.81. So, by every metric and by every measure in thousands of other stocks, this company is undervalued.
Here is what should have happened. With the stock already 90% off its 52 week high, when news came out of the Recolte vodka shipments to Russia commencing again, the stock should have gone higher. That is an annual commitment of 50000 cases per year and $7.5 million in revenues. Then the Dr. Dre introduction news was announced. The stock tripled in price and should have kept climbing because of the magnitude of sales volume it would create for the company. Then the earnings news from Third Quarter came in March and that should have been a “non event” for the stock. It was a January 31 ending earnings report and already news of accelerating sales in the next quarter was hitting the markets. Even the CEO stated on the earnings conference call that the market was improperly pricing the valuation of the company. Then the Trump Flavors introduction came and showed immediately Trump Vodka sales were more than last quarter. Then there is the increasing Willie Nelson sales news. Then there is the increasing Newman’s Own Sparkling Fruit Juice and Waters sales news. This stock should have easily rebounded more than 6 times its current price and I am being very conservative by saying that.
Now, for just a taste of even more of what has happened here. By the news that has been released, the company has shown they are going to be booking around $10 million in sales per year WITHOUT ANY DR. DRE PRODUCTS AT ALL. This means that at a 10X valuation, this currently values the company at $120 million or a minimum of $1.50 a share. These numbers represent record sales for the company and also represent PROFITABILITY for the company. It is estimated with the CEO’s current SG&A cost reductions and streamlining the product pipeline that it would take around $6.2 million in sales for the company to post profitability. Now you can see the devastation that has occurred here and why many people are grabbing all this hedge fund’s fire sale shares. When they are gone, there is every indication this stock will move higher with relative ease. But you know what? There is more.
Dr. Dre and Hubert Millet; the current keys to this company’s sales success going forward. Dr. Dre’s cognac introduction alone is estimated to have a sales price of 90% higher than a case of Trump Vodka. Also, a case of Trump Vodka is 6 bottles and a case of Dre cognac will be 9- 1 liter bottles. Initial marketing results suggest Dre’s Cognac, which I will now call Aftermath, will surpass 100000 cases in its introduction phase. That should bring the company at least $21 million in revenues. Add to this the company’s current $10 million sales base. You can also add to this the introduction of Dre’s Sparkling Vodka and another icon and their associated brand that is about to be announced. It is easy to see how this company with $4 million in sales is about to have a 1000% explosion in sales over the next year and a 2000% explosion in sales over the paltry valuation the market is giving the company on the quarter that ended over 6 months ago.
We cannot forget the CEO’s announced expansion for the company into Asia from TWO previous conference calls. The USA is the #1 consumer market in the world. China is the #2 consumer market in the world and India is right behind it at #5. As I stated, several distributors contacted DKAM about doing business in these countries. Now you can expect every one of DKAM’s products to gain brand acceptance in these additional markets. Most importantly is Dr. Dre Aftermath Cognac, as a cognac, is high on the list of beverage products in China. Courvoisier’s Exclusif experienced 400% growth of its cognac in China in the first two years. Russia’s cognac market is expected to double from 2006-2009. That is why many people close to the company who have talked with executives and looked closely at the demographics of their introductions expect Dre’s products alone to surpass $100 million in sales for the company over the next two years. This comes from expectations that sales of Dre cognac alone will increase to 500000 cases annually and adding to that his other branded releases in his sparkling vodka, champagne, and tequila. The two fastest growing markets for cognac presently are China and Russia. Presently, cognac consumption in the markets of US, Russia, China, India, and Duty Free represents 112 million liters per year. There is no reason with the support and name recognition of Dr. Dre that he could not command 5% market share in the markets his cognac sells into.
If you’ve been around the markets for any length of time, you know those companies that announce distribution deals in China garner the interest of hedge funds and money managers everywhere. What makes this situation all the more interesting is that 60% of the shares are controlled by insiders. I said earlier that the CEO locked his shares in and cannot sell until at least well into 2009 at the earliest. The other Board of Director members are following his lead. If this company was formed for the express intent of ultimately being bought out, it would stand to reason since none of the company insiders have sold, they will probably not sell until the company is bought out. I have personally talked with one individual who knows of several offers to buy the company that have all been received unsolicited and each one has been turned down immediately. I cannot 100% confirm this, but the highest offer that was rejected was $500 million or roughly $6 per share. I also know of several groups that have accumulated another 15+ million shares. That leaves roughly 15 million shares in the available float. That is less than $5 million in available shares. Now, imagine if you will that beverage industry analysts and money managers are watching this company closely. Those interested in buying the company have to be looking at accumulating shares at these depressed prices. They all listen in intently on each conference call. With this type of sales explosion pending, usually when these guys see two quarters of increasing growth back to back, that is when they start buying a stock heavily and then they promote it to their clients. You also have Dr. Dre and his throng of fans and his counterparts that will all want to buy stock. They will love the cognac so they will buy the stock to share in his success and “Be Like Dre.”
Comparative Analysis and Timeline
The following represents my professional opinion and should not be construed as a precursor to what will actually occur on specific dates. In addition, this material is not to be represented as an offer to buy or sell any security. (You know you always have to say these kinds of things!)
In October 2006, Red Chip, an independent research firm, came out and profiled DKAM at $.60 on the expected growth of DKAM through 2009. They profiled their expectations of the success of Trump Vodka, as well as the sales of Newman’s Own and Willie Nelson Old Whiskey River Bourbon plus the company‘s other products in Cohete Rum, Rheingold Beer, Damiana Liqueur, and Aguila Tequila. The stock hit $3.58 by January 2007. The company has since dropped coverage of the company. At that time, they had absolutely no idea about Dr. Dre, and the other iconic drink introductions that are forthcoming.
Late in 2006, another company I mentioned earlier, JSDA, took off on a rampant rise from the low single digits to $33 a share. Expectations were high for a niche soda offering and increasing profits for the company. While their sales are increasing at less than 10% a year now, the company has managed to lose over $15 million in the past 3 quarters. Sure, the price came crashing down but at the same time, the market gives the company roughly an $80 million capitalization. That equates to giving DKAM a current valuation of $1.00 a share. Except for one problem. DKAM has shown us sales are about to accelerate dramatically. JSDA has not shown the market the same news. Therefore, DKAM can be priced at more of a premium. Remember that minimum $1.50 a share I mentioned earlier? That is where DKAM should be trading on a “relative” basis in its sector without booking any sales for upcoming events. So, it is extremely undervalued on a relative basis, on a buyout basis, and on a comparative scale to all other stocks with the same EPS return.
On June 24, Snoop Dogg told MTV that Dr. Dre’s Detox album is finally complete. It is highly anticipated and sales of the album are already slated to be the largest in history. Dr. Dre’s management and production people are all going to be promoting his cognac in conjunction to his album. The album is in the final stages of being readied for distribution. Dre is already planning his cognac from DKAM be featured on his album. He is already planning I in his music videos. Being that Dre’s website is already featuring the album in the Upcoming Releases section then I’m expecting it to drop by this fall at the latest.
I have received word that the packaging and formulation of Dr. Dre’s Aftermath Cognac is complete to his exacting specifications. I would have to assume it will be a VSOP blend to meet the production demands for the product. In fact, given current production rates, we could easily see 30-60 days just for the first initial overwhelming phase of orders to be filled. I would think CEO Kenny would not miss this chance to have products in the pipeline well in advance of Dre’s album release date. From there, you can expect Dre to host all sorts of cognac launch parties in advance of the holidays and all throughout the global distribution process. So, I would expect to see the cognac and possibly even the sparkling vodka in place some time in early August. This should be addressed more in detail on the earnings conference call coming the end of July.
Over the next few trading sessions, I fully expect the hedge that went belly up to be out of shares to sell. By the time you read this, he will be gone and the price will have moved up from our initial feature price. Sorry, but Dr. Dre wanted this research report first! That leaves the stock open to any accumulation moving the price higher very quickly. I also expect that there will be some intense accumulation in advance of certain forthcoming news events. As I outlined earlier, the “effective” float of the stock at these levels I have determined is not more than 15-20 million shares. The posted liquidity on the stock shows there is not much supply available at higher prices. That in and of itself
will lend to a powerful break out to the upside. There are many individuals currently watching the stock. I cannot speak for what everyone’s intentions are but from a technical perspective, once the stock breaks 30 cents, it will move quickly to 60 cents. It has already proven that to the market previously. A break above the last breakout high at 60 cents virtually assures a quick and powerful move above a dollar. That should coincide with all the news surrounding the Dre release, the naming of another iconic beverage, and international distribution news. There is still another powerful liquidity gap in the $1.02-$1.70 area that the stock can also move quickly through. If the stock does break out and gets to the $1.72 area, I am virtually convinced you’ll see new all time highs above $3.58 in short order. That then sets the stock up to show an extension above $5.00.
The company will release its earnings and annual report probably in the last week of July. At this time, I fully expect Pat Kenny to update the investment community on just where they stand presently and what is coming in the short term. Over the next three months, you should see: earnings, conference call, initial shipments of Dr. Dre cognac, initial release of Dre’s album Detox, sales updates on higher sales of Trump Premium Flavored Vodka, additional sales updates on Recolte in Russia, the introduction of Dre Sparkling Vodka, a new streamlined distribution channel in the US, the naming of another iconic branded offering, initial sales figures on Dre cognac in the first 30 days, Dre distribution and sales in Russia, an international distribution agreement in either India or China or both. With all that has been addressed here, it is incalculable to imagine this stock at this price. The things I have outlined here are the things that seasoned companies and beverage giants do trading at $20-$80 a share.
As a caveat to this research, I do want to offer one more item. When I spoke initially to someone very close to this situation, it was conveyed to me more than one time that beverage start ups average about 5-6 years to get fully ramped up to demand the highest premium for a potential suitor interested in buying the company. The business plan and implementation of DKAM is no different. By 2010, if not earlier, I would expect this company will be maximizing shareholder value, announcing news of being listed on a major exchange, buying stock back at depressed prices, and entertaining offers from the highest bidder.
In terms of targets, I will address this one on a market capitalization basis. Currently, the market capitalization of the company is $17.45 million. Remember, to introduce just one brand of liquor costs other companies about $50 million? With Trump Vodka, Trump Flavors, and Dre Cognac alone, the intrinsic “to produce” value of Drinks Americas jumps to $150 million without including any of their other brands or products. Once again, a share price above $1.50 presents itself. I expect this company to be selling over 500000 -600000 total case products within the next 2 years. On Pat Kenny’s valuation metric of $2000/case to be bought out, that gives the company a 2 year out valuation of at least $1 billion - $1.2 billion.
Current Valuation: $17.45 million
3 month target: $120 million ( +588%)
6 month target: $235 million (+1247%)
1 year return: $400 million (+2192%)
2 year return: $1.2 billion (+6777%)
Summary: The Perfect Storm Scenario
The Business Plan. Carefully laid out by seasoned veterans of the beverage industry. Very refined with a vision and the fortitude to pull it off against very difficult odds. Hard to imagine even discussing this information without being literally stunned at how cheap the stock price is relative to the news and developments surrounding this company.
Given the magnitude of the events surrounding the company and forthcoming product introductions as highlighted above it is easy for me to assert that this company could actually blow the doors off all expectations. With the anticipated success of the Dr. Dre product line, it is expected that other celebrities/icons will line up to produce beverages/liquors with this company. The expansion in Asia should lead to opening other global markets worldwide.
From what we know presently, fully maximizing the plan with expanding sales of Trump Vodka, a line of four Dre products, a new iconic offering in 2008, two-three iconic offerings in 2009, a realignment of US distribution, expansion in Asia, and expansion into Europe, Mexico, and South America, it becomes very real the company will sell 1,200,000 or more cases of product annually. With this metric for growth, the company could easily command the standard $2000/case valuation when it comes to putting a price tag on the company for a buyout. That is $2.4 billion and puts a price tag on the company of $30.00 per share. I recall a phone conversation with Mr. Kenny about 18 months ago where he made the comment on top of discussing his plan that he was building a $30 a share company. More than just coincidence in this writer’s opinion. I invite you to read the company’s Wikipedia listing. Please take note once again of the insiders track record and success at being bought out in the past.
http://en.wikipedia.org/wiki/Drinks_Americas
Those who are purely technical based and have no regard to anything I have to say, please pull open the chart. It is an exact duplicate from 2006. A certain 1000% winner and even higher as Dre will sell more than Trump by TEN FOLD.
HANS was one thing. This is in front of everybody!
Links:
1. Company Website:
www.drinksamericas.com
2. News Chain for Drinks Americas:
http://finance.yahoo.com/q?s=dkam.ob
3. Dr. Dre Web Community:
http://www.dr-dre.com/aftermath/
4. BNIC; Governing Body of Cognac:
http://www.bnic.fr/cognac/_en/intro.aspx
5. Recolte Distributors in Russia:
http://www.recolte.ru/main/
6. Convenience Store Decisions cites Newman’s Own Lightly Sparkling Fruit Juices as the only brand experiencing growth:
http://www.csdecisions.com/article/4311/juices-and-teas-fruit-drinks-flat-teas-growing.html
7. Cognac market set for further growth:
http://www.just-drinks.com/article.aspx?ID=92141
Copyright @2008 Equity Growth Partners . Trademark and all rights reserved. This report is intended for informational purposes only and does not constitute an offer or solicitation, express or implied, to purchase any security instrument discussed in the contents of this document. This report does not recommend nor advocate the consumption of alcoholic beverages nor does it assume the responsibility for any consumption of the alcoholic products described by any minor individual under the legal age for alcohol consumption.
This report is intended solely for the recipient to which it is addressed and may not be copied, faxed, transmitted, or e mailed to any other individual without the express written permission of DiamondTradePros.com. It is unlawful for this report to be posted on, or in any message board forum of any kind. Such action will constitute immediate legal action and prosecution to the fullest extent of the law.
Yes I also have heard sooner for cognac. They want it in the pipeline nationwide and selling strong before album. Kenny probably timing it so the stack of orders hits first and in the quarter that starts next week. Then a solid three months of hard selling. Then slam them again with big holiday sales on the release of the album. Then if they play the play there should be two videos off that album and if we're not cognacing on the jacket or in one of the songs, then we'll be all over one of those videos. Like we said before, Kenny got something from it also and he made Dre take notes! LOL
Lymmas. Go back to the previous posts over the past couple of days. Site down over weekend. Server reset. Beta version still in the program. They hid it again. Not even the real bottle anyway. Real one looks prettier!
20482 passes after hours. They have no more shares left! Between the hedges and MMs now.
Seaspot doing some checking. He agrees! These guys are about out of inventory. They are fishing. Taking out .60 was never easier.
Awesome! This is even better! MTV and USA Today started to build the hype. Dre headphones hit. Sales shoot up in advance of the ONE album they want to listen to them on. Then comes cognac. Sales shoot up as they want ANY part of Dre as they wait drooling for Detox. Then Detox hits for the holidays. Beats for Christmas! Cognac for Christmas! Detox for Christmas.
Profits for Christmas?
Absolutely! People are shopping NOW for their Very Dre Christmas!
That had to be a market margin sell. Nobody with even a half a brain sells a stock 12% off its breakout price the first time it gets there and 10% below the last trend line.
But I forget this is DKAM where the only thing you can trust is if people know how to push a sell button, they will find a way to park their butt on it!
Not the least bit concerned. Last time we bumped .30 on the run to .60, it took a couple sessons of manipulation before it ran right through. These market makers are looking for shares and want retail to jump off so they get them.
Listen to Seaspot everyone. He reads a chart and predicts like no other! Going through every major technical. We're just warming up now.
Ore it's all BS. I've been a member for awhile. Can't remember log in. Sent for user and PW. Nothing. Registered new. Nothing. They obviously don't want anybody to know the good news until they done buying.
Last time I saw a chart like this, the stock went up 500%. It was DKAM in 2006!
Thanks Seaspot. Explosion pending. Look at 2006. Now look at 2008. Now look at 2006. Again. OMG!!!! LOL