Warning Models fka WNMI

[investorgation]

First, I believe WNMI has a better shot at becoming a highly successful company than most companies on the OTC and that, if I am right about that, an eventual market cap of hundreds of millions will more than adequately support a vastly higher PPS even with a higher share count. But anyone who believes this company can be a major hit will have already digested the powerful synergies this company is pursuing.

WNMI's business plan clearly intends to leverage a savvy take on our contemporary popular culture's obsession with celebrity and material trappings with a media driven organization vertically integrating brand building with agency representation, media packaging, couture and product development in ways few companies have done to date. The Warning! brand name is a simple and unbelievably brilliant logo and it could become a very, very valuable asset in and of itself just for its licensing possibilities alone. Warning! is a potential conglomerate with great earnings power in the making. And it is already a very active enterprise, not a "potentially" real OTC company (i.e., see Malia Jones Coke ad placement, Faking It, Gumball Rally, etc.). Paris will just add more juice, but she is not even the make or break factor in this company's future at all.

Second, and the primary point of this message, is that I am absolutely convinced the trading behavior of WNMI's stock has everything to do with WNMI being oversold by MMs selling without actual inventory on hand and they have done so at depressed price levels for reasons I'll explain.

Different brokerages reflect different permutations of their streamer data display. Ameritrade, in particular is showing the actual block sizes going through, but the buys are often registered in the Quote Trend as sales in Red, not buys in Green. With Ameritrade being as influential broker in the penny stock market as it is, this alone has a disproportionately large effect on the perceptions of the retail trading community.

These inaccuracies in WNMI's case has been going on for at least the past six weeks I have been actively watching it trade. Anyone who dismisses the idea of MM manipulation is obviously not watching the scenario that has been unfolding with WNMI. No, it is NOT a myth, so don't kid yourself if you want to call it paranoid conjecture. It most certainly is not. There have been numerous days where buys heavily outweighed sells and it often has not shown up that way. There are numerous ways to dissect how MMs effect the appearance of trading activity, but I will stick to the central premise of their overselling WNMI.

The inconguities in the buy/sell reporting also explains in part the 30-40M volume days that has often been racked up with WNMI. You can rightly assume part of this is an aspect of some MMs working together to create churn by trading shares (reflected in matching block sizes among other things). But it is also that they have been overselling shares they do not have, also artificially boosting the volume much of the time in the process.

Today, the volume was MUCH LOWER than previously, precisely when it SHOULD HAVE BEEN HIGHER. Today's news was very significant in terms of Warning!'s pending public awareness campaign and brand building efforts. Part of my knowledge is based on my observations after already holding a large position in WNMI for some time. Plus, I received further confirmation today when I found the price extremely attractive after the news was released and decided to add more.

During the afternoon I added another 1.5M shares to my position in WNMI. The MMs would pause for minutes at a time, then fill my multiple orders (only one partial fill the whole time) sold to me in many 100K+ share blocks. I first added at 0.0175, then 0.0166, then 0.0165. We're talking about a dozen buys sizeable enough to witness the handling of the transactions as they were effected.

The block sizes were accurately accounted for, but it was interesting to see during the periods in which I kept applying considerable buying pressure, Ameritrade's Quote Trend showed only a solid column of Red Sells. This has often been the case. You can rest assured that for at least 6 weeks, but likely longer, the MMs have often skewed actual retail buys to appear as sells. That is not even taking account their ability to trade between each other to create the appearance of selling pressure which also happens. The brief moments the price would drop to the bid (for instance, I'd buy at the Ask of 0.0165, then it would go back to the Bid price of 0.0155 or 0.016), it would then snap back to the Ask repeatedly. It was not just me buying. There were others.

Today's buying pressure ultimately prevented the MMs from dropping the price as easily as they have done with their recent shakeouts and I think there was very little consistent or significant retail selling of big blocks going on at the Bid today at all. I know for a FACT that there are many others besides myself holding big positions who are NOT selling. And just watching the trading absolutely confirms there has often been massive accumulation going on for more than a month.

Go find one of my few posts on this board as Investorgation and you will see that I identified this massive accumulation and blocks on the Ask by the MMs going on many weeks ago. The only thing I underestimated was the tenacity of the MMs and the severity of the situation. That it has persisted for another month just convinces me the MMs responsible for shorting this stock have dug themselves into a very serious hole:

http://ragingbull.lycos.com/mboard/boards.cgi?board=WNMI&read=9835

http://ragingbull.lycos.com/mboard/boards.cgi?board=WNMI&read=10097

The volume would have been MUCH higher today if they had uncorked it and let run the rally obviously trying to happen. If they had, traders and investors seeing WNMI start to move and feeling the train was leaving the station would have started piling into WNMI in increasing numbers. Everyone knows it happens that way all the time. You would seen even greater buying pressure start to kick in. But the MMs kept it down as much as possible, only having to sell to those like myself who know what they are up to & who know this train WILL leave the station & that this IS the price to keep buying at.

I am convinced the MMs are definitely selling shares they do not have. I've been increasingly aware of this discrepancy in the trading of WNMI for these past 6 weeks I've watched this stock. I have marvelled at how often WNMI was blocked at the Ask to squelch a rally. This MM control has only infrequently and briefly been breached due to extra strong investor buying pressure since the run out of the sub-penny range. But then they have shaked it back down before a larger gain could be sustained and higher base prices established. I've seen it happening here over and over again. That leads to the questions:

If the MMs are selling without inventory, then why would they not do it at even higher prices?

In other words, if the buying pressure was so clearly there today and on other days, why would the MMs not take advantage of selling at even higher prices and let the price go up?

The answer is that the MMs may not have originally believed or known that WNMI was going to be as big a deal as I am almost certainly think it is going to be. Their hedge now is to at least cap the price as they have been doing, currently at below 2 cents, in the hopes WNMI will eventually lose gas on their shake outs and then go down back to earlier levels. Then they assume they can buy back shares from investors to cover at a lower price than the MM sold shares for and balance their books at a profit or at least at a minimial loss by comparison to what they could lose if they let WNMI run higher from the current price.

Since they almost certainly started doling out shares they didn't have during the big breakout from below a penny, it is my conviction they are already under water for many of those uncovered shares at a current loss on a percentage basis of as much as 100% or more. This explains their rabidness and constant attempts to block the stock. They most definitely did everything they could the past two weeks to try and drop WNMI below a penny again and have repeatedly failed.

They may actually be arrogant enough to believe they can force WNMI back to its prior sub-penny prices, BUT THEY WON'T. Mostly, I think they are damned worried and about to get desperate if they are not already. While they may have miscalculated about the potential value of this stock earlier, now they most likely really do know what WNMI can become: a stock with monstrous rallies. So they are going to do their best to hold it back as long as they can, trying to beat it back to cover their positions.

I think they are about to get seriously tripped up by their earlier misapprehension of WNMI's future valuation. The runs we should have had already will be juiced now by what could become a very serious short squeeze situation. When people mention short squeezes some think it is fantasy. Forget about it. It can definitely happen.

If the MMs are now totally hip to WNMI's potential, and I think they definitely are, there is probably going to be one classic day where recurring waves of buying pressure overwhelms them and they will break ranks (because some of them have worked together). Then some MMs will simply make the market and buy and sell real shares while the short MMs will start to scramble. Then the short MMs will have to participate in the market and pay the going rate, just like the rest of us during such a rally.

Our friend UCAP could lose millions of dollars if those shares they've been selling were not supplied by S-8 shareholders. I now believe much or most of their sells to investors were NOT from actual inventory. As a MM, UCAP really appears they may be a very reckless opportunist that will see their nonchalance backfire on them. The irony is that they may be in such a big pickle that they are sitting on the Ask selling even more shares they don't have in the hopes their continual efforts to block the share price from rising will eventually exhaust buyer demand and investors will throw in the towel in disgust.

Why, you may ask, would UCAP keep selling shares they don't have if they are already potentially so deep in the hole? Well, I think I just explained it. They're probably quite desperate now and are taking a big gamble they can tough it out long enough to reverse investor sentiment and tank the stock. Not a good bet when you're dealing with a company on the move like Warning! and I think, if they are continuing to short WNMI, it is not going to work out well for them at all.

Also, I've seen UCAP briefly switch to the Bid, then hop back on the Ask. Why? They may actually be buying some shares to fuel their above-described misguided effort to tank the stock. If they feel they are on the edge, they may be willing to actually pay for a few shares as part of their campaign to tank the stock to cover at lower prices. So they buy them in order to bring them back to the Ask to sell.

Plus, doing so briefly gives UCAP the appearance of actually performing some kind of legitimate market making function and not appear as only a virtual share selling machine. So if they sometimes buy some shares too, they don't have to only sell virtual shares that dig them deeper into the hole during their desperate selling campaign. And the further irony is they may be buying from other MMs to do so, which would be just one more artificial buy-sell transaction adding to the volume.

I thought WNMI could be a blockbuster stock already. Now I think we may see much higher prices earlier than I was prepared for. With the Gumball Rally soon to provide MASSIVE exposure of the Warning! brand name on MTV, ET, and in the print media, this stock only has 5 weeks max before this showdown between the delinquent MMs and the investing public about to overwhelm them with buying surges too big to hold back. But this stock has been itching to break for so long now that I don't think it will be that long.

Besides, it is totally reasonable to expect WNMI will have OTHER news to report as well, besides updates on the rally before the race kicks off in early June. WNMI is going to have some very big runs. If you think you know penny stocks and don't already realize WNMI is going to run, get with the program. Bashing this stock at these prices is for jokers only. Now I think there will be a big short squeeze adding fuel to the fires that have been burning and will burn harder because Warning! is going to be a hot company with a growing investor following.

There is one final point to consider. With MMs selling shares they don't have, that means shareholders hold MORE shares than the actual OS. That, for one, has done a great deal to depress the share price asides from the MMs who block the rallies. It should be at 0.05-0.10 by now, at least. But that should not alarm anyone. The ultimate point of this discourse, and the beauty of how the resolution will tie this all together, is that when the MMs are forced to buy back shares during the impending short squeeze:

1. They will become the most aggressive buyers of all. Once the jig is up and they have no choice but to start paying higher prices in fears it will become much more expensive very quickly, they will pile in or risk losing their shirts even more if the wait to buy. There is a tipping point in this scenario where the MMs simply know the tide has turned and they lost their battle. By waiting and hoping it will retrace back to prior levels, they risk incurring what I now expect would be millions of dollars more in losses if they wait any longer to buy back shares. With a stock of this potential magnitude, they will not be able to hide from the SEC if they don't cover their naked short positions. The short MMs will have NO CHOICE but to pay up. That's why you should not misinterpret the trading data and realize this is coming and not sell your shares too cavalierly.

2. The MMs will then have to retire those shares. I think it is likely they have oversold their non-existent shares in the hundreds of millions. I am not randomly speculating. There have been vastly more buys than sells. You could document it for the SEC if you want to, but just think about it. With tens of millions of shares routinely traded daily and multiples of the float traded over the past 2 months plus obvious long positions being taken during accumulation, there should be a minimum of 100 million shares that have been sold short. I think it is more.

3. Then, the beauty part, your shares will be able to find a truer valuation reflective of actual market forces and actual supply & demand. The stock will trade more accurately with the ACTUAL FLOAT in circulation. That means the share price will support much higher base prices when it goes up and it will.

4. And there will be more than enough traders who will sell out to allow the MMs to cover. And the longs will then have their holding's value restored in relation to the true share count. This is why you don't have to worry now about all of us holding more than the actual OS. It is to your advantage to hold until the squeeze causes the share count to be reconciled.

5. Once that happens, the MMs will not be so ready to mess with WNMI stock. Once burned, twice shy. They'll take their shorting shenanigans to another penny stock they think they can toy with. WNMI will become too valuable for them to take it lightly again. They didn't realize that when it was a sub-penny, but they do now. And they are going to get burned. If the losses are serious enough, it can actually damage a smaller MMs business. If they are vain enough to ever attempt to again oversell shares of WNMI they don't have, it will be at considerably higher prices and thus much more modest in terms of shares overextended on their books.

6. Finally, this reconciliation of shares and restoration of the actual float size will add to investor confidence that the stock can actually trade better. Some may have held back from purchasing shares recently since they were worried the stock was incapable of going higher. Well, I just explained why it has not gone up more and now you know that when it does it will likely go up even more during a big breakout. Blue skies will become very possible both because Warning! looks like a hot property and because the short squeeze will drive the rally harder. But, most importantly, as a stock, once the shackles of the shorting MMs are removed and the artificial dilution is resolved as a result, then it will simply be a healthier stock that trades more accurately in relationship to actual market demand.

I'll keep adding shares, especially if the MMs keep doing me the favor of putting a short lived chokehold on this firecracker. This could be one of the biggest gainers of the year, so don't underestimate what you've got here. This message is my contribution to WNMI shareholders so those who feel discouraged realize there is an explanation for the current depressed price and that their time will come. WNMI stock could become very valuable. Patient and strong hands will be the big winners here.

Good Luck,
IvG