Small SEC Disclosure Text Can Mean Ginormous Profits

We all hate the small print. Sometime early in life, we come to realize: The Large Print Giveth and the Small Print Taketh Away. But this truth of life isn’t so absolute when it comes to penny stock trading.

Most traders look at the required disclosure by the SEC of any promotional monies paid as proof that a stock is a scam: it’s black or white. I disagree strongly with that. In fact, we just got done making 160% in Sunpeaks Ventures (SNPK) by buying on the disclosure statement. Let me explain.

One of the key reasons I liked SNPK was that I saw how it was being marketed. SNPK paid top dollar to a marketing firm to get their stock known across the Internet. The higher dollar amount this disclosure statement shows how much was paid, sometimes means a higher probability the stock will go up.

That is one of the main reasons I bought Bio Nitrogen (BION) today at market open. Here’s how the strategy works. I’ve got my Business Intelligence system in place with subscriptions to all the top hot penny stock picks websites that have huge numbers of subscribers. When a penny stock is promoted, I read the small print disclosure statement and I see how much cash and stock exchanged hands for that penny stock newsletter to promote that stock. In the case of BION, the disclosure statement said that $1 million dollars was paid by a marketing firm to market BION across their several penny stock newsletter websites. The fact the company hired marketers and paid $1 million to market their stock, I like. I’ve seen great pink sheet listed stocks go no where because nobody knew about the stock. Now $1 million dollars is a large amount of money. I’ve seen some websites where they are paid $5,000… $15,000… even $50,000 to promote their stock on a penny stock newsletter website, so $1 million is some serious money spent. I’m betting that BION will be marketed over several more penny stock websites over the coming days and weeks. I mean think about it. That $1 million dollar price tag most certainly comes with a greater service than just being listed on a single website. I’m betting that it will be syndicated over many such websites.

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This is a different way to use the SEC mandated disclosure statements. But why not use them this way to make money? The greater amount of money that was paid to market the stock, the higher probability that the stock will go up. It’s a simple yet brilliant strategy that’s so obvious, it’s missed by a lot of traders. Will it always work? No. Nothing will always work. Could you have some jerks that will cash out their stock as soon as it moves just a little bit up? Yes. But the risk is worth the reward and SNPK proved that.

Don’t get me wrong. I like BION as a company. In the video below, I’m going to show you some of the press releases I like and some really exciting and developing news with this stock.

My second buy today was in Home Health International (HHII). This is a pink sheet listed stock as well. This one I did not buy based on Business Intelligence of penny stock newsletter websites. Nevertheless, I like the huge surge in volume today which was like 4,000% of the average daily volume.

Both BION and HHII have had serious pullbacks. This is good and bad. From a positive point of view, I like it because it’s more reasonably valued. HHII is valued at $16,532. BION is valued at $6,900. The bad point of view is that these stocks have burned a lot of traders over the last few months and so there’s still a lot of bad feelings out there on Wall Street regarding these 2 companies. However, I think the positive developments and the strong business models of both of these companies will eventually win out in the end. The problem is, that could take weeks or even months to work out. I’m not that arrogant to think I can perfectly time a bottom and right after I buy these stocks, suddenly they will shoot up to the moon. Maybe in Lance Fantasy Land that happens, but back in the world of reality that almost never happens.

In the video below I talk more about my two latest buys.

Disclosure: I’m long both BION and HHII.