Unemon Research is back with another scoop. The contrarian and Seeking Alpha contributor who previously exposed fraud in the Chinese firm L&L Energy, Inc. has found a new target in Cogint, Inc. COGT.
“Based on my analysis of the facts, I see Cogint ... as just another blatant stock promotion which will eventually plunge to well under $1.00 (down by 80 percent from current levels),” Unemon wrote in a Monday note. “As with the others, I believe it will then be delisted in due course.”
The Cogint Case
Cogint’s stock rose 72 percent between March and May, but Unemon considers the value baseless.
Amid employee and independent analyst reports alleging products inferior to those of competitors, coupled with an “appearance of growing revenues” that cannot be sustained, Unemon attributes the company value to stock promotion.
“I noticed some suspicious trading activity at COGT in recent days,” the author reported. “Frantic buying in mornings repeatedly pushed share price up as much as 15 percent (briefly). But high volume dumping near the close largely erased the huge intraday gains every day.”
Such theories are vindicated by federal reports of relevant investigations.
A Critical Eye
Recent documents from the Securities and Exchange Commission, the Federal Bureau of Investigation and the Department of Justice reveal investigations of Cogint employees and promoters, including chairman Michael Brauser. Unemon noted that many now affiliated with Cogint had also been implicated in the L&L scandal earlier in the decade.
The Chinese firm’s stock plunged to $0.01 and the founder sentenced to five years in U.S. prison following the fraud’s revelation.
“Cogint follows nearly the identical blueprint as dozens of other stock promotions which also plunged to just pennies,” Unemon wrote. “As a matter of fact, during my research process I discover that the investors, board members and promoters behind COGT were all ’recurring names’ in various other stock promotions that repeatedly resulted in losses of more than 90 percent for investors.”
Brauser allegedly engaged in Usell.com Inc, MusclePharm Corp, Sevion Therapeutics Inc and Marathon Patent Group Inc MARA promotion schemes, and the SEC is reportedly investigating him for two collapsed microcap stock promotions.
In response to Unemon's allegations, Cogint CEO Derek Dubner stated, "Today, our Company was subjected to an unscrupulous Internet blog by an anonymous, admitted short seller of the stock."
The company released the following statement:
- "The blog contains numerous, recycled and fabricated inaccuracies and misstatements, solely, we believe, to serve the writer's interest of making money from the stock's decline. It is unfortunate that small companies must endure this self-serving, unethical, and perhaps illegal conduct. As we have demonstrated for the last several quarters, our company is financially stronger, our business is solid, and we have built differentiated and valuable technology, massive databases, and products and solutions.
- "The Company and its management have not received any communications from the SEC or from any state, local, or federal law enforcement agency or any other regulatory body regarding the allegations in the blog. We remain focused on serving our customers and creating shareholder value."
At the time of publication, Cogint was trading down 20.16 percent at $4.43.
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