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Author Topic: Host America  (Read 3611 times)

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Salvius

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Host America
« on: September 02, 2005, 06:31:06 AM »

On July 12, Host America announced that Wal-Mart agreed to test its flagship product, the Lightmaster plus (sounds like a Dilbert reference, no?) at 10 of its stores, and if successful, it would roll it out at ALL of its stores. The product is an energy-saving lighting fixture. Makes sense. Host America's stock (symbol: CAFE) was around $3 a share at this time, and during the next week, sailed to a high of over $16.00.

On July 18, I bought 1000 shares at between $14 and $15 and sold them an hour later at $16. Nice profit, good daytrade. On July 20 & 21, the stock was still going strong, and I tried again. The idea for a daytrader is that any stock which is MOVING is a potential profit making machine. I bought everywhere from $13 to $15, and could not make a profit on it, losing something like $400 in false starts. I could not short it at the time. Usually when a stock moves up from below $5 to a high number, brokers do not have shares available to short. So I could only play the upside. But the darn thing was so volatile that it kept me sucked in. I got totally fed up and gave up on it by the afternoon of the 21st, and moved on to other things. Depending on my mood, with other stocks, I might decide to hold onto a stock to see what happens the next day or two. It turns out that it is a very good thing I didn't. NASDAQ halted the stock on July 22, to many people's shock. It reopened yesterday at $4.30 and closed under $4. Here's why:

***

Host America Comes Clean
By Lawrence Carrel  Published: September 1, 2005

THIS IS WHY YOUR mother told you to always get things in writing.

Shares of Host America (CAFE) plummeted 74% to $3.71 Thursday after the cafeteria operator admitted that it never had a formal agreement to test its energy-saving lighting technology in a handful of Wal-Mart Stores (WMT) locations. A July 12 press release that indicated the Hamden, Conn., company had a deal with the world's largest retailer sparked a 357% run-up in Host America's stock by July 22, the day Nasdaq suspended trading. Shares hadn't changed hands since until the halt was lifted early Thursday.

"The Nasdaq wasn't allowing them to trade while the information in the marketplace wasn't current and correct," says Jacob Frenkel, a partner at the Rockville, Md., law firm Shulman Rogers. "But once the company made a proper and timely corrective disclosure, the Nasdaq [permitted] them to continue trading, but that doesn't mean the exchange still won't pursue the delisting of the stock." (Frenkel doesn't own shares of Host America.)

Six weeks after Host America announced the agreement to survey 10 Wal-Marts in preparation for the installation of its LightMasterPlus technology, the company changed its tune. "[T]here is not, and never has been, a formal, written agreement with Wal-Mart concerning the proposed 10-store survey that was the subject of the July 12 press release nor is there any agreement for the installation of LightMasterPlus," the company confessed in a Wednesday press release. The release went on to say that the company still believes there was an "oral" understanding to test the lighting technology at Wal-Mart. Following a preliminary internal investigation into the circumstances surrounding the claims, Host America Chief Executive Geoffrey Ramsey was placed on administrative leave without pay effective Tuesday pending the completion of a more thorough probe.

"Here you have a disclosure 180 degrees from the previous disclosure, and that is significant," says Frenkel, a former federal prosecutor and enforcement lawyer for the Securities and Exchange Commission. "It's unfortunate that it took an internal investigation and the hiring of new counsel to do what they should have done all along, and that is make full fair disclosure."

In an interview with SmartMoney.com on July 12, when Host America's shares doubled in value, Chief Financial Officer David Murphy was upbeat about the potential of the purported deal for the LightMasterPlus technology. "If it works for 10 stores, it will work for 1,000 stores," Murphy said at the time. "Our intention is to work with America's largest retailer, and upon a successful test site roll out the product to the entire company." Murphy has been tapped to serve as acting CEO until a special committee formed on Aug. 18 by Host America gets to the bottom of the controversy.

***

The company is riddled with lawsuits and will probably be forced into bankruptcy. Serves them right. All I care about is that I didn't get stuck. I have many daytrader friends who did, and lost many thousands of dollars. Such is the life and the risk of a daytrader.

>>>Vinny
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Yuri_Prime

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Re: Host America
« Reply #1 on: September 13, 2005, 05:18:51 PM »

An excellent demonstration of Sir Issac Neuton's law of the Stock Market, "What goes up must eventually come down."
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TonyDiGerolamo

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Re: Host America
« Reply #2 on: September 15, 2005, 03:42:39 PM »

Ouch.  I say, buy Sirius before January.

-TD
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Horace

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Re: Host America
« Reply #3 on: October 21, 2005, 11:40:04 PM »

Ouch.  I say, buy Sirius before January.

-TD

Are you kidding?
 :P
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Saint_Moko

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Re: Host America
« Reply #4 on: November 07, 2005, 02:44:29 PM »

and THIS is why I don't dabble in stocks.
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Re: Host America
« Reply #5 on: November 14, 2005, 11:34:01 AM »

Quote
and THIS is why I don't dabble in stocks.

Yeah.  That and I've got other things to spend my hard earned money on, like food and outfits for my iPod ::)
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