Thursday, May 31, 2012

Legend Oil And Gas (LOGL) Has Legendary Losses

I got a teaser mailer from some outfit called the McShane Letter, attesting to the stock-picking prowess of one Don McShane with help from some unattributed factoids.  The object of this pumping missive is Legend Oil and Gas (LOGL), a Seattle-based explorer that used to be known as SIN Holdings.  The disclaimer inside the mailer says Legend paid $850,000 for this promotional material, $24,000 of which went directly to Don McShane.  None of that matters to me.

What does matter is the company's performance.  Legend hasn't just managed to lose money every year since 2009.  Their net losses have actually multiplied.  I haven't seen anything like that after reviewing and trashing multiple penny stock pumper mailings.

Normally I'd stop right there, but sometimes I just don't know when to quit.  I have to fill this article with something.  Their management team has just one geologist but he appears to be running things.  I suppose a guy with "diamond" and "gold" in his surname is in the right career.  Everybody else at HQ has corporate finance backgrounds but little apparent experience in the mining sector.

Reviewing SEC filings is a must for serious investors.  Check out their amended annual report dated May 10, 2012.  They forgot to check the box indicating they're not a shell company.  Now that we've got that straight, check out the annual report itself from March 2012.  Legend had a deadline of today to raise an equity offering sufficient to pay off part of their outstanding credit facility.  It looks like the equity commitment they received from Lincoln Park Capital Fund on May 18, 2012 is legally sufficient to meet that obligation.  I also noticed that two separate inside holders filed Statements of Beneficial Changes in Ownership in April 2012 in which they disposed of some of their shares.  Folks, company insiders who are confident of a bright future for the firm they help run would be buying shares, not selling them.  Read the Risk Factors section of their 10-K.  The loss of two key executives would materially harm their business, and those are the same two gentlemen who sold shares in April.

I've pulled back the covers far enough on this one.  It's not for me, and neither are the wondrous musings of Mr. McShane in his newsletter.

Full disclosure:  No position in LOGL at this time.