ValueWiki Blog

If you’re buying a low-volume stock, always place a limit order. Look at Friday’s IDWD chart (from Yahoo Finance). There were only 50,000 shares traded. Right around 1pm some poor sap placed a market order and overpaid 12%. See that spike? Somewhere out there, a rookie is crying.

ValueWiki may now be the only financial site showing all funds holding a position in each stock. Thanks to Zach for some nifty programming.

Here’s how it works…

Let’s search for Apple Computer. The ValueWiki Apple Computer article shows a dashboard box stating that 1191 Funds hold Apple in their Top 25 Holdings, making Apple Computer the 25th most held stock by funds.

So every stock on ValueWiki now has a subpage listing all the funds with Top 25 ownership positions. Another upgrade to ValueWiki’s Fund coverage is on each Fund page. We now list the Top 10 Holdings for every US Fund.

How we generate this data

All Funds (aside from private Hedge Funds) make their holdings pubicly available. A fairly accurate portrait of a fund can be garnered from their Top 25 Holdings, or even their Top 10 Holdings, because of portfolio weighting. Zach parsed data for all US Funds (NYSE, NASD, AMEX, OTC) and found that only 4,500 stocks were held in the Top 25 position by US Funds. Ranking this data, Zach was able to discover which stocks were the most widely held by Funds. Due to the large number of ties, there are only 351 ranks. Thus, Apple Computer is ranked 25th out of 351, for stocks held by Funds.

Stocks most widely held by Funds

For those who are curious, these are the Top 10 Stocks held by Funds (in the Top 25 position in a Fund portfolio). The first number is the Stock’s rank, the second number is the total number of Funds holding. The full list of all 4,500 stocks can be found at ValueWiki.

1. BK OF AMERICA CP: 2750

2. GEN ELECTRIC CO: 2734

3. CITIGROUP INC: 2649

4. EXXON MOBIL CP: 2643

5. Microsoft Corporation: 2508

6. JP MORGAN CHASE CO: 2411

7. Cisco Systems, Inc.: 2313

8. PFIZER INC: 2230

9. AMER INTL GROUP INC: 2094

10. PROCTER GAMBLE CO: 1899

Two weeks ago, Google shed $5 Billion in market cap on Barrons’ article claiming Google is overvalued. Google’s current P/E is 61, or around 37 times FY 2007 earnings estimates. Google’s price has been stalled ever since.

Barrons has a history of predicting Google’s crash. And Google stock has a history of going up. For example, in February Barrons predicting Google would crash to as low as $175, and in November Google topped $500.

Does anyone at Barrons use the internet? Let’s not pretend, Google’s running the show. No search engine competes with Google. And Google Adsense pretty much single-handedly revitalized the internet, spurring the current Web 2.0 boom. Gmail revolutionized email, and may have just got perfect. What other company comes close to Google’s internet innovations of the past five years? Microsoft? Yahoo? Is a forward P/E of 37 really so expensive?

Okay fine, maybe it’s time for Google’s stock to rest for a few months from its steady ascent, but Barrons’ gloomy predictions strike me as a bit overblown.

Consumer Affairs has announced their Top 10 Scams of 2006, and number 6 is the classic Pump and Dump. Consumer Affairs sites a penny stock called Texhoma Energy that was email spammed in October. Daily volume grew from 53,000 shares to more than 5 million before the stock crashed.

Aside from gullible investors, the real victims in these situations are often the underlying companies. The ValueWiki community can help prevent these scams and protect investors by immediately reporting stock spam to ValueWiki. As soon as you receive stock spam, list the company on ValueWiki’s Top 10 Stock Spam Victims and make a note on that company’s article page. This will help alert investors that a small volume stock is being manipulated.

From its birth in September, Valuewiki is now ranked the 32nd largest MediaWiki-Wiki in the world. The list is dominated by the behemoth WikiMedia Projects: Wikipedia and Wiktionary, in all their various foreign languages. Removing these WikiMedia Projects from the list bumps ValueWiki up to 8th place for all non-WikiMedia MediaWiki Wikis.

That’s right, non-WikiMedia MediaWiki Wikis…MediaWiki is the software and WikiMedia is the foundation that overseas Wikipedia and Wiktionary. That is why we are a non-WikiMedia MediaWiki Wiki.

Inclusion in the world rankings currently requires a conservative article count of 8,700. ValueWiki currently has a conservative article count of 54,705.

I wrote a new ValueWiki Tutorial this week. Wiki can intimidate a lot of new users - this is probably the biggest challenge ValueWiki faces as a startup. I know it took me a while before I began to contribute to Wikipedia. I guess the trick is to present a tutorial that is as user-friendly as possible, and then add easily accessible help links to every page of the wiki.

The truth is, there’s really only about eight commands you will ever need to write on a Wiki. Just bold, italics, bullet lists, most of which are available as soon as you open an edit window.

Wiki is a great way to introduce people to programming, and is a sort of gateway drug to learning HTML. Zach believes HTML should be a mandatory high school class nowadays, a required course in a modern society. I take his point.

If you’re new to Wiki, check out the Tutorial’s wiki cheatsheet to help you get started. If you’re a Wiki pro, you can check out how I programmed the stacked folder windows. If you’re a Wiki Ninja, you may notice some redundancy in my programming; most likely Zach is going to trim things down. Take a minute to give the Tutorial a test drive and let us know if you think the Tutorial will be helpful to newcomers.

I read about JobberWiki on TechCrunch yesterday. JobberWiki is a forum for posting insider comments about Companies’ work environments. It’s definitely information that ValueWiki would want to link to.

JobberWiki is running out-of-the-box MediaWiki. This means setting up their website probably required a few hours work, tops. So I take it as a good sign that a wiki with a decent concept can receive media attention.

Since I’ve been on a big Alexa kick lately, check out how JobberWiki’s traffic spike from their media mention yesterday. Very nice.

Conversion Solutions Holding Group is a classic penny stock pump-and-dump that went from 10 cents to four dollars to an SEC lawsuit. Not to put to fine a point on it, but stock message boards are the breeding grounds that allow scams like this to grow and thrive. CSHD CEO Paul Rufus Harris himself had an account on HotStockMarket.com and regularly posted to the CSHD forum, instructing users to “buy the s— out of CSHD.”

Note: HotStockMarket has since deleted this link, and deleted all links to ValueWiki from their site.

The Saga of CSHD

What follows is a timeline from when the pump began (in August), to the fever pitch (the $4 spike in October) to the SEC trading halt (that gap in November) to its current pre-litigation collapse on the grey market.

From its August inception, CEO Paul Rufus Harris, now under SEC litigation, claimed that CSHD had received major financing from several major institutions. These growing claims culminated on Monday, October 16, when CSHD issued this 10-K claiming an asset portfolio worth $7.2 Billion.

CSHD’s 10-K claimed to own Lehman Brothers Holdings PLC Bonds worth $564,092,494.32, Republic of Finland Sovereign Bonds worth $939,000,348.90, and Caracas Group Bonds worth $5,000,000,000. In the 10-K, CSHD boldly states “the corporation currently has an asset portfolio of $7,292,601,135.22″ and claimed a current book value of $70/share.

By October, the CSHD Message Board on HotStockMarket.com was exploding with hundreds of messages per hour. A massive cheerleading section emerged among message board regulars, some of whom may have made 4,000% on the rise from 10 cents to 4 dollars. As is standard policy, any desenters to appear on the message board were quickly reported to HotStockMarket.com’s moderators and banned for being “bashers.”

Meanwhile, there was ample and growing room for skepticism. On September 28, CSHD skipped a much anticipated interview on Market News First. According to Market News, CSHD’s CEO didn’t show up to the interview and no one in CSHD’s office answered phones all day. Watchdog websites StockLemon.com and Stockwatch.com issued frantic warnings to investors about CSHD’s shady operations. TDAmeritrade blocked investors from buying the company, causing Paul Rufus Harris to level accusations that TDAmeritrade was carrying a huge short position on CSHD.

October 24, the SEC steps in

By October 24th, the SEC decided enough was enough. The SEC filed this restraining order against CSHD and Paul Rufus Harris and halted trading under rule 15c2-11. Neither CSHD nor Paul Rufus Harris filed replies to the SEC lawsuit. This has allowed the SEC to file entries of default judgement.

In a remarkable display of investor psychology, CSHD continues to enjoy a massive fanbase on HotStockMarket.com. The CSHD forum continues to be HSM’s most highly-posted forum. Investors have bonded together to create the Conversion Solutions Shareholder Committee to help in the restructuring and resurrection of what is essentially a corporate shell that defrauded investors of millions of dollars.

In November, Paul Rufus Harris was fired, re-hired, and fired again by the CSHD board of directors. The CSHD board has shuffled through various replacements, currently settling on Vancouver trader John Arlitt as CEO. Stockwatch.com has provided enormous and devastating coverage of John Arlitt, painting a picture of a former penny stock broker who is shady and underqualified at best.

The moral of the story

We are a long way from the days when the pinksheet stocks were actually listed on pink sheets of paper. And one would imagine that with the information-sharing power of the internet, scams like CSHD would no longer be possible. But unfortunately it is the information-sharing power of the internet that allows these cons to spread farther and wider than ever before. More uninformed investors were pulled into CSHD than could ever have been possible in the days of the pink sheets.

The saga of CSHD is exactly why Zach and I are starting ValueWiki. By keeping ValueWiki articles neutral and referenced, we are working to build a reliable forum for pooling investment information. By setting a Wikipedia-level of objectivity, we can counteract Message Board hype. Any investor who read the research and coverage on our CSHD page would have no excuse for losing money in that scheme.

In the end, what did Paul Rufus Harris stand to gain? Whatever his share-dilution was between August and October, was it really worth the jail time he will face? Did he really expect to keep his winnings, after publicly touting a $7 Billion asset value for his ten cent company? Yet people are drawn into these schemes every time.

My advice to CSHD bag-holders…learn better due diligence and start using ValueWiki!

Oh what a difference a day makes. Yesterday I noted that sports-wiki ArmChair GM had roughly the same traffic as ValueWiki. Today, on news of Wikia’s $2 Million buyout, their Alexa has skyrocked to 2,738.

This is a big week for Wikia, who just announced a $4 Million-plus investment from Amazon.com. Jeff Bezos is quoted in the press release saying Wikia has “cracked the code for user-generated content.” Ahem. I think he means Wiki has cracked the code. And Wikipedia proved the thesis.

For those who don’t know, Wikia is to Wikis what Blogger.com is to Blogs. Just free hosting in return for ad revenue. Not a bad idea. Wikia was started by Jimbo Wales, the co-founder of Wikipedia. He must have felt like a yutz once non-profit Wikipedia became the 12th most popular website in the world, so he found a way to monetize Wiki. If Jimbo gets rich off of Wikia, I will be very pleased. All of us in the wiki-world owe a tremendous debt to Jimmy Wales for pioneering Wikipedia and proving his vision to the world. Open source is admirable, but a man’s got to eat.

Interestingly, Wikia, like ArmchairGM, got a nice traffic bump as well from their funding announcement. Zach and I are grateful to be self-funded. We have freedom and autonomy. But maybe we should take on some funding just to get the traffic spike. What do you think, Zach?

Zach drew my attention to ArmChairGM a Wiki startup for sports fans. I’m not very interested in sports, but I’m very interested in this site for two reasons.

1. They’ve successfully incorporated Digg voting features into their Wiki, which is very impressive.

2. Techcrunch reports Wikia is buying ArmChairGM for $2 million dollars. Not bad for one year’s work, especially considering their Alexa is currently 97,466 (not that Alexa is always 100% accurate). ArmChairGM has a healthy 1,242 users. But TechCrunch seems to feel ArmChairGM was bought for their Digg technology more than their userbase. Will be very interesting to see how Wikia applies this technology.