Bonus: Please Don’t Buy This Coffee Stock …

by Travis Johnson, Stock Gumshoe | April 14, 2011 9:49 am

You already know that I try to avoid stocks that are being actively promoted — but I write about them on occasion, and so many folks have emailed about this one in recent weeks that I thought I’d share a very quick note about it.

The ad has come in most often from John Bell for “HacktheStockMarket”, and here’s what he says, excerpted:

“In this email I’m giving you all of my research on tomorrow’s pick.

“Why I believe in the company, why now is the right time etc.

“But I am not going to give you the name of the company or symbol.

“I’ll send you that stuff in a separate email on Tuesday morning.”

Now, let me remind you: this is a stock promotion, not a newsletter promotion. Meaning: their goal is to get you to buy the stock and raise the profile (and price) of the shares, not to get you to subscribe to a newsletter (though John Bell is also trying to get you to buy his special “Hack the Stock Market” report for $4.95 down … and$124morein31daysifyoudon’tcancel). I have no idea what “secret hack” John Bell is selling about the market in his e-book, but since he’s also being paid to shill for penny stocks (more on that in a minute) I wouldn’t want to pay for his investing advice.

There are several newsletters and promoters who operate in this way — they send out frequent teases about their “special report” or their “stock pick” that’s “coming soon,” telling us that they haven’t made a pick in months but they’re finally ready to send one out, so get ready. They wait a few days then send another barrage of emails, just ramping up the enthusiasm among readers until folks are salivating about the possible wealth-making idea … and of course, we think it’s a real idea from an analyst and not a pump and dump[1] scam … because if it was a pump and dump, they’d just put the stock ticker out there front and center, right?

Well, usually that’s true — most stock promotions, which are ad campaigns run by either companies who wish to raise their stock price and profile or by third party investors who want to pump and dump the shares, do indeed tell you the name of the stock up front. But sometimes folks like this — or like the DoublingStocks and “Marl the Robot” stock promoters a couple years ago — try much harder to seem like “real” stock pickers and build anticipation, and even to sell a subscription to their service as they’re trotting out a bought-and-paid-for stock promotion in the guise of a “pick.”

Which is what’s happening here. This pick has been teased and made a couple times already by John Bell — we identified it by the clues but you can certainly also find it by giving him your email address and sitting through his promotional emails until he finally sends the one that “reveals” the name and stock ticker (we did that, too, just to test our assumptions). So yes, the “big pick” that is continually teased as being “here tomorrow” has been “released” several times already to other folks who signed up for HackTheStockMarket’s effluvient.

Would you like to sit through the hints anyway, just to test your guessing ability? Sure, we can do that … just skip ahead if you’re not so inclined …

The hints and details from the “tease” ad:

“For the past year I’ve been scouring for small coffee[2] companies the market has missed.

“You’ see the trend of home roasting is as hot as ever.

“The problem…

“Is that almost every small gourmet coffee roaster is already ‘trading’ at dizzy heights.

“I had almost given up looking til about 2 months ago.

“When I stumbled upon a real diamond in the rough:

“A small gourmet coffee roasting company specializing in organic, fair-trade coffee.

“But it gets better:

“This company is owned and operated by the son of (probably) the most famous man in the world.”

And more …

“Heck, I bet at least 50% of the people in third-world nations know the name.

“And so this guy (the son of the super-famous celebrity) has named the company after his father.

“But here’s the 800lb Gorilla…

“This has given the company an instant worldwide brand.

“A trusted name.

“Worldwide brand recognition.

“This is something that even coffee giant Starbucks doesn’t have.

“And the same level of brand recognition would cost BILLIONS (with a “b”) in advertising expense.

“I can guarantee your Mother, your Father and even your Kids would recognize the name.”

So … didja guess?

That’s right, this special “secret” stock that’s perenially teased as “tomorrow’s pick” is …

Jammin’ Java (JAMN)

And yes, as you might guess from the “Jammin'” name, it’s connected to the estate of Bob Marley — who is indeed one of the most recognizable celebrities in the world, and one of the most heavily marketed (from what I’ve seen, he’s close to getting into Marilyn Monroe and Elvis territory when it comes to the revenue potential of a deceased celebrity). Jammin Java was started by one of Bob’s sons, Rohan Marley — who’s maybe not the most famous progeny (I’d guess that’s probably Ziggy), but probably second-most-famous. Rohan is the one you might remember as a football player — he was a linebacker at the University of Miami 10-15 years ago and had a brief professional career in Canada[3], and he has several children with Lauryn Hill.

Apparently Rohan has been trying to build a business for much of the past decade, and is active with much of the rest of his family in helping to manage the Marley image, but his biggest move was the purchase of a coffee plantation in Jamaica a few years ago and the renovation of that plantation to grow and process organic coffee under the name Marley Coffee, and trying to build a luxury eco-conscious coffee brand under the Marley name. Which is interesting — and a good story, you can see an almost-as-promotional story about Marley Coffee from the Jamaica Observer newspaper[4], published a couple weeks ago, but then it gets a bit less interesting.

Jammin Java trades over the counter (on the OTCBB) and has about 100 million shares outstanding — and Rohan Marley is a fairly large owner of those shares and it sounds like, initially, Jammin Java was set up to be the owner of the Marley Coffee plantation and brand — but Marley Coffee, owned by Rohan Marley, Lennox Lewis and some other friends, bought back the plantation and the name and gave Jammin’ Java a non-exclusive right to use the brand and Rohan Marley’s name in selling coffee to the wholesale trade, including those little coffee packets for hotel rooms, wholesale bags for restaurants and big box stores, etc. It looks like they might buy the coffee from Marley Coffee, since the bags say “Rohan Marley Jammin’ Java: Supported by Marley Coffee” on them, though they’re clearly intended to be different from the actual Marley Coffee products.

So though they are trying to build that business, apparently, from what I can tell that’s really all that Jammin’ Java owns that’s particularly unique or viable — a non-exclusive license to what is still a very new coffee brand. And on that, with 100 million shares outstanding as of the last 10-K, the company is apparently “worth” $200 million.

What does the company think this license is worth? According to the same 10-K annual report, they had an outside analyst value the perpetual, global, non-exclusive license, and decided that it’s worth $640,000. That’s the value that this asset carries on the books of Jammin’ Java, and it’s also their only asset that they list on the books.

Perhaps the company is worth something beyond the value of that license — but I don’t see why you’d want to bet on it. The world is awash in gourmet coffee brands, and Jammin’ Java would be competing with all of them, as well as potentially with Marley Coffee itself, in trying to get into hotels and restaurants … none of which will believe that they’ll make extra money because their little coffee bags have pictures of Rohan Marley on them, even if he does look a bit like his dad.

Marley Coffee might be an interesting brand and it’s certainly possible that they’ll build it into a business, but that’s now a separate and private company, they’ve allied with Cooking.com to build an online store and they’re trying to go for the upper end Jamaica Blue Mountain Coffee, organic, fancy bag and coffeeshop market — including distribution in Whole Foods (WFMI), which is underway in California, and some fancy coffeeshops with the Marley brand around the world, perhaps even including “virtual” visits to the Marley plantation if we’re to believe Rohan’s quotes in interviews.

With the Bob Marley name behind them, I wouldn’t count out Marley Coffee building up a decent business eventually — I’ll even go out on a limb and say that they’ll do better than Trump Vodka did with The Donald’s name behind them back in 2006 or so — but I don’t see why that would help Jammin’ Java very much. Jammin’ Java didn’t even have any non-officer employees until just recently (assuming that the marketing folks they brought in are employees), and as of their last filing they didn’t think they’d have enough money to hire any employees this quarter. They also have never generated any revenue (as in, they’ve never sold any coffee). To be fair, they probably will report some revenue soon — they say they now have a distributor in California to get them into some grocery stores, and as of a couple weeks ago they are selling their coffee on Amazon.com (or listing it for sale, anyway — right now there are five products, only one of which is available for purchase).

And to close the loop on a stock not to buy, it’s also worth noting that the other prominent name behind Jammin’ Java is Shane Whittle, who has become a somewhat notorious name in the Vancouver stock promotion circuit — there’s a funny article on him from the Vancouver Sun[5] here, and Whittle was apparently also involved as promoter pumping up the shares of Global Electronic Recovery, which became the publicly traded shell that Jammin’ Java did a reverse merger with to get a public listing. Whittle is the former President of Jammin’ Java and was a board member, and was cited as a friend of Rohan Marley who helped build the business initially. He apparently canceled millions of his shares of JAMN stock in December, according to the latest filing, at about the same time that Rohan Marley, who is still apparently active in Jammin’ Java and is on the Board of Directors, bought about 13 million shares for $3,000 from another former Jammin’ Java honcho, David O’Neill. No, not missing a decimal point — Marley paid .0002 per share, so he effectively bought 18% of the company (after the share cancellations) for three thousand bucks. Whittle apparently still owns a couple million shares, too.

After all the promotion going into this stock (I have no reason to think that Marley or the company had anything to do with the promotion, though I guess it’s possible), those 13 million shares would be worth about $25 million now. Assuming that you believe that this company, with assets of $640,000 and some early plans to sell coffee to wholesalers, is actually worth the ~$200 million that it trades at in the market now.

And John Bell? Yes, he was paid by a third party to shill for Jammin’ Java and to get investor interest up — along with, according to stockpromoters.com, several other stock promoting email “newsletters” and websites. Here’s an excerpt of the disclaimer from Bell’s letter that actually named the stock:

“htsm has been contracted to receive no more than fifteen thousand five hundred usd by a third-party shareholder of jamn common stock (centurion ventures) to cover and report on jamn for six months. centurian (sic) ventures and htsm and their affiliates have purchased and sold, are purchasing and selling and will purchase and sell shares of jamn common stock without notice to the reader.”

Which is pretty much what every “pump and dump” promotion says, thought the words can vary — there’s only one compelling reason for a third party to promote a penny stock, and that’s so they can then sell the penny stock for a higher price.

I might be missing something here, there’s quite a bit of complex absurdity in the filings and history of Jammin’ Java and I really only looked at the most recent 10-K (I particularly don’t know why the officers canceled shares) — but please, don’t buy this stock just because you like Bob Marley. I like his music, too, but I really, really don’t like this stock.

I might take them at their word about the book value of their only asset and buy the stock if I could get it for a market cap of $640,000, I suppose (that would be just over a half cent per share, if I did my math right) … If it turns into a company that deserves a $200 million valuation in the future, well, I’ll gladly buy a couple bags of coffee from ’em by way of an apology. Unless I’ve had a heart attack first.

And if it turns into the next Green Mountain Coffee (GMCR) or Starbucks (SBUX)[6], as implied by Hack the Stock Market? I’ll do pretty much whatever you want — how about I go to work naked, while eating my hat, sipping a cup of Jammin’ Java, and singing “One Love.” And I’ll even try my best to grow dreadlocks — it didn’t work out well when my little brother shoveled molasses into his hair as a rebellious adolescent in an attempt to Marley-ify his locks, but, frankly, my hair isn’t long for this world, anyway.

See a stock being promoted that makes you suspicious? As always, read the disclaimer on the promotion and you’ll probably notice how much that “expert” was paid to tout the shares … and read the company filings, which almost always completely cools an ardor you might have felt for an exciting story stock.

Source URL: https://www.stockgumshoe.com/2011/04/bonus-please-dont-buy-this-coffee-stock/