His name is Jason. I don’t press him for a surname because the trading world – or at least, the Twitter-based OTC penny stock world that he inhabits – knows him as The @WolfOfWeedStreet, and he prefers it that way.
Not because he has an ego that needs a costume to be carried off, but because, in his words, “It isn’t about me. It’s about The #Wolfpack, and that’s a community of people working together, not a single person making a name for his self.”
#Wolfpack is a group of social media-based penny stock investors that numbers, according to The Wolf, some 38,000 subscribers strong. It’s a large enough outfit that medical marijuana companies (and others) regularly contact him inviting his group to invest in their companies.
Few get the gold seal – the ‘unicorn pick’ status - but those that do can take a very fast and high ride, which begins within minutes of their company being announced as a pick.
“We haven’t even really promoted it yet,” says The Wolf, of his website http://www.wolfofweedstreet.com , which launched in the last few weeks.
The site charges for premium access, chatrooms, alerts when the group makes a pick and detailed due diligence on companies. And it has no trouble finding takers.
The #Wolfpack has a solid record of not just picking unknown companies that could be winners going forward, but directing a huge crowd to them that turns those price bumps into self-fulfilling prophecies.
Recent picks include Minerco Resources (OTCQB:MINE, Stock Forum), Stevia Corporation (OBB:STEV, Stock Forum), MyEcheck (OTT:MYEC, Stock Forum), The Vapor Group (OTT:VPOR, Stock Forum) and Canadian fave, Abattis Bioceuticals (CSE:C.ATT, Stock Forum). In the high times of February, Wolfpack members were making bank with multiple-baggers galore.
But this is no Compuserve-style pump and dump syndicate. The group makes stock picks, but doesn't tell members when to sell, and the idea is to pick stocks that can be held long, not abuse stocks at the expense of long holders. When riches are falling out of the sky, the group doesn't respond by sharing screenshots of their wealth, like many online touts, but rather funnels a piece of their riches to charitable causes and shares screenshots of those.
The Wolf doesn't expect regulators will have an issue with what he does.
“If Carl Icahn tells CNBC he’s buying Apple,” he said recently, “Apple stock is going up. Do the SEC go and yell at him about that? No, he’s just giving his opinion. That’s what we do.”
“After it goes up 30%, you’re on your own,” he adds. “I’m not responsible for selling your stock. You decide how greedy you want to be.”
The process for picking a unicorn isn't fast. The group works together to do due diligence on companies, with a core group visiting facilities, interviewing CEOs, and running the numbers through company filings and results. Once they agree, more or less, on a company they like, the wider group receives an email, and that stock WILL move.
“That’s how we do it,” says The Wolf. “Takes us a while. Lots of back and forth.”
When it works, a lot of money is made. Wolfpack followers have made big bucks buying into stocks valued in the tenths of a penny and seeing them rocket up 3000% plus.
Of course, when a stock rises 30% or more in a morning, it often keeps rising as others, often unconnected with the group, pile in on what they see as a hot stock that won't stop going up.
Investors, especially young investors new to the markets, can have a tough time taking their win and rolling out with a big profit when they imagine there's more to come, and because a low price and tight share structure is what the group is looking for, they can move up quickly.
They can also move down quickly… Up a million by lunch, sell your plasma for dinner money.
“I think that’s the problem with the MMJ sector right now,” he says. “There’s a lot of kids jumping into the sector, and their lack of maturity and impatience really shows. They’re jumping from one thing to the next thing, chasing price rises, not doing any digging into the companies they buy.”
And then there's the recent downward swing in weed stocks, led by the unfortunate near-collapse of Growlife (OTO:PHOT, Stock Forum) when questions were asked about share dealings.
One 26-year-old Wolf website regular I chatted with, going by the name SpaceNectar, tells me he's down 23% on his original investment, after being up over 100% early on. Before early March, when he discovered The Wolfpack, he had never invested in shares before.
“ I was too wet behind the ears to know that a run eventually ends, and I didn't take profits along the way. A fairly inexpensive lesson, all things considered.”
User Brisbon, 28, says he was up 180% on his investment in March. The recent weed slump has taken it's toll on his loot too. “Got to 433k, was in euphoria... didn't sell.”
He says he's getting closer to his original stake now but is hanging tough on two stocks he says he “knows will make it.”
User JeremyCupp says he was up 110% in March alone. When I ask how his portfolio looks after the slump on the market lately, he responds with a frowny face emoticon.
“It's shorts and market manipulator games,” says Brisbon. “Lots of people lost buying high, scared 'em away, or just bag holders. February's fast gains brought in impatient investors. No buyers, no volume.”
Interestingly, the group isn't freaked out about the volatility of a new sector, in a largely unregulated market sometimes dominated by manipulators. The group is still uncovering new picks, and still riding spikes... they're just much more focused on fundamentals and long term gains than they were – and just about everyone appears to feel like they've had a crash course in trading.
“The number one rule is always, don’t marry a stock,” says The Wolf. “You have to look at it as numbers not your baby. If I’m up 500k in profit, but it’s dropping 6% a day, why don’t I just take 25% off and see how it reacts? Then I can make a decision as to whether I take out my principal if it’s still going down. These guys don’t do that, a lot of them ride it down.”
Wolf included. After he recommended The Vapor Group as a unicorn pick previously, that stock ran up significantly, drawing big profits for many, before a short attack took two thirds off its value last month.
Wolf is still in.
“Yeah, I’m still sitting on 1.18m shares or something and a lot of people say, why didn’t you just sell all the way down? I’ll admit, maybe I should have taken my profits but I didn’t think the correction would be this big.”
The thing stopping him from bailing on that stock, and several others through a downward slide, is his belief in the fundamentals of The Wolfpack picks, including VPOR. They're hunting for what they believe to be long term plays that will stand up over time. The one-day three-bagger? That’s just a bonus.
“For example, I’m looking at MCIG (OBB:MCIG, Stock Forum); it’s still over the high of VPOR. The share structure is nearly identical, but they have no money. No revenues. What are their products? Their products suck. VPOR is easier for me to be comfy with on the long term because it’s in my backyard, I can just drive over and ask questions. When I go there, I’m looking and listening. I’m seeing the building, the people working, I drive in through the loading dock so I can peek in, are the trucks loading up? Sales, revenue, fundamentals, real business.”
An inner circle of confidantes regularly makes visits to facilities and conventions elsewhere in the country. A party and dispensary tour is planned for Denver later in the year.
But, like much of the investor community, all the due diligence in the world means little when a bigger dog down the block begins playing the opposite end of the trade. VPOR has risen off the bottom since it became a target of the short war, but like a ground war in the 19th century, ever acre won takes a concerted push.
Recent results have been good, but war is hell.
“VPOR has numbers. Sales increasing. Good products. People on Twitter are still saying it’s a scam, but you can see their financials – it’s not a scam, it’s real money. Their preliminary numbers match up with the real numbers they’re filing. They’re doing good business. Why would I trade out of that at the bottom? You can't listen to bashers, you have to know what you're buying.”
#TheWolfpack isn’t something I knew about beyond a month ago. Up north in Canada, the extensive use of social media around penny stocks isn’t something that has hit the mainstream. Partly because the OTC can be a gong show of scammers, dreamers and shorters, but also because the resource-heavy Canadian smallcap investor base is older, less tech’ed up, and likes to gamble on exploration and NI 43-101s more than a vending machine company with a $0.0001 stock, or the Psychic Friends Network (OBB:PFNI, Stock Forum).
The recent mining-to-weed diaspora has changed that a lot, bringing a younger investor into the Venture Exchange and CSE, certainly younger than the market has seen since the dotcom days. They too have lived through the crazy highs and sad lows as the weed industry moves from vision to reality.
Just as with the dotcom days, this new audience is a crowd with a disposable income and a passion for the product. The ABC123 demographic that is prized by marketers and advertisers has little interest in a 12% return on their money. They want doubles and the weed sector has given them plenty, even in a rough recent turn.
Wolfpack member Lupo1423 says, “Definitely can say I've learned a lot since March. First penny stock I bought was SING, rode from .02 up to .08 and sold when it got to .06. And now they haven't been doing shit.”
The Wolf says he started out investing after college, when his life started coming together and he got engaged. He started paying more attention to what he was doing with his money and, after some time spent investing in midcaps for decent but uninteresting returns on a small stake, he began to watch the “psychology of the market” and was drawn to the penny arena.
“If I put a thousand bucks on some NASDAQ stock and it goes up 10%, who cares?” he says. “These are companies that can go up 1200% in quick time and if you're young and only have so much money, that's a big draw.”
When I stumbled across The Wolf, it was a day before the BBC was going to publish a big piece about him, which looked for all intents and purposes like it was going to catapult his group into mega-market mover status. The story quoted him as saying that he'd quit his job as a disaster consultant to focus on the huge returns he was getting, with more than $500,000 having been earned in the previous six months.
"One day, people are going to ask me how I became a millionaire," the Wolf told the reporter. "And I'm gonna say, 'From weed stock.'"
It was a time where everyone had been seeing large green numbers on their trading dashboards, and the publicity the BBC was bringing promised to grow the group to a point where it could really make some moves.
Instead, as the article went wide, the Wolfpack picks crashed as other groups took short positions to teach the upstarts a lesson.
“I think it did draw in the shorters a bit,” says The Wolf. “You have a lot of these guys who are pretty well established on Twitter and then some young guy comes from out of nowhere and all of a sudden he’s on the BBC. A lot of this is ego with these guys - whatever, I understand, it’s money and the guy that makes the money is the guy that’s most arrogant a lot of the time.”
“It’s like being in middle school,” he says. “People want to hold on to being the king.”
An online feud between #TheWolfpack and self-proclaimed stock trading guru Tim Sykes blew things up for a solid week after that crunch, as Sykes yelled all over social media about teaching the Wolfpack a lesson and the Pack yelled back that they'd squeeze his shorts, with both sides getting distracted before the two alpha dogs finally made contact and settled scores.
For now, #TheWolfpack continues to fight teething pains. A recent pick appeared to leak early, running up hard before word got out. The ensuing post-alert gains soothed hurt feelings, but those who would previously hold their stock for weeks are now more likely to take their profits by the end of the day.
Other picks, where the group did their due diligence, turned out to be not the long term star they were sold on.
“Fortitude Group (OTO:FRTD, Stock Forum) was one, unfortunately, we got duped on. That was brought to me with all this due diligence that was just gift wrapped and everything in it sounded too good to be true. I asked how they had this info, it seemed like inside info and I don’t want to get into a situation that’s not above board. So we said, let’s talk to management, see if the share buyback is legit, etc, and when we’re sure there’s something here that could be really undervalued and we think it could run, great.”
“We did a conference call with management, the CEO, and we fired some questions at them and talked for an hour, always reiterating we don’t want info that will get us crucified later for having, we just wanted to get some pieces to the puzzle so we could reverse engineer what was going on.”
“They confirmed everything and unfortunately we released the pick a few days before a huge market correction and management just fucked up. When we talked to them, before we got involved, they were talking about releasing press release after press release, and we told them not be PR whores, don’t drop news like skittles. We said ‘why not just do a conference call?’ Sounds like you have good stuff, why not let each of those things spread organically? Maybe a guy listening picks up on one thing and another guy picks up something else rather than PR after PR.”
“Long story short, we dropped that we were getting into FRTD; ‘do your due diligence, management answered our questions but the choice is yours.’”
“After that, the price goes up 90% and people started to sell - the dump began. People were all over us, how could you dump this on people? We didn’t dump shit on anybody. We’re not responsible for you selling your stock. It went up. The profits were there.”
I've watched The Wolfpack up close for a few weeks now, even joining them on their VPOR buying to get a sense of what life is like at the coalface.
Unlike many corners of the penny stock sector *cough*iHub*cough* - surprisingly to me, considering the average age involved – the group is amazingly focused, well behaved with each other, and eager to learn. Their chatroom is a constant flow of ideas and opinions on this company and that, this strategy and that, and a decided lack of fealty to their leader, an atmosphere he encourages by speaking softly, rarely, and considerately, even in the face of social media's tendency to attract trolls. It's like Lord of the Flies on Bizarro World.
Detractors, many of which appear to be people who jumped on expecting to quintuple their money in a day and lost it all betting dumb, regularly point at The Wolf and chew him out for not telling them when to quit their stake, or accusing him of shorting while they're buying. He takes it in better humour than I do, showing screenshots of his portfolio.
I asked the group what it is that makes them... well, normal in a world filled with absurd dudebro shit heels... and they were quick to answer.
“There's enough pain in this world as it is, why be negative?” says Pack member Joe Mayo.
“I like what The Wolf started,” says Lupo1423, “with the donations. That's one thing that kept me following.”
“It's a place where like-minded people can discuss the same interests/jobs and learn,” says Adam, “Like a bar but we don't have to keep buying rounds for everyone. Everyone brings a different aspect to the table.”
Justin says, “I think so many of us are just so new to this that we don't have grounds to be [douchebags].”
But perhaps the best response, for mine, was a single word answer from Bilbowtique.