A worthless company that shall soon reward its foolish investors

Many things can be said about MaxLife Fund Corp (OTC BB: MXFD). Certainly, it could be called overvalued: the company, trading at a recent $18.89 per share and a market cap of $572.2 million (it has 30.3 million shares outstanding as of January 14), has a book value of $560,000 and revenues for the most recent quarter of $330,000. The company could be called a great speculation: since August 6, 2007 its share price has increased from $1 to $18.89. Since January its shares have doubled.

One thing that is certain about MaxLife Fund Corp is that it will not reward long-term investors. Even if the company does execute on its highly optimistic plan put forth in a recent press release (which I believe to be unlikely), its revenues and earnings will not justify its current market cap. One day its stockholders will realize this and the share price will crash down below $1.

Another ill omen for investors: Itamar (Eddy) Cohen is a 46% owner of the company. Stocks promoted by Cohen have not faired well: two of his recently promoted stocks have fallen 97% from their peaks.

For more information:

Forbes Informer article
10Q filing with SEC

Disclosure: I am short MXFD. I have a disclosure policy.

0 thoughts on “A worthless company that shall soon reward its foolish investors”

  1. How do you go short an OTC stock? None of my brokers can trade in it? Is there a broker you recommend for shorting frauds like this?

  2. I of course do not recommend short selling, as it is very risky. For example, I currently am sitting on a 50% loss in MXFD. Also, it is very hard to get shares to short such companies. The one discount broker that allows for shorting of OTC stocks is Interactive Brokers.

  3. Thanks very much for the brokerage recommendation. Here’s the stock screener I use to identify shorts:

    Your Screen Summary:
    (Number of Employees 100)
    and (Revenue ($ mil) – Trailing 12 Months 8%)

    My current shorts from this screen are PRKR, SUF, ALTI, RZ, AERG, and REFR.

    When I’ve been unable to locate shares to short but LEAPS are available, I’ve started doing synthetic shorts:
    http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_P/threadview?bn=14618&tid=28623&mid=28625

    Here are my Yahoo message board posts:
    http://search.messages.yahoo.com/search?.mbintl=finance&q=shorty735261&action=Search&r=Huiz75WdCYfD_KCA2Dc-&within=author&within=tm

    Thanks again for your blog.

  4. I went to Interactive Brokers and they did not have MXFD available to short…was it previously? Any other ideas of where to short?

  5. It was only available to short for a brief period of time at MXFD. ThinkorSwim allows shorting OTC stocks as well, but I doubt they have any shares available.

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