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Hip Hop Social Media Meets Wall Street: 50 Cent and His $8.7 Million Penny Stock Tweets

Submitted by asiablues on 01/15/2011 03:49 -0400

"[H&H Imports] Stock went from 5 cent to 10 in one day. You can double your money right now. Just get what you can afford."

[H & H Imports has]…15 products this year. If you get in technically I work for you. BIG MONEY."

Think you are reading the script of Boiler Room? You probably are not that far off. These are actually statements, according to Guardian, broadcasted by rapper 50 Cent on twitter, the social media site, on which 50 Cent has over 3.8 million followers. (The original tweets have been removed from 50 Cent's Twitter account.)

290% Pump = $8.7 million Paper Profit

H&H Imports is a penny stock traded on Pink Sheets under the ticker HNHI. Apparently, 50 Cent’s 3.8 million followers heeded his tweets, as HNHI shares saw a 290% jump in one day on Jan. 10, 2011 (See Chart). This is not one of those paid promotions that celebrities sometime do, and by NY Post’s account, that pop also translates into $8.7 million paper profit for 50 Cent. That means 50 Cent owns about 30 million shares of the stock.

Insider Disclosure?

There are some aspects of this event that could attract interests from the SEC. For example, 50 Cent did not disclose that he purchased about 13% of H&H Imports, consisting of shares and warrants, in a private placement back in November, 2010.

According to another article at Hotstocked.com, the price per unit was $0.10 and thus the total investment made by the rapper amounted for $750,000. But the article went on to say "It looks like the warrants have also been already exercised," and the actual number of shares owned could as many as 30 million, which is the number cited by the NY Post article.

From $412k loss to $8.7 Million Profit?

Using just the $0.10 per share and $750,000 as the cost base, the stock’s 4.5 cents price on Thursday Jan. 6—right before the pump tweets—could represent a paper loss of $412,500 to 50 Cent, at the minimum. (Yes, this is loose change to the rapper mogul, as 50 Cent net worth is estimated to be $480 million, but Martha Stewart had served time for far less.) Furthermore, making claims like “double your money right now” to investors is simply a big no no.

"Alternative Exchange"...For Good Reason

However, what really boggles my mind is the fact that 9.24 million shares were traded in two days flocking to a high risk penny stock largely on celebrity tweets!

I’m not sure if anybody invested in the stock has bothered to do any due diligence homework. First of all, there’s a reason these Pink Sheets stocks are listed on the “alternative exchange” – they are not exactly financially sound and highly speculative.

Then, there’s this small matter that H&H Imports does not even have an official company website. Of course, the various and extremely vague business descriptions from Yahoo Finance, and Google Finance only further affirm one of the typical penny stock's characteristics.

NY Post also reported that as of Sept. 30, the company has accumulated a deficit of $3.3 million and in March its auditor raised questions about its ability "to continue as a going concern," the company has said in financial documents.”

Ok, ‘nough said.

Pump, But Not Sure About Dump

The stock, after peaking at 39 cents on Jan. 10, has since dropped almost 31% to close at $0.27 on Friday, Jan.13. So, apparently there’s some dumping going on. Nevertheless, I personally am quite flabbergasted at the apparent faith behind the stock as it is still way above its low of 4.5 cents.

Anyway, for now, there’s no indication that 50 Cent has sold his holdings to complete the “pump and dump” cycle as some have suspected him of. I guess we will leave it to the SEC and other regulatory agencies to sort it all out.

Meanwhile, there seems to be some PR coaching coming through in the more recent tweets by 50 Cent such as this one:

"I own HNHI stock thoughts on it are my opinion. Talk to financial advisor about it."

Dian L. Chu, Jan. 15, 2011 | Vote at Shorty Finance Award | Facebook Page | Google Profile

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Fri, 06/17/2011 - 05:38 | 1376898 robins

I agree with your conclusions and will eagerly look forward to your incoming updates. Just saying thanks will not just be enough, for the phenomenal clarity in your writing. facebook marketing

Sat, 01/15/2011 - 13:23 | 878747 alexwest

this is what USA became.. #igger w/ criminal past who probably dont know all letters in alfabet pumping junk on CNBC..

nothing new under the SUN..

do youself a favor re-read Roman Empire, http://en.wikipedia.org/wiki/Julio-Claudian_dynasty

alx

Sat, 01/15/2011 - 23:55 | 879430 The Talmud Kid

I'm assuming this n igger has as many jews around him as does Barry X.

Sat, 01/15/2011 - 13:48 | 878762 Bob

The validity of your critique notwithstanding, I have to assert that he is, for all his shortcomings, truly a self-made man whose weatlh is far more respectable than that of the bankster spawn who not only contribute less, but do far more actual damage to our world while enjoying equal financial success that is above both reproach and popular ridicule in their cultured Hamptons circles.

The Empire has never been all that it was supposed to be.

His coming fall at the hands of the SEC will be the result of trying to run with real gangsters . . . completely out of his league.

To the extent that we all know the truth of that, I would maintain that 50 Cent is hardly a relevant barometer of our collapse.

Sat, 01/15/2011 - 14:52 | 878855 Dr. Porkchop

Blankfein, Dimon or any of these white shoe boys didn't take nine bullets. You don't make it in the world 50 came from without having some wit about you. I don't think he's that dumb. Maybe he doesn't know anything about Wall st., but he knows the raw cut throat business of the ghetto and I'm sure he could learn the ins and outs of Wall St quick enough.

Sat, 01/15/2011 - 16:34 | 878974 Dolar in a vortex

Smarter people than Fiddy spend decades trying to "learn the ins and outs of WallStreet" and they still lose their butts.

He's obviously a smart guy, you don't come from nothing into millions by being a dope.

Hopefully he tries to rescue some kids who remind him of himself.

Sat, 01/15/2011 - 12:29 | 878681 Dr. Porkchop

This mother fucker took nine bullets biatch. Bring yo SEC punk.

Sat, 01/15/2011 - 12:23 | 878671 cclaeys

Like organized inner city gang activity, the real money never touches the dope, go get some 15 year olds to do it - ya dope!

Sat, 01/15/2011 - 11:50 | 878624 Bob

WTF?! What up with this fool? With money like that, he can't get a hedge fund to run his racket? Jesus H. The boy needs to tap into a respectable Expert Network.

Instead, I see another high profile slam dunk for the Protectors of the Fair and Free Market at the SEC.

We can only hope that he shares a cell with Bernie Madoff.

Sat, 01/15/2011 - 11:22 | 878600 Arthur Two Shed...

Must have done his DD.

Sat, 01/15/2011 - 11:16 | 878591 JW n FL

asiablues,

Everything that I have seen you produce to date is quality...

Thanks for the Great! Entertainment! Puff... never mind...

Seriously though, You are fantastic.

Keep your head up, JW

Sat, 01/15/2011 - 12:21 | 878668 asiablues

Thank you.

Sat, 01/15/2011 - 09:17 | 878528 RoRoTrader

Nice article, Dian.........and once again, nice call on the that long OIL trade from last week.

http://www.youtube.com/watch?v=0qHqBBXFayw

Sat, 01/15/2011 - 09:23 | 878533 asiablues

Thanks.

Sat, 01/15/2011 - 08:35 | 878520 Cognitive Dissonance

I guess we will leave it to the SEC and other regulatory agencies to sort it all out.

Easily the funniest line in the entire article. At least I hope it was intended to be funny.

Sat, 01/15/2011 - 09:29 | 878534 asiablues

you are not incorrect.

Sat, 01/15/2011 - 06:10 | 878477 zhandax

All joking aside, Barrick et al is one instance where you do buy the fucking dip.

Sat, 01/15/2011 - 05:34 | 878471 pitz

Wow, this is an excellent insight into the minds of the same fucking morons (ie: "retail investors") that are poised to push AAPL over $350. Or the minds that neglect perfectly fine gold producers such as Barrick and allow it to collapse 5% in one day on no news.

Sat, 01/15/2011 - 11:14 | 878593 malikai