University Bancorp, Inc. (unib)


First let me say that there's probably not a thing wrong with this stock. What I write about here is the 'pump and dump' scam that landed me in it.

As is often the case, I follow leads from Yahoo Message Boards in search of investment opportunities. One such lead led me to a Yahoo Group (something I have a fair amount of experience in, as I moderate half a dozen Yahoo Groups) called Hottest Channeling Stocks. The 'pitch' is that the moderator (Market General) will identify stocks that trade in a narrow band, or channel; by understanding this channel you will always have an opportunity to get out and get back in again at a more advantageous price.

Since it's a Yahoo group with viewable archives, I looked at some of his previous picks. For the most part, I could see the 'movement' associated with his trades, but I found it hard to pick out the 'channels' (this should have been a warning.....). Undaunted, I signed on, and I identified a smallish block of cash to play with his 'next pick'.

Next warning sign: his email did not arrive in the first half hour of the trading day as promised. Having some experience with the oddities of Yahoo groups and timely emails, I figured it was lost in the system somewhere and retrieved 'my pick' from the website. I bought a small position in UNIB at $2.79 per share.

It was only at the end of the day that I really dug in and 'surveyed the landscape' of this new stock (UNIB) that I had bought into. At that point, I found a message on the UNIB Yahoo Message Board from one of 'Market General's 'anti - camp followers', someone who has made it his mission to follow him around and 'educate the fleeced':

Definitely sobering. It was 'shouted down' by many of his 'camp followers' who were quick to jump in and tell how much money they had made by following 'Market General'. They denounced those who had lost money as 'not knowing how to trade'. One never knows in a Yahoo Message Board that one has just been dropped into who the 'real folk' are vs. the 'made up IDs'.

Here's a screenshot of what happened that day -

Google snapshot of UNIB on the fateful day

While it's true that I may 'not know how to trade', it's also remarkably obvious that this is not a 'channeling stock'. This is an extremely low volume, quiet little stock that mostly trades sideways. 'Market General' selected it because he can in effect 'make his own weather'. He can accumulate quietly, and then unleash his 'followers' onto it driving the price up. With his followers buying, he can sell for a profit. Those of us who are too slow to catch on become posterboy 'bag-holders'.

Had I taken the time to really look around before committing, I might have seen this beforehand. Failing that, if I had checked it carefully during the day, I still probably could have exited for my entry price. Waiting until the evening to unravel all of this means I'm stuck with a stock that's 'underwater' (to me). I could sell it at a loss, or I can wait a bit for it to creep back up and then slip out.

At least I didn't buy in in any quantity. My 'education' continues.

Out at $2.70 on 4/03/06, from a standing sell order at that price level. As it happens, the stock took a 25% jump to touch $3.12 based on a press release: "University Bancorp Reports Record Profit for 2005 With 66.3% ROE Due to New Islamic Subsidiary and Growth at Midwest Loan Services".



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