Toby Smith, a market analyst for Fox News Channel and best-selling author of investment books, has taken a special liking to a small penny stock called China Tel Group. Indeed, he has been touting the stock to his Twitter followers for the past four months.
Unfortunately for Toby (and those who followed his recommendations,) the Asian broadband wireless company has failed so far to find the financing it needs to stay afloat despite several arrangements with relatively unknown investment firms that have subsequently walked away from the deal several times.
Announcements of the financing deals have caused big spikes in China Tel’s stock price, only to be followed by dramatic drops when the investment firms failed to deliver the cash. Curiously, several China Tel insiders and a mysterious Mexican trust company have cashed out to the tune of several million dollars right before the shares tanked. Apparently, Smith's stocks have tanked in the past.
From The Street Sweeper:
Despite his popularity, as evidenced by two bestselling business books and a highly rated show on Fox, Smith has a checkered track record at best.
Smith actually began stumbling about a decade ago. He helped launch a high-tech mutual fund at the height of the dot-com bubble in 2000, Reuters revealed, only to see it shut it down as a result of massive losses – with his second-largest holding plummeting by 90% -- less than one year later. He has gone on to embrace some other notorious money-losers since that time.
For example, Smith has often recommended some of the same ill-fated stocks exposed by Citron Research (formerly known as StockLemon) before they crashed. He has also criticized the bearish website, despite its early calls on several doomed companies, along the way.
For his part, Smith told The Street Sweeper that he is confident China Tel will secure new financing and maintains his $8 price target.
“These are engineers and construction guys,” Smith told The Street Sweeper. “They’re not capital market guys. When it comes to capital structure,” he conceded, “they’re knuckleheads.”