GWBU: Why you shouldn't buy

The following research will hope to reveal why you should think twice before buying into this company. This post will mainly be geared towards those of you who are inexperienced traders as the main goal of this blog is really to protect people from huge losses. I'll be going into as much depth as possible though so I expect this to be of value to experienced traders who already understand the pump-and-dump nature of this stock.

To begin, according to the yahoo business summary, Great Wall Builders Ltd. (GWBU) is...

...a development stage company, focuses to provide homes in the United States and China. It plans to design and sell homes with solar integrated systems, such as solar integrated roof tiles, solar hot water heaters, and solar electric photovoltaic systems. The company intends to market its products through commissioned employees and independent real estate brokers. Great Wall Builders Ltd. was founded in 2007 and is based in Houston, Texas.

It based on the price as of this writing, it has a market cap of 575M which is actually a bit low for past APS pumps (may be one reason to expect the price to increase in the future). The company has zero revenue, zero cash on hand, and according to the latest 10-Q: "As at December 31, 2011, the Company has a working capital deficit of $63,283 and an accumulated deficit of $126,783."

The company has very recently seen a change in management which could be seen as suspicious. The previous CEO had been Peter Evan Bell. According to the financial times:

Mr. Daniele Brazzi has been appointed as President, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Director of Great Wall Builders Ltd., effective March 23, 2012. Mr. Brazzi has studied general electronics, electrical engineering and applied electronics. He has collaborated with prestigious brands such as Sony, Kenwood, Clarion and Alpine in the automotive area, developing new technologies. He graduated in medicine for the construction of medical electrical, specific for bio-resonance to treat pathogens, and iris scanners, to detect early disease of human body. Mr. Brazzi has also worked in the orthopedics are for the Rizzoli Institute, Bologna, on ambulatory equipment. Over the past 10 years, Mr. Brazzi has worked in the specific area of the combustion engine, specifically in reducing emissions in the combustion engine. His most recent experience has let him to develop the START device, which boasts more than 800 worldwide installations.

Mr. Jay Almeida has been appointed as Treasurer, Secretary, Director - Operations, Director of Great Wall Builders Ltd., effective March 23, 2012. Graduated from the University of Chicago with a degree in economics. In addition, he graduated as an engineer from Universidad Santa Ursula, Rio de Janeiro, Brazil. Mr. Almeida has a masters degree in Marketing from Universidad de chile, Santiago, Chile. Mr. Almeida also has a Phd. in Engineering Economics from Bonn University, Germany. In 1999, he was nominated as Ambassador of Commerce of Florida for all Latin America and Caribbean countries. After a career as a bank industry for 14 years, Mr. Almeida moved to the US in 1989. Since 1990, Mr. Almeida has served as the President and CEO of PHN Group. PHN Group is an international business group of 5 companies involved with foreign trade (importation, exportation, business representations, international business consulting, trade finance and security technology) in all Latin America, Caribbean and European countries.

According to a marketwire report, the company also took on Mr. Dominico Chiovitti, as a Board Member:

From 1967 to 1992, Mr. Chiovitti was a Senior Chemist and supervisor of the Petro Canada Laboratory in Montreal, Canada. During his career, Mr. Chiovetti controlled and researched several new products, specifically Vanadium Pentoxyde derived from fly ash. Mr. Chiovetti was responsible in the design and development of a method to control CO & CO2 levels for industrial gas discharges into the environment, while collaborating with the Center of Emissions Control. Mr. Chiovitti is a member of the Order of Chemists since 1979 and graduated from the University of Montreal with a Bachelor of Science in Chemistry in 1967.

Although none of these new individuals seem to be involved in any significant issues, the most damning piece of evidence is that Mr. Brazzi also currently serves as the director of research and development at Dpollution International Inc (RMGX.PK). This company has also been previously involved in several stock promotions which include Wall Street Grand, a Lebed pick, a stock egg alert, and several StockMarketLife promotions.

To give you an idea of the success of this company and promotional strategy, RMGX once traded at 80 dollars a share and now is only worth 4 cents a share.

On March 19, 2012 GWBU actually entered into an Asset Acquisition Agreement with RMGX in exchange for 27,306,793 shares of restricted common stock. According to this same SEC filing, "Following the completion of the Agreement and the SPA, Daniele Brazzi control approximately 50.3% of the issued and outstanding shares of the Company." Thus he has a lot to gain from such a promotion if he plans to sell those shares into the promotion.

Another interesting tidbit that seems sketchy and was pulled from an SEC filing is that Peter Evan Bell, one of the previous CEO's quit his position 14 days after taking it on before being reappointed a while later: "On August 3, 2011, Peter Evan Bell was appointed as President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and a member of the Board of Directors. On August 17, 2011, Mr. Bell resigned from all positions with the Company."

As with any pump-and-dump the moral of the story is that the stock will eventually crash, usually within a month. Based on recent past APS picks, these stocks don't make it much past 2 dollars before tanking although this pick began its official promotion at a significantly higher price. Therefore, it is uncertain as whether 2 dollars can be used as an accurate historical measure of the top. Either way though, being long in this stock will become increasingly risky for each passing day.

Another significant factor with this pick is that there are actually shares available to short which has not been the case for the APS picks of the recent past. This means that there will be an awesome profit potential for shorts at some point in the future but I would not suggest shorting this early. It is possible and I think likely that the promoters will manipulate the stock higher in an attempt to squeeze these shorts would could allow the price to reach higher levels than we have recently seen.

If you are still skeptical about the level of sketchiness with this company and the associated promotion, I suggest you check out my post on the most recent APS pick, SNPK to get a sense of how right I was in predictions of what would happen over the next few months while it was being promoted.