HSOA – Update (Stock Lemon)

By: ispeculatornew
Date posted: 06.11.2007 (12:00 am) | Write a Comment  (0 Comments)

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HSOA – Home Solutions of America (Nasdaq) (Closing Price – $6.00)

The stock price of Home Solutions of America has taken quite a hit in the last week so I will provide an update of what caused this and where I think the share price is headed from here.

The initial cause of the selloff was an article written by stocklemon.com which calls itself “Cintron Research”. Before I go into the details of the article they wrote let me give you some more information on stocklemon.

The people behind stocklemon establish short positions in stocks, usually companies that trade on the pink sheets, and then they write negative articles about the companies to drive the stock price down. They basically try to scare people into selling shares of the companies they write about so they can make money. The articles they write have to be taken with a grain of salt, or just disregarded, considering the obvious bias they have.

Even though it is obvious what they are doing, they won’t disclose their positions. Also, they make a point in there disclaimer to say that they may not be providing all the information available. Obviously, you should read the information on their website with suspicion.

In light of this information I will describe the articles they wrote. They accused Home Solutions of America of fraud and claimed the last couple of contracts they announced were made up. Home Solutions responded to the articles and disclosed some more information about the contacts but didn’t provide all relevant information due to “confidentiality provisions”. They did state “over the coming weeks” additional details on the contracts will be announced.

I think the lingering questions about the contracts will depress the share price of Home Solutions short term but I think most of the damage has been done and it would be unwise to sell shares right now. I think the stock price of Home Solutions will recover very quickly if the company further clarifies details about the contracts. There are also many potential catalysts, which I have previously mentioned, that should benefit Home Solutions in the future.

For now I am going to change my recommendation to hold until more developments happen over the next few weeks.

Disclosure: I currently own shares of HSOA.

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