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Castor Maritime Stays Afloat Playing the Penny Stock Game

Back when I began work as a business reporter, in the late 1970s, penny stocks were a thing. Any stock that is persistently priced under $1 qualified.

A magnifying glass zooms in on the website for Castor Maritime (CTRM).
Source: Pavel Kapysh / Shutterstock.com

In those days, penny stocks were traded on something called the Vancouver Stock Exchange, now part of the TSX Venture Exchange. Author Joe Queenan called the VSX the “scam capital of the world.”

Rather than focus on the scams, I focused on the small market caps of these stocks. Small market caps are easy to manipulate. Even if the managers are completely honest, a trader can jump in, pump up the stock with a few trades, then dump it after others try to join the fun.

The GameStop (NYSE:GME) short squeeze gave Reddit players a taste of this easy money and they want more. One of their primary vehicles right now is Castor Maritime (NASDAQ:CTRM).

CTRM Stock Needs a Bigger Boat

Castor Maritime is a shipping company run out of Cyprus by a man named Petros Panagiotidis. Folks at Reddit seem to like the cut of his jib.

Castor wants to take advantage of the sharp rise in shipping rates from the post-pandemic re-opening of the global economy. It’s buying boats. It wants to buy a lot of boats.

To get money to buy boats, it’s issuing stock. It’s issuing a lot of stock. How much stock? InvestorPlace contributor Ian Bezek writes Castor had 2.6 million shares outstanding in 2019. It now has 700 million.

They say that on the internet “no one knows you’re a dog.” The same is true on Reddit. Anyone can pump anything, encouraging other users to “buy, buy, buy,” or writing “I’ll see you on the Moon.”

It’s a free country. If you’re not a corporate insider, it’s legal. If shares are falling, a bull will say, “buy to squeeze the shorts.” If the shares are rising, buy to make a fortune.

In Rides the InvestorPlace Posse

InvestorPlace has sent the equivalent of Wyatt Earp and his immortals after this game.

In addition to Ian Bezek, who wants you out before Castor capsizes, Will Ashworth writes, “don’t even think” of buying Castor. He mentions the EverGiven disaster. He cites the President’s “Buy American” plan. He talks of the move toward less-polluting ships. He offers a personal story.

Chris MacDonald writes that “the meme stock crowd is wrong” on Castor. Josh Enomoto argues Castor is “bleeding sentiment.”

The best of these stories is from Mark Hake. He wrote on March 23 that Castor was “poised to fall 50%.” Funny thing — since then, it has.

There is a short-term opportunity here, as Alex Sirois notes. Rates are up and if you have a ship, you’re making money. But rates also go down, and the rates that fall fastest are those on the oldest, least efficient ships. The way to play, he suggests, is with bigger companies that have a long history of operations.

The Bottom Line on CTRM Stock

Stocks with small market caps are easy to manipulate. Cynicism is also easy to manipulate. Young traders cynical about the market, hungry for a fast buck, are easy marks for the penny stock crowd.

The game of watering stocks isn’t new. They were playing it over 150 years ago with the Erie Railroad. The con men were eventually conned, and the biggest among them died young.

Any stock with a low market cap can be manipulated easily. Any CEO can water his own stock, for good reasons or ill. Don’t play cards with a guy called Doc. Don’t eat at a place called Mom’s. Don’t throw good money at shares that are easy to manipulate.

If you’re young, invest in good companies and let time do its magic. When you get to be my age, you might be a millionaire. Chasing the fast buck never works. But every generation must learn that the hard way.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: Penny Stocks — How to Profit Without Gettting Scammed

At the time of publication, Dana Blankenhorn owned no shares, directly or indirectly, in stocks mentioned in this story.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.

Article printed from InvestorPlace Media, https://investorplace.com/2021/04/ctrm-stock-stays-afloat-playing-the-penny-stock-game/.

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