“I’m going to shout it from the rooftops to get the word out,” boasts share tipster Frank Black. “This is NO misprint! I’ll repeat my offer to you: Unless you double your money in three months on at least one of my share tips, everything you’ve received is FREE. That’s right, FREE!”
Really? Not according to one of Moneyweb’s community members, who subscribed to Black’s “Red Hot Penny Shares” (RHPS), a newsletter distributed by Fleet Street Publications.
Our community member subscribed to RHPS around April this year. He followed its advice, and purchased shares in Cellcom (JSE: CEL) and Onelogix (JSE:OLG).
Far from doubling, the share prices of these two stocks have actually been in a state of decline since Black tipped them.
In fact not one of the five shares identified by Black as winners doubled in the three months. Their prices all fell or stagnated, in sympathy with the rest of the market. Our community member thus asked for his subscription fees back.
Instead of receiving a refund, as Black so boldly promised he would, our community member received a curt email stating that his claim was out of a so-called guarantee period.
An insincere guarantee
It turns out that subscribers have only three months in which to voice their dissatisfaction with RHPS, if they are to expect a refund. This condition is contained in print much smaller than that used for Black’s promise above.
RHPS’s promise is thus hypocritical. If at least one of its stock picks doesn’t double in three months, you’ll get your money back. But you can’t get your money back if you wait more than three months. And you have to wait at least three months to know for sure that the picks haven’t doubled.
That is the equivalent of a hospital telling a pregnant woman that she’ll get a free delivery, provided she has her baby after ten months.
After Moneyweb approached Fleet Street Publications’ Annabel Koffman, she offered our community member only one month’s subscription back. Unhappy with this offer, he says he will seek financial redress through the ombudsman for financial services providers.
Koffman says that RHPS has been in existence since 2001 and has 1000 “very happy customers. One of the things we pride ourselves on is delivering on our money back guarantee which we offer with virtually every publication that we produce.”
Hot air or hot stocks?
RHPS’s puff material, which runs to 16 pages, is full of “hypothetical” examples of how you could have earned huge amounts of money by trading on Black’s tips. It is long on success stories, and mysteriously short on failures (RHPS once infamously tipped Milkworx at more than ten times its current trading price!).
Yes, RHPS subscribers have made money on its tips, especially in the past few years.
But it is dubious logic to attribute these returns to Black. Virtually every penny stock on the JSE has done well in recent history. You could have selected penny stocks by throwing darts at the share-price pages three years ago and have many successes to boast about today.
There is not a shred of evidence that Black has been able to outperform the JSE’s Small Cap Index over an extended period of time. Nor is he able to avoid really catastrophic investments (think Milkworx).And if Black really is as good as he claims, why is he selling his tips for the paltry sum of R970? In fact why is he selling them at all?