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Charlatan stock Cloudtag remains a compelling short

By Lucian Miers | Monday 24 October 2016

Disclosure: The author has a short position in one or more of the shares mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

It wasa mixed week for the leading charlatan stocks on AIM. Shares in Cloudtag (CTAG) have come off the boil on an absence of news but there is worse to come for the bulls. These shares are set to collapse.

As Cloudtag is discovering, the retail product space is not the best sector to choose for misleading investors. To seduce even the most unsophisticated punter you need to promise the sale of a certain amount of physical product for a set amount of money within a given timeframe.

Somewhat recklessly Cloudtag has gone the extra mile in doing just that: following up the somewhat premature “launch” of its yet-to-be- manufactured fitness wearable product in January this year it has announced sales of $5.2 million for calendar 2016. Now that we are in the 4th quarter and there is no sign that a single unit has been sold the company has a problem.

Even the dumbest investor is beginning to wake up to the fact that practically all orders for the all-important Christmas trading period will be in by now and that he has been led up the garden path.

The realization is sinking in that the next announcement is more likely to be an admission that this is the case (aka a massive profit warning) than a sale of the company to Google or Microsoft.

That makes the shares a massive sell and I remain short.

This article first appeared on the Nifty Fifty website which Lucian Miers runs with Tom Winnifrith & Steve Moore. To access the website ahead of the next share tip from Tom & Steve and ahead of a new shorting idea from Lucian GO HERE

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