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Parallel Media – a SELL as share price rise forces statement: a lesson in following the BBs

By Nigel Somerville, the Deputy Sheriff of AIM | Tuesday 10 January 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

Yesterday morning shares in AIM-listed Parallel Media (PAA) shot out of the gates from the start of trading, peaking at a gain of almost 200%. Meanwhile, over on the LSE Asylum the PAA bulletin board was full of speculation about a corporate deal which would see the shares roof it. 50p, 100p here we come. Having opened the morning at 16p, the stock peaked at 46.5p (mid) with peak prices paid of 48p. But then the company spoke….

This all goes back to an RNS of 30 December 2016 – the last trading day of 2016 and thus no-one-is-watching o’clock all day – which told us that the company's chairman had bailed it out with further loans of £288,000 to take the total owed by the company to him and entities he controlled up to £1.438 million.

But the RNS also referred to reviewing acquisition prospects and it seems to be this line which has sparked all the excitement. In particular focus is an outfit called Brick Live which seems to be some sort of events outfit connected to Lego in some way. The spark? Parallel’s Chairman owns the shares in Brick Live.

And so we saw revenue figures of £5m being thrown around.

Up went the shares. Up, up, up, and up some more.

The thing is that even at the peak price of 46.6p (mid) this outfit is only on a market capitalisation of a bit over £1 million and, lest it be forgotten, it seems to be keeping the lights on only because the chairman is feeding the meter from his own pocket.

Whadaya reckon: Parallel would get the shares in Brick Live for free and shareholders would not be diluted? Really?

I don’t know what is going on behind the scenes, although one might suppose that given the pretty lamentable performance of the company over the years some kind of a restructuring might come along at some point. Perhaps reduce it to a cash shell and do an RTO?

But existing shareholders would see the incoming business owners take the lion’s share of the equity, surely?

Judging by the share price movements, it seems as though either there is a big deal going on and word has leaked out….

….or this is just a plain old common-or-garden pump and dump. Welcome to the Casino.

My money is on the latter.

The company issued a statement at 2:34pm;

Parallel Media Group Plc (AIM: PAA) notes the recent share price rise.   On 30th December 2016 PMG released an update statement including the comment that it was reviewing acquisition prospects which will enable PMG in 2017 to confirm opportunities in the live event and entertainment sector. Whilst the Group continues to review acquisition prospects there have been no material developments since that time.

In other words nothing to see, move along please. For now.

Who knows, perhaps there will be a deal at some point but we can have no idea of what until it is announced, nor the terms – which might carry at least a small modicum of importance.

I’ve no idea who, if anyone, got suckered in by all this but I fear anyone who did has been had - especially those on the end of the four trades which went through at a whopping 48p.

I would say that one should go by RNS statements only, and not BB lunacy. But that would imply that RNSs from AIM-listed CloudTag (CTAG) and the now AIM-executed African Potash (AFPO) were all completely true and not misleading in any way. As for Parallel Media, for the record, I don’t believe for a moment that the company or its directors and advisers have done anything wrong and yesterday’s statement should, in the end, settle things back down again.

Perhaps if AIM cranked up the risk for those releasing false RNS statements – and those approving them – it might be easier for the mug punter to discern between the realms of p&d and truth.

Needless to say, with the company now having told us that there have been no material developments since the RNS at the very back end of 2016, one would suggest that the journey from here will be a descent back to the levels we were at before all yesterday's nonsense kicked off.

As such with the shares having closed at 30.75p, as against the 16p opening price and the 13p at which the shares have been marooned for most of this year, if I were a holder I'd look skywards, be thankful and SELL.

Meanwhile, here is yesterday’s share price and volume chart (courtesy of ADVFN):

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