Cascadia Investments's shares have skyrocketed, but it spends less on developing software than someone is spending to pump up the stock.
February was a spectacular month for an unspectacular company called Cascadia Investments.
Its share price more than tripled, inflating the Tacoma company’s market capitalization to $57 million. The stock has rocketed from two-tenths of a penny six months ago to 27.5 cents on Friday — a prodigious 13,750 percent increase — as cheerleaders on Web message boards and Twitter talked up Cascadia’s switch from real-estate investments to Internet games.
Those anonymous enthusiasts, be they actual stockholders or paid shills, surely haven’t visited its corporate headquarters — a frumpy one-room office with no company sign, just a yellow placard on the window sill that advertises “The cheapest rentals.”
And it’s unlikely those boosters have examined its skimpy, unaudited financial statements, which are not filed with the Securities and Exchange Commission.
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While someone paid a stock promoter more than $10,000 for a campaign touting Cascadia’s stock, its financials show that in the latest quarter the company only spent a $4,620 on its Internet business.
But on the bottom rung of the over-the-counter market known as the Pink Sheets, where Cascadia trades under the ticker symbol CDIV, none of that seems to matter.
Cascadia Investments (no relation to Bill Gates’ investment firm Cascade Investments) has issued a blizzard of news releases since last summer about buying or licensing online games and Web sites.
CEO Nazir Maherali said this past week that the company’s approach is “to acquire or work with developers who have interesting ideas or Web sites, and put a little bit of our expertise and financial resources to bring them to fruition.”
That grand description, however, bears little resemblance to the picture drawn by the company’s financial statements, which show that in the second half of 2009, the expenses of its “Internet division” were only $10,620.
Cascadia’s total revenues for that period, including those from its remaining real estate, were $61,351. Its “financial resources” amounted to $4,694 in cash at year-end. (No, there are no missing zeros.)
Its Web properties are no more impressive.
A site it debuted in June — ticktweet.com, described as a weekly investment competition conducted via Twitter — hasn’t posted any winners since August. “We put that on hold” after not finding any sponsors, said Maherali.
Last month it announced two more deals. One was “a majority stake” in customflashgames.com and a “marketplace” where outside developers can sell casual games. But most of that market’s 19 categories are empty, and its two games were developed internally.
The other was an “exclusive licensing agreement” on another company’s Facebook application for virtual pets, called AdoptMe. Facebook, which claims 400 million active users, reports the AdoptMe application has just 578.
Maherali declined to say which of the company’s half-dozen initiatives are most promising. “Some of the sites we’re rejigging a bit,” he said. “We’re building up a user base, we’re not focused on revenue.”
With 207 million shares outstanding, Cascadia’s market capitalization has pushed up to that of some Washington companies that may be damaged but nonetheless run a real business, such as Cardiac Science, which has annual sales of about $150 million, or Banner Bancorporation, which has 80-plus branches in three states.
Cascadia’s limited financial information isn’t available on its own Web site or from the SEC, only from the operator of the Pink Sheets online marketplace, Pink OTC Markets. And those filings lack crucial data such as who owns major chunks of the company.
Maherali said 147 million shares are restricted as insider stock, mostly belonging to him, and “I have not sold anything.”
Maherali, who used to work in the British Columbia small-cap stock world, said in a telephone interview that he doesn’t know why Cascadia’s stock has climbed so rapidly in recent weeks: “I can’t comment on the price of the stock, the daily machinations of the market.”
Later, approached at his office, he offered a brief explanation before declining to answer further questions. “It’s basically a short squeeze, that’s what people are telling me.”
That echoes a refrain by the online boosters. They say that short sellers (who borrow shares and sell them, expecting the price will drop before they must settle their obligation) are now desperate to buy the stock of Cascadia before it climbs further.
Again, Cascadia’s numbers don’t bear that out. According to Pink OTC’s latest data, as of Feb. 12 only about 100,000 shares were sold short, a paltry amount compared to daily trading volume that averaged nearly 1.8 million shares.
A more plausible explanation is that paid online cheerleading has lifted the stock. stockmarketinginc.com, just one of the stock sites or newsletters that have pitched Cascadia heavily since January, acknowledges it was paid $10,000 and 350,000 shares by an unidentified third party.
That kind of money may not buy much software development, but it does buy some pretty effective hype.
large in Bellevue
Everyone knows Microsoft is a major presence in downtown Bellevue. Charlie Malley, a vice president at Pacific Real Estate Partners, offered perspective on just how big at the brokerage’s annual dinner and investment forum Tuesday. The total office-vacancy rate in downtown Bellevue is about 15 percent. If Microsoft left, Malley said, around 30 percent.
The software giant has moved into downtown Bellevue in a big way since 2006, leasing a total of 1.6 million square feet in Lincoln Square, The Bravern and City Center Plaza.
When Microsoft speaks, the Eastside office market listens, Malley suggested: “Other large tenants are really there because of Microsoft. If they grow, the market grows. If they shrink, God help us all.”
— Eric Pryne
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