When is a $11 dollar stock not a $11 stock?  When it is PAX Clean Energy, Inc. (PXCE).  This stock had risen, almost under the radar, to be a $11.00 stock ($11.35 close on April 5th, 2009).

A $0.25 stock until its January 28th open of $2.25 (when I assume the promoters bid it up to $2.25) to yesterday’s closing price of $11.35, the stock has risen drastically to close above $11/share on slight volume.  There have been wobbies on that steady climb as witnessed in mid-March.  The stock fell drastically to $4.00 intraday on March 16, 2009 only to close at $7.87.  The stock then resumed its incremental march back to  the $11.00 range.  As a recovering CPA, I naturally look for some kind of rational explanation for the rise in value.  I looked for the fundamentals (cash in bank, shareholder’s equity, etc…)…. I couldn’t find any.  I looked for quarterly and annual earnings…. there aren’t any.  I am reminded of the famous Gertrude Stein quote, “there is no there there”.  This is a development-stage company with no revenue, no assets to speak of and no clear near-term expectation of earnings.  According to their PAX website, they are still a leading-edge company that is going to be commercializing biofuels in Europe, Serbia being the first market they are penetrating.  A number of press releases released in the first Q 2009 have related the migration of the company from biofuels to technology.

Since I am sure that you can sense my deep skepticism about this company, I will continue in that vein.  On Monday, March 9th, PXCE management announced the pending acquisition of another Development-stage Company called Mobile Video Development, Inc.

Pax Clean Energy, Inc. (PXCE) (“Pax” or the “Company”) announces that it has entered into a Stock Purchase Agreement with Mobile Video Development, Inc. (“MVDI”) an early stage technology company targeting applications in the exploding mobile social multi-media market. MVDI is developing new market breakthrough technologies in mobile video sharing that can be leveraged to revolutionize how mobile video is used across wireless carriers and devices. MVDI believes that it is poised to achieve mass appeal and acceptance in rapidly growing and potentially very large segments of the mobile wireless and social network markets. Through the business combination, the combined enterprise will take the initiative to move these new technologies into commercialization.

I have read all of the press releases about the technology and the management team they are putting in place.  The most information-packed press release can be read on marketwatch.com. Potential landmines that await investors in this company include going concern questions, significant dilution in common shareholders if certain events occur, acceptance and adoption of their mobile video technology and the ability of management to execute their strategy.

Unfortunately this stock is not available to short.  It just keeps going up (and I think I know why).  I study the chart to see if I can discern any patterns but that is no help.  There are no meaningful indicators that have developed in this short run-up from a $0.25 stock.  I cannot figure it out other than pure manipulation:  ‘painting the tape” as it is called.  I have no proof of that, but absent any rational reason for the run-up, I begin to suspect.  Be very careful with this stock.  The hype machine is in full swing…don’t get taken in.