Commentary: Beware the “Baby Berkshire” Scam

(BRK.A), (BRK.B)

Berkshire Hathaway’s unprecedented growth in share value, which has seen its stock skyrocket 1,088,029% from 1964-2017, always has investors hoping to catch the “next Berkshire Hathaway” in its infancy. Thus, being proclaimed (or proclaiming yourself) the next Berkshire Hathaway in the making, can be an irresistible lure for some investors.

Well, there’s good cause to resist the siren song of the Baby Berkshire moniker.

The S.E.C. has put a halt to the trading in the securities of Manzo Pharmaceuticals, Inc. (“MNZO”), of Spring Hill, Tennessee.

Manzo Pharmaceuticals, a penny stock which billed itself as a “mini-Berkshire Hathaway,” is in the eyes of the S.E.C., “a classic pump-and-dump scheme.”

According to the S.E.C, company president, J. Ritch, 51, of Spring Hill, Tennessee, used his Website to make a host of misrepresentations.

On the Website, Ritch touted his investment background, his role at MNZO and the prospects of MNZO, which he claimed would “operate as a mini-Berkshire Hathaway” and “acquire in whole or in part operating companies” in the “energy, technology, real estate and financial services” sectors. In fact, since his acquisition of over one million MNZO shares in or around January 2017, Ritch has authored numerous blog posts on his Website falsely claiming that he built and exited several multimillion dollar businesses, had been involved in over $1 billion in investment deals, and had degrees from college and/or graduate school.

The S.E.C. has fined Ritch $50,000 plus interest and prohibited him from acting as an officer or director of any issuer that has a class of securities, and barred him from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.

Unfortunately for investors, the only one who ever had a shot at getting rich was Ritch. His “mini-Berkshire Hathaway” is gone with the wind, and investors are left with nothing.

It’s a painful reminder that calling yourself the next Berkshire Hathaway is a far cry from being the next Berkshire Hathaway.

© 2018 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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