HQS - The company is known for conducting unnecessary dilutions. The CEO, Norbert Sporns, has a particularly negative reputation when it comes to the issue of shareholder value.
The company has about $85M in cash + receivables - payables. The market cap is $105M. They are trading at less than their book value, at a price relatively close to their March lows. The enterprise value (p/e with the cash backed out) is obscenely low.
Yet they just registered $50M worth of shares for another potential offering!!!
A company that makes a move like that is obviously not interested in shareholder value. Even if they have acquistions to pursue, they are screwing their shareholders by pursuing them, because they will have to give away their own stock at firesale prices to do it.
Instead of trying to 'acquire' other companies, they should be trying to 'acquire' their own company. They should be buying back shares. In terms of the numbers, they are the cheapest company in the sector right now, one of the cheapest in the entire space. No need to pursue another company that will likely be selling more expensive in comparison.
Think about this: if they took the roughly $30M in excess cash that they will have *after* they pursue all their new projects, and they bought back their own shares, they could raise the value of their stock by almost 30%. That doesn't count the runup that would occur in response to the news that they are buying. They could inspire investor confidence, wreak havoc on shorts, and set themselves up to get much more out of any offering that they decide to pursue in the future.
Why aren't they doing that?
Not only are they not doing that, they are doing the opposite. They are trying to sell more shares right now! That's because they aren't concerned about making money for their owners. Their owners are just piggy banks that they use to get more cash to play with (or sit on).
If you want to make a wise investment in the chinese food sector, buy SIAF. They have huge insider ownership, so you can be sure that they won't screw their own shareholders. And instead of taking cash from new investors at your expense, they are going to give you back cash in the form of a dividend. That's how you know they are for real.
Bottom line: HQS is a POS with an S-3 on the shelf. A terrible investment. There is a reason why the company sells cheap--they have a reputation for operating like a charity designed to raise money for a pet cause, rather than a business designed to make money for its owners.
AI
