FAB Universal symbol FU has acted like a Chinese bottle rocket since our purchases but in the last few days several articles have warned of an impending large dilution of shares. The story of FAB on Seeking Alpha has taken the firm to task for allegedly misrepresenting the capitalization is not $160mm as listed but more than double that figure once the conversion of preferred shares is taken into consideration.
Despite the stock’s high ranking in our various systems it’s never worth the risk of owning shares of any company where there is risk of a misleading balance sheet. Better to sell the shares and take our profit rather than risk losing the profit of our remaining shares.
If you follow this blog you’ll see that we sold a large percentage of shares above $8 a share when the shares were trading in a parabolic frenzy. Since then, new information has come to light that should make anyone question why they should be involved in such an issue.
In another light this issue sheds a different light on Socially Responsible Investing, being responsible to yourself and clients in avoiding potential mistakes that could be hazardous to your portfolio’s well being. Consider it a proactive step in the direction of “portfolio wellness” 🙂
So we bid adieu to FAB Universal
No position as of publication of this blog article
Be careful out there
Brad Pappas