University General Health System Inc (OTCMKTS:UGHS) Lacks Consistency
University General Health System Inc (OTCMKTS:UGHS)’s management team have made five announcements over the last two months and, having read through them, we can see that the shareholders have much to cheer about. The press releases all talk about year-over-year and quarter-over-quarter growth, about big steps in the development of new facilities and they even informed us about the dismissal of a lawsuit against the company.
A quick look at the chart, however, reveals that the stock performance isn’t what you’d call consistent. A point that was proven last week when four positive sessions pushed the price from $0.55 all the way to $0.60, but instead of continuing up, the ticker lost 6.8% on Friday registering a trading volume of 496 thousand shares. So, what is causing the hesitant chart movement?
Well, a major role in the whole thing is most certainly played by the lack of any official filings. Changes in UGHS‘ auditing firm and some acquisitions have delayed the publishing of their periodical SEC reports which means that investors don’t have any up-to-date financial information to work with. Last Monday, they did manage to put out the annual 2012 statement and although it does show some definite signs of progress (the revenue figure has grown by 59% compared to 2011 results), the lack of any more recent figures still seems to put some of the investors off.
What’s more, on August 29 UGHS announced that the second quarter of 2013 has been another resounding success with revenues receiving another boost and occupancy rates registering above-industry-average levels, but they somehow fail to mention whether the period ended with a positive bottom line or not. That, we reckon, is quite important since the massive increase in revenues has come at a price – according to the 2012 10-K, the annual net loss has increased by as much as 54% year-over-year. All in all, the publishing of the missing reports should give us a better understanding of where the company is heading and how big the growth is. Until then, the investors who are more prone to gambling will jump in and hope for a potential surge while the ones who prefer to play it safe will wait for the official figures. Both groups should consider one more factor that is, we reckon, playing a huge part in the hesitant stock performance.
Before we get to it, we want to remind you about Mr. Tobin Smith. He is a business analyst who made a name for himself by hosting the Bulls & Bears show on Fox’s Business Network. Back in June, however, Fox fired him because they found out that he had been paid $50 thousand to tout a small cap venture called Petrosonic Energy Inc (OTCMKTS:PSON). He seemed mightily optimistic about PSON‘s future, but the performance from the last four months shows that his enthusiasm was somewhat misplaced (the price has plummeted by as much as 70% since then).
Other companies like IceWEB, Inc. (OTCBB:IWEB), Pulse Beverage Corp (OTCMKTS:PLSB) and Echo Automotive Inc (OTCMKTS:ECAU) have also been covered by Mr. Smith and if you take the time to check out their charts, you’ll see that the results of all the hype are less than impressive. You’re probably wondering why we’re telling you all this.
The reason lies in the fact that Mr. Smith, through his NBT Equities Research website, has written a report on UGHS as well and, once again, he is saying that the ticker could potentially make you very rich. The fact that his predictions have turned out to be inaccurate so many times in the past warrants some extra caution and the $50 thousand he received for his research adds another layer of risk. This time, the compensation was provided by UGHS themselves and some of you might argue that this is a good sign, but even so, the additional hype and the lack of official filings could wreak havoc with the price at any moment which is why you should tread carefully and avoid making any rash decisions.
