University General Health System Inc (OTCMKTS:UGHS) Sinks to a New 52-Week Low
Back in March University General Health System Inc (OTCMKTS:UGHS)’s share price was hovering between $0.40 and $0.50 when former Fox commentator, Tobin Smith, received $50 thousand to write what he likes to call “a sponsored research” report on the company. He seemed genuinely enthusiastic about the future and put a $2.50 price target on the ticker. Yesterday, nine months after his report got published, UGHS closed the session at $0.31 and registered a new 52-week low of $0.293. Are you surprised?
You shouldn’t be. If you take a look at some of the companies that Mr. Smith previously covered, you will see that his optimistic projections rarely become a reality. Back in April 2012, for example, he said that Circle Star Energy Corp (OTCMKTS:CRCL) (which was then traded at $2.50) can triple. Right now, CRCL‘s price hovers around $0.02. North American Oil & Gas Corp (OTCBB:NAMG) was an absolute disaster and even one of his newest picks, Gray Fox Petroleum Corp (OTCBB:GFOX), isn’t doing particularly well.
When UGHS‘ management team paid Mr. Smith $50 thousand for an awareness campaign, they probably thought that spreading the word around will help draw in some new investors but, at the moment at least, this seems impossible.
Part of the problem lies with the rather dismal stock performance, but it is mostly due to the fact that there isn’t any up-to-date financial information which could lure in potential buyers. We last covered the ticker a month and a half ago, just a week after they had filed their 10-K for the year ended… December 2012. The report was, of course, accompanied with the almost obligatory optimistic press release which talks about the increased revenue and the massive growth but even it couldn’t change the fact that the latest available figures are now almost a year old.
On November 15, the shareholders saw a glimmer at the end of the tunnel when UGHS filed an NT 10-Q saying that they won’t be able to publish the third quarter results on time. This would normally be something of a red flag, but in the case of UGHS, the document at least showed that they are willing to continue issuing their periodic SEC reports. They said that the filing will appear “as soon as practicable”, but unfortunately, more than a month later, it’s still not out.
With these things in mind, it’s not that hard to explain the rather huge selling from yesterday and the relatively strong downward trend that we’ve been witnessing over the last weeks. Investors are starting to lose their patience and right now, even the more gambling-prone traders seem reluctant to trade UGHS.
The fact that the company comes on the news only when there’s something positive to report isn’t helping either. The latest press release, for example, is dated October 23 but instead of giving us any updates around the filing of the SEC reports, it talks about the building of a new hospital and gives very little in terms of actual details around the construction. With that in mind, we won’t be at all surprised if we see some more selling in the future.
Which really is a shame since the figures in the 2012 10-K suggest that UGHS really is a solid, operating entity. Few penny stocks have around $29 million in current assets and even fewer can boast about annual revenues in excess of $113 million. That said, if you take a closer look at the report, you’ll still find some problems like the rather huge working capital deficit and the scary net loss.
We still don’t know if these issues have been addressed which is why, a potential UGHS investment remains as risky as ever. At least until we see some fresh figures.
