Wuhan General Group (China), Inc. (OTC:WUHN) Erases Gains

A new promotion has made its play in just two short days, with Wuhan General Group (China), Inc. (OTC:WUHN) losing more than 50% on Wednesday after a doubling of its price on January 22. The producer of industrial fans and turbines is a leader in China, yet remains a risky bet on the US small cap markets.

The ticker has been falling for the better part of three years, and its latest spikes come after a brief promotion with a middling budget of $25,000. Also, it is on the watch list of several stock pickers, releasing expectations and news on significant climbs, more than 600% on separate days, with $1.4 million volume.

The company is well-set with a solid and active business, and may look like the company to improve the record of paid pumpers. Its financial strengths and weaknesses are as follows:

• $40.3 million cash

• $195 million total liabilites

• $17 million sales

• $3.3 million net loss

The company holds high, but reasonable debts compared to the assets, around $194 million. But nothing in its balance sheets would point to why a relatively untraded company would explode with a six-time gain. Nothing, except the paid pump by The Bull Report, a paid pumper with a history of hyping small cap companies.

WUHN is something of an exception, with its long history dating back to 1958 and assets more than ten times larger than its modest $4 million market cap. But even with a solid business, disproportionate investor interest generated by paid advertising may cause wild moves in the graph and significant daily losses.

While all markers point to a company with a great potential and a fair stock price much higher than a few cents, the general distrust for Chinese companies seems to carry over to WUHN. Chinese companies are suspect for irregular accounting and may frighten off investors despite the paid mailing.

The Bull Report has other traditional choices, US-based companies with a sharp and promising idea, but little solid assets behind it. The average compensation for the pumps is $21,000 and the Bull Report helped several penny stocks become the fashion of the day. Unfortunately, most of those star stocks will lose almost all their value just days after the mailing goes silent. Such is the case of Coastal Capital Acquisition, Corp. (OTC:CCAJ), a pump from October that spiked to double-zero territory before erasing more than 90% of its value and returning to triple-zero price.

In the case of fast and risky picks, do your own estimation of risk and acceptable losses before buying The Bull Report’s claims.