Latest short idea:
What do you think of a company that put the following risk statement in its latest 10K filing:
Although the Company's financial statements are presented in U.S. dollars in accordance with generally accepted accounting principles, the Company's transactions are consummated in both the Brazilian Real and the U.S. dollar. Inflation and devaluation have had, and may continue to have, an effect on the Company's results of operations and financial condition. Although the Company had used Brazilian Real futures and options contracts during 1996, in an effort to hedge against currency risks, its highest coverage at any one time had only met 20% of its exposure, consisting of accounts receivable denominated in Reals, net of accounts payable and other current liabilities denominated in Reals. Currently, the Company is not engaged in any hedging activities, however, the Company is constantly monitoring its exposure to currency risks and plans to use hedging activities to offset currency risks as it deems appropriate. Accordingly, any significant devaluation of the Real relative to the U.S. dollar could have a material adverse effect on the Company's operating results.
Also, this company had an unfavorable write-up in Barrons this past summer. The company is Vitech (VTCH), trades on NASDAQ, and sells computers in Brazil. There's a thread on SI at Subject 13873. There's lots of concerns raised throughout the thread, including its cash flow negative reports, nepotistic (and high rate) financings from the founder's father, high levels of inventory, and other red flags as well. Any comments positive or negative are welcome. |
