With all respect to Jeff, I don't put a lot of stock in statements made in private phone calls. Others may have a different view of investing, which is their right.
To me, public disclosure is a crucial acid test. If a company will put something in writing, in public, it can't run away from it later. Private phone calls can be subject to later denials, selective recollection, or (unfortunately for Jeff) a later claim by the company that what Jeff said was either wrong or unauthorized.
True, there is a role for private communications with companies, largely to fill in gaps in knowledge. But I see those gaps as being questions that arise around the margins in the case of companies that already have established their credibility through what they have disclosed publicly. HNLY does not yet have this level of credibility; its directors have in effect hidden the company's workings from public scrutiny for over three years. And Jeff probably is limited to passing along what the company tells him, which may already have some "spin" on it by the time it gets to Jeff.
HNLY's public disclosures have been sparse and selective, and suspiciously so. The company continues to withhold from the investing public such fundamental information as the capital structure of the company, including the terms of every single deal made since HNLY changed its name to HNLY, and even before (for example, is there anyone out there who knows the terms of the deals NewReach did?). At the same time, the HNLY website offers incomplete and (in my view) misleading information such as a per-share book value that likely consists mainly of intangibles.
The information I have posted from the Advent SEC filings is publicly available, although unfortunately I think you have to pay for Disclosure Inc. to send it to you (or perhaps ask HNLY for it.)
As for Mr. Swarzman's history, he either is or is not the guy who was convicted of lying to a bank to procure a $1 million loan. I have done enough research to think that he IS the same person, and I have invited the company to respond. If the company chooses not to make a public denial, that is its choice. But if I were President and CEO of a publicly traded company, I sure as heck would act to end talk of a felony conviction -- unless I had been convicted.
Whether or not Mr. Swarzman is a convicted felon (and I still don't know for sure), how much do we know about him, or about the other members of the HNLY board? The HNLY website offers almost no information on Mr. Swarzman, and none about the other board members.
I'm going to keep digging through public records, in part because it is quite a challenge to find the pieces to this puzzle and put it together. But I am pessimistic about this company because -- regardless of whether or not Magra makes money -- I suspect the shareholders will be left with too much dilution to make any share that valuable.
-- Jim |
