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Tuesday, December 13, 2005

Two more companies

WBBM (sec), mortgage lender in Florida, mortgage broker in NC. Quit CA and NY.
not interested

WCAP (sec), a BDC. All sorts of securities. Privately held businesses in the worst of industries: "new economy" businesses, computer hardware/software, consumer products manufacturers and distributors.

Right off the bat, I see a gigantic red flag. The writeoffs for each year are:
2003: 1.29% of investments
2004: 0.07% of investments
2005: 31.5% of investments!!!!!
Writing off 31% of your investments in one year with prior years writing off amounts that could very well be at a bank... this looks absolutely terrible. Why 2005? Most BDCs had trouble 2-3 years earlier. Did this company hide things for all that time? And then why so much?

Going concern qualification. The huge impairment was "under SBA regulations" which seems like it wasn't the company's decision. Looking over the details, I see a lot of different investments have been written down to zero.
not interested

stumbled onto your site during work heh.
noticed u do alot of anaylsis on pinks. check out SRGX. going to go fully reporting very soon, has DOD contract. hopefully more contracts in wings, expanding to CA facility (i guess that was enough of a 'pump' to get u itnerested). share price has been fallign though but the management is very nice, USAF peeps. a 'worth watching' pick from me. Strathmore is uranium right? had a few of those on my watch list. been shooting up lately :).

P.S. Are u an accountant?

No, I'm an engineer. I already looked at SRGX when I covered the letter S. I don't recall why I passed on them, but looking at them again right now, it was probably due to a lack of open disclosure. They make a lot of noise, but I don't see any balance sheets, income statements, cash flow statements, equity statements, and related notes... not to mention getting auditors to work on their results. How could I possibly make an investment decision without those things out in the open (preferrably with a respected auditor's neck on the line). When things are hidden or difficult to find or understand, it's usually because the management wants it hidden or not understood. If they were serious about getting listed, wouldn't they be producing valid financial statements and trying to get investors to look at them?
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