Wuhan General Group China, Inc. (PINK:WUHN) Lifted by The Bull Report Pump

WUHN_chart.pngYesterday Wuhan General Group China, Inc. (PINK:WUHN) stock exploded from a humble previous close of $0.04 to a huge gap up and ended the day at a little over $0.30 per share, equaling an increase of over 650%. The movement was fueled by paid pumps that surfaced, as the company was barely trading in the past few months.

Among the pumpers is the ambiguously named The Bull Report who pocketed a respectable fee of $25 thousand for their promotional services. The email contains a very restrained advertisement effort as per usual pumper standards and is more of a short expose of company information. However, this doesn’t change the fact that it constitutes a paid advertisement.

WUHN is a China-based company that produces industrial-grade blowers and fans intended for use in power plants. According to their filings WUHN have millions of dollars in cash. Combined with their material assets, this leads to a bottom line of over $230 million in assets. Yet, the company’s price per share was sitting at the modest $0.04 per share until yesterday. Even a pps estimation based on cash alone would place WUHN‘s price at over a dollar, however this was not the case. It’s also worth mentioning that according to their last quarterly report the company logged nearly $3.5 million quarterly net loss and recorded yearly losses in 2011 and 2012.

The boom and the following disillusionment with Chinese-based companies of several years ago caused both by crashes and by the lack of real U.S. auditing control over company activity and financials on the territory of the PRC, have left many western investors very wary. The inherently higher risk with businesses located in China and the currently active promotional pump may scare those less fond of speculative trading.

0BRND_fail.pngSome additional indication of the possible future of WUHN is also the performance of previous companies pumped by The Bull Report. One example of a pump turned very sour for hopeful investors is the mid-October promotion of Premier Brands Inc. (OTC:BRND), formerly known as Tracksoft Systems Inc. The Bull Report received $60 thousand for the promo and the stock went crashing horribly after running for less than week. It is currently over 90% down from the peak of the pump.

Investors are advised to be very careful with promoted stocks as paid pumps almost always have the effect of inflating stock prices due to the created hype. The subsequent crashes are often severe and unpredictable.

You may also like...