WINS - Ten Reasons Why I Do Not Like One of Nasdaq’s Biggest 2016 Winners, Wins Finance Holdings

TL;DR - If you can find shares to short, let me know.

WINS is a company that does leasing, financial guarantees of Chinese SMEs, and financial consultancy services in the Chinese province of Shanxi. WINS wanted the prestige of being listed on an American exchange, so they bought Sino Mercury Acquisition Corp. and became listed on the Nasdaq through a reverse merger in November 2015 (Wins Finance Holdings). Since being listing, WINS has been one of Nasdaq’s and Russell 2000’s the best performing companies growing over 3370% (Google Finance).

WINS was identified as a potential loser by my proprietary statistical model. After finding sell-side research mostly lacking, I started our investigation and even sent someone to their Beijing office. Here are the ten reasons why I do not like Wins Finance Holdings.

1. WINS closed Friday, 1/13/17 at $233/share despite a looming $12-$20/share sale of 67% of the company (WINS 6-K).

2. Two out of three founding directors resigned in June, the founding president resigned in July, and the founding CFO resigned in August. The CEO and Chairman of the Board, Jianming Hao, will resign eminently along with the entire board (WINS SEC Filings).

3. An analyst’s, "site visit to Wins Finance Holdings Inc’s purported headquarters had revealed that Wins Finance Holdings Inc did not have offices there" (Shareholders Foundation).

4. Cable Car Capital’s Jacob Ma-Weaver, CFA, noted, “most of the stock’s gain occurred on tiny volumes of odd-lot trades and end-of-the-day transactions. Some 40% of Wins’ trades on a recent day were for one share apiece” (Alpert).

5. WINS value increased 358% in 31 trade days from insider lock-expiration to the report claiming WINS did not have offices located at their purported headquarters (close on 10/25/16 to open on 12/12/16). The next day, despite WINS trading between $79-$101.99, WINS largest shareholder entered an agreement to sell 67% of the company for $12-$20 (it has not closed). On 12/13/16, WINS announced the CEO and entire board would resign at the deal closing. (WINS 20-F, Google Finance, WINS 6-K, Morningstar).

6. Both Wins Finance Holdings’ CEO & Chairman of Board, Jianming Hao, as well as CFO, Junfeg Zhao, come from a background of agriculture businesses which were disasters for investors. Hao allegedly destroyed the value of his previous venture Deyu Agriculture Corp, and Zhao is the former CFO of Agria Corporation. Agria lost 93% of its initial trade value before being delisted after it allegedly, "engaged in trading to artificially inflate Agria’s stock price” (Thorpe, winsfinance.com, Google Finance, Daniels).

7. WINS’ has a $4.3B valuation, a P/E is 366, and a P/S is 849. This valuation is supported by $1.5M quarterly revenue (down 32% y/y), $312M in assets, and no reported intellectual property (equities.com, Google Finance, WINS Unaudited Q1 2017 Financial Results).

8. Hong Kong’s Securities and Futures Commissions (SFC) is investigating the company about to buy 67% of WINS, Freeman FinTech Corp. Ltd., and seeking to disqualify 10 of its directors (SFC).

9. Their website’s job postings are all from November 2015, and there are no instructions on how to apply to them (winsfinance.com).

10. They are under investigation by at least Goldberg Law PC, Bronstein, Gewirtz & Grossman, LLC, Lundin Law, Howard G. Smith Inc., and Rosen Law Firm.

Three other things I do not like about WINS:

1. WINS’ majority owner is named Wang Hong. Wang Hong is the Chinese term for an internet celebrity (BBC).

2. WINS reported quarterly earnings Q2 2016, Q3 2016, and Q1 2017 but appear to have skipped Q4 2016 (Edgar).

3. Our investigator reported finding the Beijing office confusing because Wins Finance Holdings (稳盛金融) and Wins Investment (稳盛投资) are on the same street and translate similarly. Wins Investment was in a prestigious tower, downtown tower while Wins Finance Holdings was past the fourth ring in a three-story building, surrounded by museums. He also said the location indicated on WINS’ website map is the Chinese Businessmen Museum not WINS’ office.

Sources Alpert, Bill. "The Mystery Stock That's Up 15-Fold This Year." Barron's. N.p., 24 Dec. 2016. Web. 13 Jan. 2017. http://ift.tt/2imSBMI.

"Board of Directors." Wins Finance Holdings. N.p., n.d. Web. 13 Jan. 2017. http://ift.tt/2jFJKTX.

Bronstein, Gewirtz & Grossman. “SHAREHOLDER ALERT: Bronstein, Gewirtz & Grossman, LLC Announces Investigation of Wins Finance Holdings Inc. (WINS).” PR Newswire. 13 Dec. 2016. Web. 13 jan. 2017. < http://ift.tt/2jFH5cZ;

Daniels, Michael. "Agria Corporation (ADR) (NYSE:GRO) Investor Notice: Lawsuit Alleges Misleading Statements." GroundReport. N.p., 07 Dec. 2016. Web. 13 Jan. 2017. http://ift.tt/2iJvjQf.

"Earnings Announcements Transcripts." Zacks Investment Research. Zacks, 13 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2jFOxEP.

"EDGAR Search Results." EDGAR Search Results. SEC, 13 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2iJlt0I.

"First Quarter 2017 Financial Results." PR Newswire, 6 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2hYfHoz.

"Freeman Fintech Corporation to Acquire Controlling Interest in Wins Finance." Reuters. Thomson Reuters, 13 Dec. 2016. Web. 13 Jan. 2017. http://ift.tt/2iJhIZg.

"FORM 6-K/A, EXHIBIT 99.1." Edgars. SEC, 6 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2jFvV7Q.

"FORM 8-K." EDGAR. SEC, 26 Oct. 2016. Web. 13 Jan. 2017. http://ift.tt/2iJaynY.

"Insiders:WINS." Fidelity. N.p., 13 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2jFNhld.

"Investors Relations: News Releases." Wins Finance Holdings, n.d. Web. 13 Jan. 2017. http://ift.tt/2iJkI84.

“Google Finace:OTCMKTS:LUCC.” Google Finance. Google, 13 Jan. 2017. http://ift.tt/2jFOwAL

"Management Team." Wins Finance Holdings. N.p., n.d. Web. 13 Jan. 2017. http://ift.tt/2iJhHEG.

"Morningstar: Insider Trading." Morningstar. N.p., n.d. Web. 13 Jan. 2017. http://ift.tt/2jFH48V.

"Ownership:WINS." Fidelity. N.p., 13 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2jFKGrA.

Thorpe, Anthony. "Wins Finance Holdings Is Overvalued: 75% Downside." Seeking Alpha. N.p., 09 Dec. 2016. Web. 13 Jan. 2017. http://ift.tt/2iJoKNL.

Securities Exchange Act of 1934. SEC. 10 Aug. 2012. Web. 13 Jan 2017. http://ift.tt/1AOFtyZ

"SFC Seeks Compensation and Disqualification Orders against Former and Current Directors of Freeman FinTech Corporation Limited." Securities and Futures Commission. N.p., 7 Oct. 2016. Web. 13 Jan. 2017. http://ift.tt/2iJfVDm.

"Sino Mercury Acquisition Corp. And Wins Financial Group Ltd Announce Closing of Business Combination." PR News Wire, 28 Oct. 2015. Web. 13 Jan. 2017. http://ift.tt/1NA97zB.

Tsoi, Grace. "Wang Hong: China's Online Stars Making Real Cash." BBC News. BBC, 01 Aug. 2016. Web. 13 Jan. 2017. http://ift.tt/2aWBcnP.

"Wins Finance Holdings Inc Daily Price Dec 13, 2016." Google Finance. Google, n.d. Web. 13 Jan. 2017. http://ift.tt/2jFLkFv.

"Wins Finance Holdings Inc from 11/6/2015 to 1/12/2017." Google Finance. Google, 13 Jan. 2017. Web. 13 Jan. 2017. http://ift.tt/2iJhhhz.

"Wins Finance Holdings Inc (NASDAQ:WINS) Investor Investigation Concerning Potential Securities Laws Violations Announced." Shareholders Foundation. N.p., 20 Dec. 2016. Web. 13 Jan. 2017. http://ift.tt/2jFS85S.

"Wins Finance Holdings Inc Ownership." Morningstar. N.p., n.d. Web. 13 Jan. 2017. http://ift.tt/2iJlUrQ.

Disclosures: These are my own views while believed to be correct, I disclaim as much liability as I can. This should not be taken as investment advice. Do you own research. Stocks can rise or fall. I do not hold a position in WINS, but if I can find any shares to short, I will.

Submitted January 17, 2017 at 08:39AM by AccrueInvestments http://ift.tt/2iJEosb